TNAG-0240-FCO40-276-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 59

Mr. Brind (EID)

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MTU.15/393/1

CC: Mr. Kinnear (Hong Kong Department)

Mr. Burns

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Consultations with long Kong Generalised Preferences: E.E.C.

You will have seen paragraphs 2 to 9 of the record of the third session of the talks with Hong Kong officials on 24 November, dealing with the question of Hong Kong's hoped-for inclusion in the Community scheme

of generalised preferences. As the record shows, there was disagreement between the UK and the Hong Kong side over the latter's hope (perhaps rather insistence) that HMG should somehow persuade the Community to remove

textiles and footwear altogether from their preferences scheme. Mr. Bottomley (para. 5) agreed that the matter should be put to Ministers, though emphasising that we could not advise them to accede to this Hong Kong request.

2.

Since this is a matter which is being handled as a facet of enlargement, you may wish to initiate the submission called for. The fact that the EEC's textile offer is a compensating advantage for Commonwealth 1de' S such as India and Pakistan which would otherwise suffer from our entry into the Community is perhaps the conclusive argument against the Hong Kong request.

3. We for our part would support you in advising rejection of the Hong Kong request for the following

reasons:-

(a) We have no locus standi to urge the EEC to

items from their offer (especially as we renover textiles from our own). Indeed, from the princ

of view of both self-interest (burden-shari (:) and presentation in UNCTAD, we should urge (}} donors to maximum generosity.

•

(b) Any further narrowing of the FEC offer is liable

to unbalance the delicate equilibrium between donor offers, and would strongly encourage the U.S. Congress to reject legislation to implement the generalised preferences scheme. The U.S exclusion of textiles and footwear is already balanced by the EEC's imposition of duty quotas on sensitive items, whereas the Americans now offer duty free entry for everything actually included in their scheme. We should remember that Hong Kong would be delighted with any move which made Congressional opposition to preferences more certain. But the sabotaging of the GPS would of course be a major setback for HMG, given

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