TNAG-0046-FCO40-82-Britain-s-entry-into-EEC-effect-on-trade-with-Hong-Kong-1967 — Page 42

16.

CONFIDENTIAL

In the previous round of consultations, there was some

discussion of the possibility that Hong Kong might protect her-

self by practical methods, e.g. by imposing and suspending a

tariff, which could be reimposed against particular countries in

defence of G.A.T.T. rights; or by action in the field of public

purchasing. This is a rather sensitive area and we should not

raise the subject again unless the Hong Kong delegation do. Our

attitude to these ideas will in fact depend quite a lot on what

opening position we adopt on Hong Kong. If we decide to seek a

special arrangement for Hong Kong in the negotiations, our prospects

of succeeding would be gravely weakened if it were know that Hong

Kong was taking, or contemplating, such action. However, if the

Hong Kong authorities felt that it was unnecessary for us to

seek any special safeguards for the Colony in our negotiations, this

objection has less weight. (So far as public purchasing is con-

cerned we know that Mr. Cowperthwaite is very much opposed to any

departure from Hong Kong's traditional policy of buying in the

cheapest market. But in 1966/67 Hong Kong's recurrent and capital

expenditure, after deducting personal emoluments and pensions, is

estimated at nearly £79m., which would seem to give her a sizeable

bargaining counter.) If the Hong Kong delegation wish to discuss

such counter-measures, we should simply note that, whether or not

we enter the Community, it is open to the Hong Kong Government,

if they feel the need of a means of defending their G.A.T.T.

rights directly and if they judge this to be in their best

interests in the light of the prevailing circumstances at the time,

to introduce a tariff or to direct contracts forwards countries

which provide good outlets for Hong Kong exports rather than

towards those which impose highly restrictive quotas

CONFIDENTIAL

/17.