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WE DO NOT ON THE OTHER HAND FEAR SUCH A REACTION IN THE CONTEXT OF GENERALISED PREFERENCES BECAUSE OF THEIR VERY GENERALITY.
WE CONTINUE TO HOLD THIS VIEW THAT WE SHOULD AVOID GIVING THE E E C AN EXCUSE TO DEMAND A QUID PRO QUO - IN SPITE OF LUR GENERALLY IMPROVED RELATIONSHIP WITH THE E E C WHICH HAS MADE CUR POSITION LESS EXPOSED AND VULNERABLE THAN IT WAS IN 1962.
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WE ARE SUSPICIOUS OF THE MOTIVES OF THE E E C, IN PARTICULAR THE FRENCH, IN HINTING THAT A DEGREE CF PREFERENCE MAY BE ACCORDED HONG KONG IN THE COURSE OF THE ''ENLARGEMENT' NEGOTIATIONS. IF, OF COURSE, THE MOTIVATION IS NEITHER MERELY TO POSTPONE THE ISSUE NOR TO DEMAND AN IMPOSSIBLE QUID PRO CUO BY WAY OF RESTRICTIONS ON HONG KONG TRADE BUT, AS WE BELIEVE DENMAN HAS SUGGESTED, TO SECURE CONCESSIONS FROM BRITAIN RATHER THAN FROM HONG KONG, THEN WE WOULD NATURALLY TAKE A RATHER DIFFERENT VIEW, PROVIDED, OF COURSE, THE CONCESSIONS WERE SUCH AS BRITAIN COULD
CONTEMPLATE.
5.
WE WOULD AGREE THAT, SHOULD WE REACH A STAGE WHERE THE E E C,
JAPAN AND US A HAD REACHED AND ANNOUNCED A FINAL DECISION TO EXCLUDE HONG KONG THEN CLEARLY IT WOULD BE NECESSARY TO RAISE THE
ISSUE IN THE ENLARGEMENT NETOTIATIONS. BUT WE HAVE NOT
REACHED THIS STAGE.
6. FOR ALL THESE REASONS WE CONSIDERED, IT TACTICALLY UNWISE TO CALL FOR EARLY DISCUSSIONS OF HONG KONG'S RELATIONSHIP WITH
THE ENLARGED COMMUNITY. WE REALISE THAT WHAT HAS ALREADY BEEN SAID ABOUT THIS CANNOT BE UNSAID BUT WE WOULD HOPE THAT NO FURTHER PRESS- URE WILL BE APPLIED FOR SUCH CONSULTATIONS AND THAT SEPARATE ACTION ON GENERALISED PREFERENCES WILL CONTINUE. FURTHER TACTICS ON ENLARGEMENT NEGOTIATIONS MIGHT BE BEST DISCUSSED AT THE CONSULTATIONS YOU HAVE PROPOSED IN LONDON TOWARDS THE END OF NEXT MONTH.
(FCO PLEASE PASS IMMEDIATE TO ALL)
SIR H.NORMAN -WALKER [REPEATED AS REQUESTED]
EUROPEAN ECONOMIC AND POLITICAL
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