TNAG-0249-FCO40-285-Effect-of-entry-of-UK-into-EEC-on-exports-from-Hong-Kong-1970 — Page 138

CONFIDENTIAL

in 1957, who were associated under Part 4 of the Treaty of

Rome, Hong Kong will be treated by the enlarged Community as

an outside country and have to face the full Common External

Tariff on her exports. In the United Kingdom market, she

will lose very little on man-made fibre textiles where there

is already a UK tariff, nor on cotton textiles since we

shall have replaced our duty-free quotas controls with a

simple tariff in January 1972. On her other trade, however,

she will not only lose duty-free entry into the UK but will

also lose preference against all her foreign competitors

and face a preference against her in favour of Western

European suppliers. However, we do not regard this as

likely to have any serious effect on the volume of Hong

Kong's exports to Britain, though it will reduce the prices

they can charge and hence the profitability of their

industries.

D.

The Generalised Preferences Scheme

14. Though we are making representations to the United States

and the EEC for the inclusion of Hong Kong as a beneficiary

of the UNCTAD Generalised Preferences Scheme, and this would

follow from the principle of "self-election" agreed in OECD

some time ago, we have little hope that our representations

will be successful. As stated above, Hong Kong is

sufficiently competitive not to need preferential free entry

for her manufactured goods. What is more disturbing is

that the benefit of the scheme is likely to be extended

to her main competitors, Taiwan and South Korea. This

competition will be limited to the extent that the exports

of Taiwan and Korea which compete with those of Hong Kong

are on the EEC sensitive list and are limited by small

/duty