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demands to the six on Hon, Kong's behalf; but this was subject to Britain's own views. If Britain decided that she would accept a straightforward arrangen.nt for the progressive application of the CT to Hong Kong's exports, Hong Kong would not object to that conclusion; but they would hope in that case that Britain would seek the longest transitional period obtainable". r. Cowperthwaite also stressed the desirability, in Hong Kong's eyes that HG should issue a unilateral declaration of continuing responsibility for Hong Kong (see paragraph 4(f) above).
Hong Kong's position in 1970
8. Attached to this brief as Annex I is a Paper (AO(70)41) on Hong Kong's position as regards our C negotiations, prepared by officials for Linisterial consideration.
9.
The conclusions of the Paper are:
(1) 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. Sho is, however, now beginning to lose her competitive advantage because of increasing wages, the second highest in Asia; (ii) Hong Kong's economy is resilient, and adaptable
within limits, and she could probably face Britain's imposition of the CT against her;
(iii) 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, the EEC and Japan formally give her the benefit of generalised preferences, even at the price of some discriminatory limitations of the quantity of her exports which can benefit;
(iv) 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 to achieve this by proposing that we should begin fairly soon
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