TNAG-0139-FCO40-175-Effect-of-EEC-common-commercial-policy-on-Hong-Kong-exports-1969 — Page 175

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CONFIDENTIAL

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be (and need to be) completely au fait with the development of thinking in the Commission on subjects of interest to Hong Kong, and regular but informal contact with Ernst (or other officials of This seems similar status) may be the best way of achieving this.

But

to me to be only reasonable because there would be little sense in Hong Kong having a representative in Brussels at all if he was not permitted to make these sort of contacts. Naturally, the basis on which the dialogue is to be carried on will need to be clearly spelled out to Ernst and any other Commission official involved. Ernst has himself (commendably) stated his own position unambiguously, namely that he speaks without commitment to the Commission and I am

Further sure he understand that the same goes for our side as well. more, although at times he can be somewhat exasperating and long-winded, he seems well disposed, genuinely I think, towards Hong Kong (this was certainly the impression we gained from the talks we had with him last week, of which more below).

6.

Hong Kong's attitude towards the E.E.C.'s emerging common commercial policy has hitherto been one of "wait-and-see" and I think we are agreed that this has up to now been the best policy. We have kept out of the limelight and have avoided giving any impression that Hong Kong is concerned over the developing policy in case those who were ill disposed to Hong Kong tried to exploit the situation to our disadvantage. However, now that the Commission are beginning to formulate, for the consideration of the Council, definite proposals on a common import policy, including a policy on the future handling of cotton textiles questions, I do not think that we can profitably conti with this policy of masterly inactivity for very much longer. We now have a definite Commission proposal for the handling of the ceramics sector, including the possibility of surveillance on certain imports from Hong Kong, and we know that the Commission are actively studying other sectors with a view to the submission of parallel proposals in these sectors also. No doubt some of these will also contain proposals for Community-wide quotas or surveillance on imports from Hong Kong.

7.

I enclose a copy of our informal record of the talks we had with Ernst, from which you will see that he spelled out his version of what at least some people in the Commission have in mind in relation to Hong Kong. He also made it clear that, again at least in the view of some in the Commission, the Community as a whole should in future deal with Hong Kong on cotton textiles and not the individual member states as hitherto. This is going to be important for us because both of Hong Kong's Article 4 agreements with members of the Community, namely Germany and the three Benelux countries, expire on 31 December this year.

8.

I do not say that these sort of developments have been unexpected - at least they have not been so to me. I have been anticipating for some time that, when finally faced with the crunch of the end of the transitional period, the Commission would put forward their views on a common import policy for the Community as a whole and that, at least to some degree, this would involve, as far as Hong Kong is concerned, a compromise between the liberal policy hitherto followed by the Five and the very restrictive policy adopted by the French.

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