TNAG-0240-FCO40-276-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 111

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PA

Kinir

TOKYO

27 November 1970

Preferential Tariffs (i)

339)

Enki &p..

AL4/12.

You will have seen from our telegram no. 849 of 25 November that the Japanese have still not taken a decision on their final beneficiary list. You will also recall that we have been pressing the Japanese to give us come clearer indication of what products, apart from textiles, would be seriously threatened by any extension of the preferential arrangements to imports from Hong Hong. In other words, we have been concentrating upon the potential threat to their domestic industry as the reason for Japan'a refusal to include Hong Kong.

2. There is, however, another side to the question of Japan's difficulties over including Hong Kong to which we may not have been attaching sufficient weight, This is their fear that by accepting Hong Kong they may help to bring about Hong Kong's inclusion by the US, which would enhance Hong Kong's competitiveness in the US market, and so undermine the market share of certain Japanese exports.

I enclose a copy

of an article which has just appeared here in the English language magazine "The Oriental Economist" which gives considerable play to this second argument. You will see that the preamble to the article categorically suggests that intensification of competition by beneficiary countries in the North American market is of more concern to Japan than those countries' competitiveness in Japan itself. This is, of course, by no means a new argument, but we have tended to consider it as one of very secondary importance since textiles are in any case excluded from the US offer (in this respect, table 1 of this article seems incorrect in only listing textile fibres" as excluded by the US). This article draws attention to a number of competitive exports from Japan and Hong Kong apart from textiles. For instance, there seems to be considerable anxiety about competition from Hong Kong's toy exports to the United States. Toys are only one of 11 items listed in table 2 of this article in which Hong Kong is Japan's principal competitor in the US, and which appear to be the major objects of concern for Japan in assessing the likely effects of Hong Kong's indecision on their position in the US.

3. G. Britten, Esq., Trade Policy Dept., F.C.O.

:

Ак

Copics:

345

(P. G. A. Wakefield) Counsellor - Commercial

J.A.L. Morgan, Esq., F.E.D., F.C.O. A.C. Buxton, usq., UKMIS Geneva A.F. Maddocks, Esq., Hong Kong Miss C. Pestell, OECD Paris

We Camis

D.H. Hannay, Esq.,' UTDEL EEC Brussels B.W. Meynell, sq., Washington

CONFIDENTIAL,

here:

T.1.

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