TNAG-0240-FCO40-276-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 155

CONFIDENTIAL.

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Surinam oil products exported to the Community). Tran emphasised that the battle on whether and if so what to do for Hong Kong was not over yet in the Commission.

4. Among the member states the situation also seemed to be evolving satisfactorily but there was still a long way to go. The Italians were extremely suspicious of any inclusion of Hong Kong in the Unctad Freference scheme but Di Martino had been talking to them and thought he had made some impression. The Germans were being very helpful. The French had so far said nothing but Tran hud himself spoken on 5 ilovember to comeone in the quai d'Orsay and the reaction had been that the exclusion of textiles and shoes made a big difference. The Benelux countries were not being particularly helpful but they would probably not block a sólution if Germany, Italy and France were prepared to include Hong Long.

5. Tran then went on to make a number of other points:

.(i) He urged very strongly that Hong Kong should

consider some form of voluntary control on the 22 products. For one thing, if Hong Kong were prepared to offer voluntary control, then this would go a long way to disarm the opposition of the Directorate+ General for Industry which was complaining that the addition of 22 new turiff quotas to the Community scheme would make it administratively appallingly difficult to handle. The other advantage of voluntary control, which Tran saw, was that it would greatly improve the chances of getting the Americans to include Hong Kong. The Community would be able to say that they were including Hong kong in their scheme subject only to the exclusion of textiles and shoes (which the Americans themselves were already excluding from their general offer). If, however, the Community had to say that Hong Kong's inclusion also involved tariff quotas on a whole list of sensitive products the americans, who had no tariff quota arrangements, would be able to argue that they could not possibly include Hong Kong without taking a disproportionate amount of the burden. But, if Hong Kong accepted voluntary control, the extent of this restriction could be concealed from the Americans; and if necessary similar voluntary control could be offered to the Americans. Tran therefore urged strongly that consideration should be given to this, pointing out that Hong Kong was not being asked to apply a voluntary control on the quantity of her exports but merely on the proportion of them that would enjoy duty free entry.

(ii) Although Tran said he was firmly in favour of an Unctad Preference rather than a Part IV solution to Hong Kong's problems, he thought that we ought also to try to keep open for the future a Part IV option. He argued that, if the Unctad Preference schone lapsed after its 10-year trial period, this would leave Hong Kong with noting. He wondered therefore whether it would not be wise for us to seek some purely formal Part IV duty free coverage, say for everything not covered by or specifically excluded from the Community's preference offer should such an offer materialise.

/This

CONFIDENT TAT.