CONFIDENTIAL
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50% limit leading to exclusion for the product in question provided this figure applied to all beneficiaries which hit it.
9. Di Martino replied that he knew all these arguments and he seemed personally to be in general agreement but (he threw up his hands), the member states would not accept the competition. Even the Germans were worried about umbrellas (I said this was a special case and they had Article XIX of the GATT available in the last resort. Hong Kong could be excluded on umbrellas). He also added that, if Hong Kong were included, the sensitive list (on which duty quota ceilings will be imposed automatically) would need to be considerably increased.
10. I added that nevertheless the point I had made about the U.S. was a valid one. In the last resort, the U.K. was responsible for Hong Kong and she would have to carry that respons- ibility into the enlarged Community. If this attitude was persisted in by the Six it would make the enlargement negotiations considerably more difficult. Di Martino implied that he agreed but what could he do.
11.
I also had a short conversation with Laloux (Belgium) who had been reading a "Le Monde" feature on Hong Kong which appeared that day. He had not realised how much Hong Kong was dependent on the U.S. market and therefore how important it was for Hong Kong to have preferences there. I explained that that was the main point and gave him the usual argument about where Europe's interests lay. He commented that the U.K. decision to exclude all textiles would not help Hong Kong's case with the EEC.
United States
12.
I managed to have a go at Leary at a lunch the U.K. delegation gave the U.S. delegation during the Ad Hoc Group meeting. He is, however, a fairly cagey Civil Servant who gives little away.
He said that the U.S. minimum list was "the Group of 77 plus Taiwan" and that others were being considered on a case by case basis. He confirmed that the "Hong Kong formula" was with the President. I then told him that, in contrast to Taiwan and Korea, Hong Kong had never cost the U.S. a cent in aid but that, on the contrary, it had been of considerable benefit to her in one way or another. He (Leary) must realise the damage to Hong Kong that would inevitably result from discrimination, opposition to which used to be a cherished American doctrine. Leary took all this poker faced and said that the problem was Hong Kong's "image", especially with Congress. He asked how we were getting on with the EEC and Japan and I gave some temporising reply. The position is, of course, that things are now way above Leary's level and we cannot expect much help from him at the present stage.
13. I had a bit more success with Cronk and with Fox (Commerce Dept.) at the Trade Committee. I said that Cronk must be fully au fait with the Hong Kong position from his contacts with Hermann (he agreed). I then pointed out that what worried us most was the possibility of discrimination in the U.S. market in favour of Taiwan and S. Korea which could have serious consequences for Hong Kong trade. Cronk said that as of then the President had not made his decision on Hong Kong but Fox chipped in to add that they fully understood the worries of Hong Kong and would still try to do something about it. But because of Congress the U.S. could certainly not do anything if the EEC were to exclude Hong Kong and the same went for Japan. I replied that we were working on the EEC and Japan but the latter was really a pretty hopeless case. They both then said that the real problem was the EEC.
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