TNAG-0289-FCO40-325-Departmental-briefs-on-Hong-Kong-1971 — Page 166

CONFIDENTIAL

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There is a strong attitude in the Colony that Hong Kong knows

best what is good for it and particularly for its rather unique

economy.

3.

·

There has been a clear emergence of a clash of intereste

in the field of international textile policy between Hong Kong

as a major exporter of textiles and the UK as a major importo.

and domestic producer: this has led Hong Kong to press for

the maximum possible freedom in the conduct of the Colony's

commercial relations and proposals providing for a dologation

of authority are now under consideration. To the extent

that liong Kong "trades up" (i̟.e. produces goods of higher quality and value) so the Colony will more and more become

u competitor of the United Kingdom both in the UK domestic

market and also in overscap markets, particularly in textilos,

9. 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 Portugueco

competition in tuxtiles). If we obtain entry into EEC,

1.

Hong Kong will almost certainly be shut out from membership on an gasociate basis and, losing its Commonwealth preference,

i

will have to compete in the UK market across the BEC's commen

external tariff.

·!

10. There has been a certain reaction in Hong Kong to the successive margors which led to the formation of the Foroiga and Commonwealth Office. Somewhat unreasoning fears woro

felt, among officials as well as unofficials, that those who handlod Hong Kong's affairs in the merged office would have

/ an inadequato