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(c)
4.
country than a developed one.
(11) A number of countries generally accepted as
developing have per capita income equal to or higher
than Hong Kong.
Hong Kong is "competitive"
(1)
Other developing countries, in particular South
Korea and Taiwan are no less competitive than Hong Kong.
What Hong Kong seeks is the avoidance of discrimination
against her alone.
(ii) The total exclusion of a country on grounds of
competitiveness was rejected by the OECD in 1967.
(iii) The OECD report of 1967 (see paragraph 3 (a) (iv)
above) recommended that the way to deal with commodities
considered to be competitive was by the use of safeguard
arrangements or by excepting the products altogether.
In recent years Japan has been running a large and rapidly
mounting trade surplus with Hong Kong (US $295 million in 1967;
US $413 million in 1968 and US $546 million in 1969). In 1969
Japan only absorbed 3.4% of Hong Kong's total exports whereas
the US took 42, and the EEC 10%
Japan is an important source
She is Japan's third largest
of raw materials for Hong Kong.
buyer and her exclusion could adversely affect Japan's export
potential. Hong Kong's trade deficit with Japan is greater
than her surplus with the USA which means that the USA is
virtually financing Hong Kong's deficit with Japan. A
Japanese decision to exclude Hong Kong which encouraged the USA
and others to do likewise would clearly have adverse effects
CONFIDENTIAL
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