TNAG-0240-FCO40-276-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 163

L

• Confidential Стра

Note for Discussion with Mr. Marshall Green:

Hong Kong and the Generalised Preference Scheme

317

Agreement has now been reached in UNCTAD between the developed (donor) and developing (beneficiary) countries on most

aspects of a Generalised Preference Scheme for probable implemen-

tation in 1971.

2.

One major unresolved question however is the precise list of developing countries to benefit from the preference offers of the

various donors. For varying political or economic reasons, a dozen or so countries are regarded as "problem" cases, and face

exclusion from one or more donor schemes. Though by no means the most developed of developing countries, Hong Kong's competiti- veness has earned her a place on this unpublished blacklist. 3. Donor countries generally operate a principle of "burden-

sharing", which means that a beneficiary excluded by one major

donor is almost certain to be excluded by the others. We are

thus disturbed to learn unofficially that the American position

has been determined by a Presidential directive that Hong Kong will

be excluded unless other major donors include her. This would almost certainly decide Hong Kong's fate unfavourably. We would therefore press that the very minimum American position should be that of "including Hong Kong unless other donors exclude her". 4. Furthermore, this condition should not require a contribution from the Japanese, whose attitude is wholly negative for no good reason (Japan runs a large trade surplus with Hong Kong). The condition merely tempts the Japanese to exclude Hong Kong from their preferences offer in order to see the US follow suit. would conviently damage a rival in the American market. 5. If American exclusion of Hong Kong forced the EEC to follow suit, the UK would be forced to seek a solution for Hong Kong in the context of the EEC enlargement negotiations. As demandeur,

the UK would be in a weaker position to resist whatever package the EEC (with French inspiration) proposed. The result could hardly contribute towards the economically outward-looking enlarged

EEC that America would like to see.

This

16.