uncompromisingly on the principle we may find that in the end Hong Kong will suffer unnecessary damage because countries have laid down their own arbitrary solutions imposing virtual exclusion from the scheme on Hong Kong (when not unsatisfactory terms for inclusion may have been obtainable by negotiation). All this points to the need ultimately to find a compromise solution on Hong Kong - although this need not prevent us striving for a little longer to obtain unconditional acceptance of self-election in the hope (however remote) that when it comes to the point where donor countries must declare their positions openly there will be a general reluctance to stand and be counted as opposing the principle. Eventually, however, I suspect that we shall have to be content with donor countries accepting self- election for Hong Kong to the point of allowing it to regard itself as one of the developing countries within the scheme provided it accepts a special position for itself.
5. What kind of solution would meet Hong Kong (and our) interests? Clearly Hong Kong wants to gvoid exclusion on the grounds that it is not a developing country; any form of "country-wise" discrimination tends to cast doubt on its developing status. But additionally Hong Kong must guard against any solution that by giving a strong edge to its competitors will cut back its trade or prevent it getting a reasonable share of growth. We have an equal interest in ensuring that a reasonable solution is reached, not only because of the danger of deflection of Hong Kong's trade to the UK but because any severe setback to the Colony's economy could have consequences both political and financial which ultimately HMG would have to shoulder.
6.
I do not see my way to any clear-cut suggestions as to the way in which Hong Kong's interests might best be served; this might become more apparent in the course of discussion with those of you who are more versed in the intricacies of this subject. But on the face of it the adoption of some principle like "competitive need" might help to secure Hong Kong's markets in sectors where it has a good share of the trade; and exclusion of particularly "sensitive" products e.g. textiles - which seems a likely candidate in view of the EEC attitude foreshadowed at paragraph 3(g) of (109) - should make it easier to include Hong Kong in the over-all scheme without any specific discrimination.
7.
What should or can we do to help achieve a satisfactory solution for Hong Kong? We cannot afford, I suggest, to take a negative attitude (I detect a hint of this in the minutes of the C.P. Committee). Our self-interest requires that
/ we guard
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