TNAG-0281-FCO40-317-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster-to-Hong-Ko-1970 — Page 167

CONFIDENTIAL

Our approach to Europe

10.

Another factor is the pronounced European stance

of our policy in recent years and its consequences for

Hong Kong. One of the consequences of our membership

of EFTA is that a wide range of products from EFTA countries

now enter the UK duty free whereas on some of them Hong Kong

is charged duty. (Hong Kong is particularly worried about

low-cost Portuguese competition in textiles.)

If we

obtain entry into EEC, Hong Kong will almost certainly be

shut out from membership on an associate basis and,

losing its Commonwealth preference, will have to compete

in the UK market across the EEC's common external tariff.

The Handling of 11. There has been a certain reaction in Hong Kong to Hong Kong s

Affairs

the successive mergere which led to the formation of the

Foreign and Commonwealth Office. Somewhat unreasoning

fears were felt, among officials as well as unofficials,

that those who handled liong Kong's affairs in the merged

office would have an inadequate knowledge of its problems;

or that Hong Kong's intereats would weigh lightly if they

had to be measured in the balance against the greater

interests of our relations with foreign or independent

Commonwealth countries; or that with the heavier responsibilities

falling on Ministers, they would not be able to give full

consideration to Hong Kong's particular interests. However,

frequent visits in the past eighteen months have done

something to dispel these fears and any distrust, and we

think that Hong Kong officials are now more ready to make

allowances for the short time the merged office has been operating, for the more frequent staff changes and for the

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CONFIDENTIAL