TNAG-0240-FCO40-276-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 34

CONFIDENTÓ

2

GOING

are

These new argument aven't they

The Prime Minister agreed that there was heavy

pressure on the U.S. Administration.

le thought that

President Nixon bimself was not protectionist by nature

and wanted to follow a liberal policy. lie was relieved

to hear that Mr. Sato was going to speak to the President

again and he hoped that the problem could be resolved.

Mr. Sato commented that he could not promise that the

problem would be resolved but he would certainly do his

best. It was

case where progress depended on mutual

concessions.

The Prime Minister referred to the British

Government's wish to broaden Anglo/Japanese trade and

particularly the problem of whisky and woollen goods.

Mr. Sato replied that he hoped that import liberalisation

would be accomplished by the end of the year. Tariff

reductions would take a little longer because of the need

to put measures through the Diet.

The Prime Minister raised the question of Hong Kong.

lle said that we felt strongly that Hong Kong should be

included in the generalised preference scheme. Hong Kong's

position was not different from that of Korea and Taiwan,

He hoped that Japan would look sympathetically at the

problem.

Mr. Sato said that this was a very difficult matter

for them largely because of Hong Kong's tariff arrangements.

Ile also referred to the fact that the Japanese yen was

freely used in Hong Kong and the yen conversion rate in

Hong Kong affected Japanese trade. There were also cases

where Japanese products were sold in third markets disguised

as Hong Kong goods. This could be to Japan's, disadvantage

when they were calculated against the total permitted

level of Japanese imports.

CONFIDENTIAL