CONFIDENTIAL
40. On (a), Hong Kong officials made clear that their
principal concern was about New Zealand, where their pre- ferences are of particular value. They were told that we could see no inherent reason why the gradual abolition of preferential trading arrangements between the U.K. and the rest of the Commonwealth should lead to any change in trading
arrangements as between other Commonwealth countries and territories, However, as we should be trying to obtain some
very substantial benefits for New. Zealand in the context of
our negotiations with the Six, we could certainly express the hope to New Zealand that she in turn would not terminate the benefits she now gives to Hong Kong. On (b), so long as Hong Kong enjoys any margin of tariff preference on her cotton textile experts to the U.K., she is likely to continue buying Pakistan cotton and Canadian plastics. But, once the common external tariff is applied in full to Hong Kong exports to this country, it seems inevitable that Pakistan and Canada should suffer to some extent. There seems nothing that we could do
about this.
CONFIDENTIAL
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