TNAG-0250-FCO40-286-Discussions-on-EEC-negotiations-between-officials-of-Hong-Ko-1970 — Page 16

4.

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more alarm about Hong Kong's competitive power,

and

(a) The Chairman and other speakers pointed out that if

other countries were to exclude Taiwan and South

Korea, which were strong American interests, the

USA, which was after all Hong Kong's main preferences target, would be unlikely to include Hong Kong.

With regard to (iii), Sir J. Cowperthwaite suggested that Hong Kong should be excluded only on those textiles items where she enjoyed a large share of the EEC market, but r. Hannay pointed out that what progress had been achieved so far was because of the attraction of a total exclusion on textiles and

shoes. Picking at the edges of this proposal could well cause it to fall apart altogether. Mr. Lam and Mr. Denman stressed the EEC reluctance to get involved in further complications on textiles. The main objective was to get enough from the 30 to induce the Americans to follow suit.

5.

As for the rider on (iii) the Hong Kong proposal that textile exclusions might be reversed in the light of evidence damage (Hong Kong officials quoted the example of the Australian preference scheme, which allowed for such reversals) was found reasonable so long as it was restricted to the periodic reviews of the GPS. The Chairman suggested that when the EEC put to us their proposals on Hong Kong, we could then introduce such conditions as part of our reaction. The Chairman summed up this part of the discussion to the effect that of the suggestions advanced by Hong Kong, only the periodic review seemed really practicable. The Governor stated that he could not accept the arguments against the exclusion of textiles and footwear from the EEC offer.for all beneficiaries. The Chairman replied that in the last resort it would depend on Ministers, but that advice in favour of such a course could not be offered to them. However, the Governor's disappointment would be clearly noted.

6.

Mr. Cater raised a technical point of importance to Hong Kong, namely that where the territory was not a beneficiary in the

30 scheme, as in toxtiles and footwear, her performance should not be included in the calculation of the corresponding duty quota. This, if it occurred would be to enlarge the quota for the benefit of her competitors. Mr. Hannay said that we had no information on EEC intentions on this point, and it was unlikely that they had devoted thought to it yet. The Chairman observed that logic would surely not permit quota calculation in the manner Hong Kong feared.

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