TNAG-0250-FCO40-286-Discussions-on-EEC-negotiations-between-officials-of-Hong-Ko-1970 — Page 118

CONFIDENTIAL

CONSULTATIONS WITH HONG KONG: 23-25 NOVEMBER

GENERALISED PREFERENCE SCHEME

BRIEF NO. 2:

33

BACKGROUND

Hong Kong's inclusion as a beneficiary in the UNCTAD General-

ised Preference Scheme has already been mentioned in a separate

brief on the enlargement negotiations. The prospect of Hong Kong

as a burden exclusively on the enlarged Community is the only

lever we possess to achieve Hong Kong's inclusion (even partially)

in the EEC preference scheme. This should gain the territory

admittance to the US preference scheme, and this is without ques-

tion the most important aspect from Hong Kong's point of view, as

42% of her exports are to the American market, and less than half

of them are in the textile and footwear categories excluded from

the US preference scheme. Failure to obtain access to the EEC's

scheme will certainly disqualify Hong Kong from the US scheme,

and presumably from the UK scheme also when this is merged with

the EEC scheme after enlargement. It is therefore clear that a

successful outcome of the EEC/Hong Kong GPS issue is vital to the

colony's economic future.

2.

The situation at present

(a) EEC. The point reached with the EEC has been described

in the main brief on our negotiating position. The Com-

mission are considering product exclusions and voluntary

control measures put to M. Tran by Mr. Jones. We cannot

be certain that the EEC will find it possible to accept

a compromise on the lines of the Jones proposals although

there have been unofficial indications that something on

these lines might be acceptable (Mr. Denman's conversa-

1

CONFIDENTIAL