TNAG-0240-FCO40-276-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 154

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CONFIMMTAL

Reference....

Hong Kong

I called on Tran in the Commission on 3 loven.ber

to discuss the state of play on liong Kong.

2. Tran began by giving me an account of the proposal which he and di Martino, his Director, were now trying to sell both within the Commission and, informally, to representatives of the member states. The formula provides for the inclusion of Hong kong in the Community's Unctad Preference scheme, subject to the following conditions:

3.

(1) All textiles and shoes would be excluded from the offer (this would account for 95 million dollars of Community imports from Hong Kong).

(ii) There would be special tariff quotas for sensitive products and these sensitive products would be defined as the 22 products on which there are in existence, in one or other of the member states, quantitative restrictions on imports from Hong Kong. (This would account for a further 30 million dollars of Community imports from Hong kong). The quotas would provide for duty free entry of 15% only of liong Kong's exports of each product to the Community; the rest would have to pay the full tariff (in certain individual member states there would also be a quantitative limit on imports of these products from Hong kong).

(iii) On everything else Hong Kong would be a full beneficiary under the Community's preference schene. This would give Hong Kong full participation in the Community's offer on chapters 1-24; and full participation in the Community's offer on chapters 24-99 except for the 22 products where the benefits would be limited within a tariff quota.

Tran said that within the Commission this solution was beginning to make a little progress. The Directorate- General for Industrial Questions (altzahn) was still being exceptionally difficult but the proposed exclusion of textiles and shoes had certainly blunted their opposition. Wellenstein was distinctly favourable to doing something for Hong kong in the context of the enlargement negotiations but seemed to prefer a formula involving the negotiation of a special Part IV Associa- tion agreement for Hong Kong. (What Wellenstein appears to have in mind is to use Article 136 of the Treaty to negotiate a Part IV Association agreement which would give Hong Kong less than duty free access on sensiti ve products but duty free access on everything else. There is apparently a precedent for limiting duty free access under the provisions of Part IV Association on the basis of this article; there are restrictions on

/Surinam

CONFIDEIAL