TNAG-0281-FCO40-317-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster-to-Hong-Ko-1970 — Page 136

NOTHING TO BE WRITTEN IN THIS MARGIN

CONFIDENTIAL

face a duty on entry to our market, and you

will know that we have announced our intention

of imposing a 15% duty on Commonwealth cotton

textile imports from 1 January, 1972. Clearly.

the application of the CET albeit at its

relatively moderate post-Kennedy Round level -

would be unwelcome for your other exports to

Britain. But I was interested and impressed

to learn that the detailed study done for the

Hong Kong Trade and Industry Advisory Board

in June indicated that the results of the

CET for goods other than textiles might be

less serious than had been previously envisaged.

Common Commercial Policy

6. A more serious danger, it seems to me,

is that in addition to the CET, the Six may

move towards a Common Commercial Policy in

relation to Hong Kong by adopting a common range

of quantitative restrictions. Such a move

would be in conflict with the provision in

Article XXIV of the GATT that the formation

of a customs union or free trade areas should

not lead to the intensification of existing

barriers to trade, and as non-members of the

EEC we should certainly resist such action.

But we must recognise that our arguments might

not prevail. We must recognise too that as

members of an enlarged EEC we shall be expected

to conform to the Common Commercial Policy.

UNCTAD Generalised Preferences Scheme

7. We are of course hopeful that your

difficulties can be reduced by the development

of the UNCTAD preferences scheme, and you

know that we have recently made representations