TNAG-0141-FCO40-177-Hong-Kong-concession--in-Kennedy-Round--on-unmanufactured-to-1969 — Page 32

CONFIDENTIAL

TRADE POLICY DEPARTMENT

НКК 6/28

R. F.B. please

1/20/8/69

19 August, 1969

Hong Kongt

Preference on Indian Tobacco

You wrote to Terence O'Leary on 8 July about the representa- tions made by the Indian High Commission about Hong Kong's treatment of tobacco imports from India.

2. Our Legal Advisers agree with you that by signing the Geneva (1967) Protocol, (which showed the reduction of Commonwealth preference by Hong Kọng on unmanufactured tobacco with Malawi as the sole exception), the Indian authorities accepted the elimination or reduction of certain preferential margins to which they were entitled under the Trade Agreement. They cannot, therefore, now use the provisions of the Trade Agreement to question the implementation of the Kennedy Round concessions.

3. A reply on these lines is not, however, likely to find much favour with the Indians, especially as they seem to be right in claiming that the exception for Malawi was never specifically drawn to their attention, (see the correspondence between Jones and Pradhan in Geneva enclosed with Jones' Saving telegram HK/GVA/160/168 of 18 December 1968). I do not need to remind you of the recent telegrams reporting mounting resentment in Delhi over our action on cotton textiles. The question of tobacco is not, of course, directly related but I fear that an unhelpful reply to the Indians on tobacco at the moment (however well justified from a legal point of view) would merely reinforce their feeling that we are ready to disregard the Trade Agreement and their interests whenever it suits us to do so.

I hope therefore that you will agree that our reply to the Indians should be delayed for at least a short time until their feelings about cotton textiles have had a chance to simmer down and we see how things develop.

4. I am sending copies of this letter to Peter Vereker and Iain Murray in the FCO.

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(J. N. McKelvie)

Miss M. V. Muskett,

Board of Trade, Victoria Street.

CONFIDENTIAL