CONFIDENTIAL
Commonwealth Preference Origin Rules
6.
The Hong Kong Delegation reverted to the suggestion which they had made in the third session, that at the outset of the transitional period Britain should go over to a less onerous origin system for Commonwealth preference, based on the criterion of a
change in state" brought about by a manufacturing process. The British Delegation repeated that they saw grave difficulties in this, but undertook to give the matter further consideration. It would help in this if the Hong Kong Government could provide a fuller statement of their case for such a change.
Preferential Treatment Given by Hong Kong to British Exports
7. The Hong Kong Delegation repeated their request that the right of the Colony to use the preferential treatment which Britain enjoys in the Hong Kong market in the interests of the Colony rather than in those of Britain should be recognised. The British Delegation said that these preferences ∞vered a very narrow sector. If the matter arose in negotiations, the British Government would consult the Hong Kong Government. In principle, it seemed not unreasonable that, after our entry into the Community, Hong Kong should use any preferences which remained to strike the best bargain possible either with the enlarged Community or with third countries.
8*
The Hong Kong delegation asked for an assurance that we would not oppose the retention by Hong Kong of preferences elsewhere in the Commonwealth, e.g. New Zealand. The British delegation replied that it was premature to take a view on this as questions of British, as well as Hong Kong, commercial interests might be involved; but on the whole it was unlikely that Britain would want to insist on the removal of such preferences.
Possible Refund of Import Duty to Hong Kong
9. Basing themselves on the British assumption that preferences benefited exporting countries rather than the British consumer an assumption which Mr. Cowperthwaite accepted so far as recent years were concerned the Hong Kong delegation argued that the Colony would probably be paying about £5 million per annum as the price of British entry into the Community, since this sum represented very approximately the anticipated loss of earnings to Hong Kong exporters. The Hong Kong delegation asked - rather tentatively whether the British Government would consider refunding duty paid on imports into Britain. There might be precedents for this. For example, if Britain obtained the kind of arrangements concerning the Commonwealth Sugar Agreement for which she had asked, she would probably end up by having to raise a levy and then refund it. Alternatively, payments might be made to Hong Kong for "social reasons". The British delegation explained the difficulties involved. It was not British practice to make repayments of duty levied; the precedent would be too dangerous. Should any precedents emerge, in negotiations on other points, Hong Kong's case for duty refunds might however be strengthened. So far as aid was concerned, this all had to come within a fixed ceiling and there were many competing claims. There was also the point that, if on entering the Community, Britain had to move to a tax on value added, this should enable Hong Kong to increase her exports to the United Kingdom.
Possible Retaliation by Hong Kong against the Six
Sir A. Snelling asked Mr. Cowperthwaite for his considered reaction to the possibility that Hong Kong might take retaliatory
/measures
CONFIDENTIAL
No comments yet.
Private notes are available after approval.