TNAG-0250-FCO40-286-Discussions-on-EEC-negotiations-between-officials-of-Hong-Ko-1970 — Page 17

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EEC domestic

industry would no doubt ensure that the quota was smaller, not

larger.

7.

However, this too could be clarified shortly.

As regards the items in paragraph 3(ii) of Codel 229, Sir J. Cowperthwaite said that these also posed problems of duty quota calculation. If all Hong Kong Performance was included in the calculation basis while the 20% cut-off ceiling limited her duty free access, this too would mean increasing the access for her rivals. It was agreed that information should be sought on this at the appropriate time. Sir J. Cowperthwaite made it clear that Hong Kong preferred a high cut-off point and a long list of sensitive items rather than a short list and a low cut-off. Mr. Jones added that Hong Kong's real aim as with the proposals to the US, was in duty free access for existing

trade.

Mr. Hannay said that the EEC had originally consideered treating Hong Kong's performance as the basis for her partial duty free quota, but had now switched to the idea of a cut-off

They also within the general duty quota for all beneficiaries. placed importance on Hong Kong operating the quota from her end;

Sir this would be helpful presentationally vis-e vis the USA. J. Cowperthwaite agreed that this did not present any problems.

8.

On paragraph 3(iii) of Codel 229 the Governor and Sir J.Cowperthwaite both expressed their bafflement at exclusions on Rules of Origin grounds, which they said were far more doubtful on these items as manufactured in Taiwan and South Korea. Possible explanations offered for this action were, that either the Yaounde rules of origin were inadequate for sophisticated manufactures, or that it was simply a device to exclude a major producer of these items without having to increase the list of sensitive items and duty quotas. Sir J. Cowperthwaite said it was historically a step backwards for Hong Kong to be classed as an assembly factory for such items, and it was more objectionable to be excluded on these grounds than on competitive grounds. Hong Kong industry would not acquiesce in such a classification, which could be and would be challenged at the appropriate time. Mr. Denman and Mr. Lam suggested that this group of items should be contested and the Chairman pointed out that if the EEC sought to adopt this technique, they would probably require Hong Kong

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