TNAG-0239-FCO40-275-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 53

CYPHER/CAT A

PRIORITY TOKYO

CONFIDENTIAL

TO FOREIGN AND COMMONWEALTH OFFICE

TELEGRAM NO.765

16 OCTOBER 1978

260

26

266

CONFIDENTIAL. 1690252. [NEUTRAL]

ADDRESSED TO F C O TELEGRAM NUMBER 765 OF 16 OCTOBER RFI TO HONG KONG, WASHINGTON, UKDEL EEC BRUSSELS AND UKMIS GENEVA.

MY TELEGRAM NUMBER 752 (NOT TO ALL).

HONG KONG AND UNCTAD GENERALISED PREFERENCES.

I TOOK MR. KAN, THE LEADER OF THE HONG KONG TRADE MISSION

TO JAPAN, TO PAY A COURTESY CALL ON THE FOREIGN MINISTER

ON 15 OCTOBER. WE TOCK THIS OPPORTUNITY OF RAISING THE ISSUE

OF HONG KONG'S EXCLUSION FROM THE GENERALISED PREFERENCES

SCHEME. COMPLEMENTING MR. ROYLE'S EMPHASIS ON THE POLITICAL

DANGERS OF EXCLUSION, MR. KAN CONCENTRATED ON THE DAMAGE

WHICH IT MIGHT DO TO JAPAN'S PROSPEROUS TRADE WITH HONG KONG.

TAKING UP A REMARK BY MR, AICHI ABOUT HONG KONG BEING JAPAN'S

THIRD MOST IMPORTANT EXPORT MARKET, MR. KAY EMPHASISED THAT

EXCLUSION FROM THE PREFERENCES SCHEME MIGHT WELL MEAN THAT

HONG KONG'S PURCHASES FROM JAPAN WOULD FALL SHARPLY. WAGES

WERE RISING ALMOST AS FAST IN HONG KONG AS IN JAPAN, IN CONTRAST WITH HONG KONG'S TWO MAIN COMPETITORS, SOUTM KOREA AND TAIWAN. IF ON TOP OF THIS THESE TWO COUNTRIES WERE TO GET

THE BENEFIT OF INCLUSION IN THE PREFERENCES SCHEME WHILE HONG

KONG WAS KEPT OUT, HONG KONG'S TRADING POSITION WAS BOUND TO SUFFER AND THIS IN TURN WOULD INEVITABLY MEAN REDUCED

BUYING OF RAW MATERIALS FROM JAPAN.

2. MR. AICHI REPLIED THAT HE FULLY UNDERSTOOD THE IMPORTANCE

OF THE ISSUE AND SHOVED SOME SYMPATHY FOR HONG KONG'S ATTITUDE,

BUT HE ADDED THAT JAPANESE INDUSTRY WAS VERY CONSERVATIVE IN ITS THINKING AND WAS AFRAID OF BEING OVERWHELMED IN CERTAIN

SECTORS OF THE INTERNAL JAPANESE MARKET IF HONG KONG'S EXPORTS

TO JAPAN WERE TO GET THE ADDITIONAL ADVANTAGE OF GENERALISED

PREFERENCES. MR. KAN AND I BOTH POINTED OUT THAT THERE WAS

SPECIFIC PROVISION IN THE UNCTAD SCHEME FOR DEALING WITH

аккыр

/THIS

CONFIDENTIAL