TNAG-0133-FCO40-169-Tariff-preferences-for-developing-countries-1969 — Page 81

GVA/10/8/1

CONFIDENTIAL

20 February

9

UNCTAD Preferences

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I am sorry not to have sparked earlier on your letter of 12 February commenting on Hannay's letters to you of 6 and 7 February.

Q5

2. However, this is just to say that I fully agree with the arguments in your letter that, at this stage, representations in Community capitals about the treatment of Hong Kong would almost certainly be counter- productive.

3. I had reached this conclusion independently in the light of the reference to beneficiary countries in the draft Commission document enclosed with Hannay's letter of 7 February to the effect that a definitive list of beneficiaries would not be drawn up until there had been consultations on this point within the framework of OECD. I see now from paragraph 4 of Hannay's further letter of 13 February that this paragraph in the draft communication to the OECD has now been struck out. The implications of this are rather obscure, but, on my reading, it should still be possible to continue the discussion on this question on a multilateral basis within OECD. In other words, it would still be the case that we have not yet exhausted the possibilities of the channels of communication we have been using so far. This would seem to be confirmed also by Tran's views reported in paragraph 8 of Hannay's latest letter.

4. One small point on paragraph 7 of that letter. Tran is reported as saying that for semi-sensitive products there would be surveillance and "perhaps some form of voluntary restraint from the Hong Kong side" I can see some difficulties here. If Tran is meaning that Hong Kong should by some means or other limit the quantity of its exports claiming preference this could surely be better dealt with from the Community end (1.e. the 50% rule or something along these lines). On the other hand, if he is implying that in return for preferences Hong Kong should exercise some form of quantitative export restraint on the products concerned, this solution would certainly be ruled out from our point of view. However, no doubt there will be time for us to iron out difficulties such as this before the Community position has hardened beyond the possibility of change.

5.

I am sending copies of this letter to Hannay, Britten (FCO) and to Brian Fall in the Mission here.

R. Goldsmith, Esq.

Boemd að Trade, CFF.1

•

爨

(D.J.C. Jones)

Counsellor (Hong Kong Affairs)

CONFIDENTIAL

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