TNAG-0249-FCO40-285-Effect-of-entry-of-UK-into-EEC-on-exports-from-Hong-Kong-1970 — Page 93

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already entering the shadow of the expiry of the lease of the new territories

1

in 1997) and confidence that the products of the industries can be exported.

It seems most unlikely that aid could be justified on normal economic criteria,

and in any case it is improbable that it would lead to a solution of any of

Hong Kong's likely difficulties in the next decade.

CONCLUSIONS

32.

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30.

ii.

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iii.

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iv.

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Hong Kong's rapid development in recent years, which has more than

kept pace with her fast increasing population, has been led by

exports of manufactures, especially textiles. She is, however, now

beginning to lose her competitive advantage because of increasing

wages, the second highest in Asia.

·

Hong Kong's economy is resilient, and adaptable within limits, and

she could probably face Britain's imposition of the Common External

Tariff against her.

But it would be more serious if she were excluded from the UNCTAD

Generalised Preferences Scheme, and the developed countries gave

preference to her competitors. We should, therefore, continue

!

our efforts to ensure that the USA, EEC and Japan formally give her

the benefit of generalised preferences, even at the price of some

discriminatory limitation of the quantity of her exports which can

benefit.

Above all, the most important action we should take is to try to

prevent the Common Commercial Policy developing in such a way as

to impose discriminatory quotas against Hong Kong; we should seek Hong Kove la

to achieve this by proposing that we should begin fairly soon to

explore with the Six the problems of Hong Kong's relationship with

an enlarged Community, including improvements to the Community

treatment of Hong Kong under the UNCTAD Preference scheme.

not beent

lack 7

Tacir 900 LI

V.

Hong Kong is so dependent on trade that her rising invisible

earnings cannot be expected to compensate for any real damage to

Financial aid is unlikely to provide a solution

her exports.

15

CONFIDENTIAL