CONFIDENTIAL
(c) Hong Kong at present enjoys Commonwealth preference.
The present U.A. preference offer of duty free entry
3.
to all developing countries decreases Hong Kong's
trading position vis-à-vis her close competitors.
She would be doubly handicapped if excluded by other
donor countries.
We have the following observations on the reasons which
have been advanced in favour of excluding Hong Kong:-
(a) Hong Kong is a territory and therefore the responsibility
of the metropolitan power
(1) We regard the distinction between "territories" and
"countries" as irrelevant in the context of economic
development.
(11) There is no practical alternative to Hong Kong's
dependent status.
Hong Kong remains a dependent
territory for political reasons.
(111) Hong Kong is a separate customs area and derives
no specific advantage from the GATT as a dependent territory
Most of her existing preferences in the U.K. will
disappear if the U.K. offer is maintained.
(iv) An OECD report on preferences (the report of the
Group of Four) which Ministers broadly endorsed in 1967
stated that "any country, territory or area may claim
developing status"
•
(b) Hong Kong is not "developing"
(1) With the exception of a limited range of manufactures,
Hong Kong is far closer to the concept of a developing
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/ country
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