TNAG-0281-FCO40-317-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster-to-Hong-Ko-1970 — Page 112

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SECURITY CLASSIFICATION

DRAFT

Top Secret.

Secret.

Confidential.

To:-

Type 1 +

From

Telephone No. & Ext.

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Unclassified.

PRIVACY MARKING

.In Confidence

Department

1. The question of Hong Kong's access to an enlarged Community, including Britain, is one of the problems I have come here to discuss.

I am

certain that Hong Kong can, and will, flourish in conditions of even the keenest competition; what we want to do is to ensure fair terms on which Hong

Kong can compete.

2. Yes.

Naturally we have examined this problem with the greatest care. Of course we cannot, at this stage, be certain what precisely will be the nature of the problem involved in advance of any

substantive discussion of this with the Six.

3. The Six have, in the past, shown unwillingness to regard Hong Kong as a candidate for association. But I do not wish to prejudice the outcome of negotiations which have not yet begun.

4.

There may well be problems of adjustment, particularly in the short term. Certainly there

will be for Britain herself. But I understand that your Trade and Industry Advisory Board, in a study done earlier this year, concluded that the results

of the application of the Common External Tariff

on Hong Kong exports, other than textiles, to Britain, would be likely to be less serious than had previously been envisaged. In the long run an enlarged, Community, including Britain, could offer enormous chances for Hong Kong's exports.

5. The factors influencing our decision to negotiate were, and are, at least as much political as economical. But it is certainly true that the change in British and Commonwealth trading patterns has been a significant factor. Only 11.6% of your

exports now go to Britain, and the proportion of

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