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The second point of relevance is that the attitude of the business community in Hong Kong seemed to me, at any rate on the impression I could form in a quick visit, shrewd and realistic. I attended a meeting of the Trade and Industry Advisory Board (the gathering of businessmen and merchants with whom the Hong Kong Government keeps in close touch). They accepted without much ado that on our entry into the Communities we should have to start imposing the CIT against imports from Hong Kong that is if the UNCTAD generalised preferences scheme did not help them. What they were mainly concerned to find out was how long they would have to adjust. To this end they asked about the timing of the negotia tions. I said that no one could foresee how long this would take. There were some in Brussels who talked about a conclusion, if successful, at the end of 1971 or carly 1972; this could lead to our formal entry at the beginning of 1973. All this was very speculative and we could give no firm view. But this gave some very approximate idea of the likely time scale. I added that we had asked for an initiation period of a year. length of the transitional period I refused to be drawn; I simply referred to several years. One of the businessmen there pointed out, I thought very reasonably, that Hong Kong would by then have had a good deal of notice, had already diversified its trade and while they would not of course welcome having to sell to the UK across the Common Tariff he thought that on the tariff alone they could manage.
On the
5. In discussion later with the Hong Kong Government people they pointed to the fact that if we applied the CFT a certain proportion of their exports to the United Kingdom (some 14 of the total and including such products as cutlery, rubber footwear, slide fasteners etc) would be particularly vulnerable. But a study carried out for the TIAB in June concluded that "Hong Kong has on the whole become less dependent on the British market. The effects of loss of preferences are there- fore likely to be less serious than previously envisaged. In many cases well developed performance in other markets, especially the United States, tends to indicate ability to surmount tariff barriers and compete successfully with other suppliers". John Cowperthwaite mentioned the possibility that we might refund to Hong Kong the duty receipts which we would levy under the CET. I said that at this suggestion Raymond Bell would fall fainting from his chair; it was not pursued.
6. What worried the Hong Kong people much more than tariffs was quotas. Tariffs they did not like but at the sort of level of the CET they could surmount. What really worried them was the prospect of tariffs and quotas. In the long tern this clearly came down to the UK doing its best as a member of the enlarged Community to ensure that the common commercial policy was as liberal as possible. But the issue might well arise in the short term in one of two ways. Either rapid progress would be made in the formulation inside the Six of a common commercial policy which would be restrictive insofar as imports from Hong Kong were concerned; we could
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