TNAG-0239-FCO40-275-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 127

NOTHING TO BE WRITTEN IN THIS MARGIN

W(B)L 51-7406

X3 @)(iv).

CONFIDENTIAL

(ii) a number of countries generally

accepted as developing have per

capita income equal to or higher

than Hong Kong.

(c) Hong Kong is "competitive"

Other developing countries, in particular 5. (1) Hong Kong is not seeking assist-

Korea & Taiwan are no less competitive than

ance in becoming competitive, but 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. The OECD) report of 1967 (see (iii) A safeguard system will be

Paragraphy (or above) recommanded' that

Anopater

the way to deal with commodities scheme and this could be applied

Considered to be competitive was by

the

to any producte-or which Hong Kong use of safeguard arrangements or by

is considered to be competitive. excepting the products altogether.

4. 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 2546 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 of raw materials for Hong Kong. She is Japan's third largest buyer and her exclusion could adversely affect Japan's

export potential.

with Japan is greater than her surplus with the USA which means that the USA is virtually financing Hong Kong's deficit with Japan.

Hong Kong's trade deficit

A Japanese decision to exclude Hong Kong which encouraged the USA and others to do likewise would clearly have adverse effects on the territory's economy and thus on

Japanese exports to Hong Kong.

CONFIDENTTAL

15.