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entry.
But it was apparent that
G
(a) the Six were not prepared to contemplate associate member status for Hong Kong on the grounds that the economic condition of Hong Kong was different from that of the States for which associate status had been devised;
(b) the Six were not prepared to consider any other arrangement
which would preserve duty free entry into the United Kingdom for Hong Kong products;
(c) to continue to press for duty free entry into the United
Kingdom would only endanger the possibility of any solution satisfactory for Hong Kong;
(a) the United Kingdom might obtain agreement for periodic
reviews to isolate and examine any problems in Hong Kong's trade relations with the enlarged Community arising out of Britain's joining the Common Market;
(e) while the common external tariff would be applied by Britain
to Hong Kong products, there would probably be special arrangements to graduate its application over a period of
years.
In short, Hong Kong could expect little to compensate for reverse preferences (i.e. the E.E.C. having preferential entry rather than Hong Kong) in the British market.
27.
Calculations based on the statistical material then available showed that Hong Kong would in all probability survive reverse preferences although the period of adjustment might be painful. Two additional factors may well mean that if Britain joins the Common Market in the future, ti.. effect on Hong Kong, all things being equal, will be less severe than it would have been in 1963 -
(a) the Kennedy Round may result in a reduction in the Common
Customs Tariff and thus of the margin of reverse preference;
(b) the United Kingdom is becoming less important as a market for
Hong Kong.
On the other hand, Hong Kong's trade with the Common Market has expanded in the three intervening years and with it the Community's concern at Hong Kong competition. Future negotiations for Britain's entry with the Member States may well develop into a struggle to preserve Hong Kong's G.A.T.T. rights vis-a-vis an enlarged Community rather than to seek compensation for loss of preference in Britain.
28.
The Department is fully aware that there are many other issues not of quite such direct concern to Hong Kong but of considerable interest and importance for a full understanding of the way in which the Community is progressing. The Department has now sufficient material available to prepare memoranda on such issues if members so wish. Possibilities might be brief papers on the relationship of the Commission to the Council and to the European Parliament; qualified majority voting; internal reduction of tariffs and alignment of external duties with the Common Customs Tariff; the significance of the Luxembourg agreement ending the 1965 crisis; the economic and industrial growth of the E.E.C.
Members are invited to note the present position regarding the common commercial policy and quantitative restrictions, abnormal
29.
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