TNAG-0250-FCO40-286-Discussions-on-EEC-negotiations-between-officials-of-Hong-Ko-1970 — Page 92

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En the bound.

YXIT

CONFIDENTIAL

Reference....

Mr. Christofas o.. separate copies

Ar. Mellon

Hong Kong.

MR KINNEAR

HONG KONG. Dr.

K270

39

When I saw Tran on 26 November I raised with him a number of the detailed points discussed with Hong Kong officials in London on 23-24 November. The following information emerged:

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(i) Exclusion of textiles and shoes. The Commission had hesitated as to whether it was necessary to exclude woollon textiles but hid concluded that an overall exclusion of textiles was an essential' psychological element in porsuading the member states to include long Kong in the generalised preference scheme. for choos they had been mainly motivated by the consideration that their inclusion would have quadrupled the Community tariff quota and that most of this benefit would have gone not to Hong Kong but to its competitors.

Tran

(ii) Exclusion of five products on grounds of origin. The Commission did genuinely believe that Hong Kong products under these tariff headings would not meet the Yaoundé rules of origin which the Community was going to apply. I said that Hong Kong officials were not of this view. took note and said that this could be rather serious because he did not believe the member states were prepared to give Hong Kong anything on these products. If they could not be excluded on origin grounds then this could have unfortunate implications for the rest of the arrangement.

(iii) Calculation of Community tariff quotas. For products where Hong Kong was excluded (textiles, Soon and the five origin itens) Community tariff

quota would not take importe from ilong kong into consideration. For sensitive products, imports from Hong Kong would be included in toto in the calculation of the tariff quota. But the Commission was no longer thinking in terms of a special, discriminatory Hong Kong cut-off but rather of a non-discriminatory 20% cut-off point on these products for all developing countries. They had calculated that no developing country would in fact be caught by this lowering of the cut-off point from 50% except for Yugoslavia on two items; and it would mean that the enlargement of the tariff quota consequent on Hong Kong's inclusion would not benefit her competitors too disproportionately.

(iv) French attitude. The French continued to argue for a lower Hong Kong cut-off point than 20%. Jane they were only really concerned with What came to Pruneo, If they could be assured

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