TNAG-0281-FCO40-317-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster-to-Hong-Ko-1970 — Page 14

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EEC and Hong Kong

CONFIDENTIAL

12. Mr. Rippon asked what he should seek for Hong Kong when he went to Brussels. The Financial Secretary said that this was still being considered but that a resumption of discussions in London, discontinued since 1967, had been agreed. He understood the first round would probably take place in November and Hong Kong would then come prepared with its proposals. At the moment the number one issue was that Hong Kong should not be discriminated against in the GPS. It seemed to him that the tendency in Whitehall over the past few days had been to sweep this under the carpet which he thought unwise for the reasons he had already given. Mr. Tickell said that Her Majesty's Government would be making another approach to the EEC on Hong Kong and preferences on 15 September and a second had already been made to Japan. The Financial Secretary said there was also the question of association for Hong Kong with the EEC. It was Hong Kong's preliminary view that, if Hong Kong insisted that this matter be raised, it could result in disadvantageous conditions being demanded by the EEC of Hong Kong. However, he could see circumstances where to raise the association issue could be advantageous. It was really a matter of judgment and timing. Mr. Rippon said that the previous request was still on the table and could therefore be referred to if it seemed desirable to do so.

13. The Financial Secretary also raised the possibility of the United Kingdom providing some financial compensation to Hong Kong for the loss of Commonwealth Preference, possibly in the form of returning the duty paid as a result of the common external tariff. He said that such a payment was not unknown; the Americans made payments in this form to Puerto Rico. Mr. Rippon thought this would be a very difficult pill for the United Kingdom to swallow and Mr. Tickell pointed out that the EEC rules required that 90 per cent of duties collected were to be paid to the Community.

British tactics during EEC negotiations

14. Mr. Haddon-Cave asked if any decision had been reached on the tactics the United Kingdom would adopt in the negotiations; whether she proposed to get in quickly once a few basic conditions had been met or to work her way in gradually. Mr. Rippon replied that it was intended to avoid an insistence that all the United Kingdom problems should be settled before entry. Many of these had, in any case, not been settled by the Community itself; there were, however, certain major ones such as the financing arrangements, Commonwealth sugar and New Zealand's dairy products for which agreed solutions before entry were necessary. The United Kingdom was not in a position to lay down a lot of conditions.

British chances

15. Mr. Haddon-Cave asked what Mr. Rippon thought the chances were this time of Britain joining. Mr. Rippon thought they were better than previously and could only fail as a result of a veto which seemed unlikely, or of a complete failure on the part of present members to come to agreement on agricultural financing and New Zealand dairy products. He was quite sure that the long-term advantages were overwhelming and that Hong Kong also would benefit in terms of trade as a result of the expanded and expanding markets of the EEC. It was, however, possible that the problems in the short term might be too great to be tolerated. These included those affecting members of the Commonwealth. He was convinced the United Kingdom would not "sell them down the river ". Mr. Cater said that it was easy to over-emphasise the point of being much better off in the long term; in the interim, a lot of people could suffer.

CONFIDENTIAL