TNAG-0298-FCO40-334-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 155

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CONFIDENTIAL

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NOTE OF MEETING WITH HONG KONG OFFICIALS HELD AT DTI 10.30 am

FRIDAY 29 JANUARY 1971

Present:

Government of Hong Kong

Mr Cater

Mr Sellers

Mr Dorward

Mr Dodge

Mr Jones

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Mr Denman

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Mr Brind

Mr Hannay

(UK Delegation to EEC)

Mr Gildea

Mr Kemmis

Mr Ingram

Mr Denman explained the circumstances which had made it necessary to seek discussions at short notice. The Community had now made its proposals for the inclusion of Hong Kong in its Generalised Preference Scheme and it was necessary to respond without delay. There were political risks in allowing the Community offer to lie on the table for too long a period and delay in response to these proposals could have reactions in other countries affecting their offers. This could be particularly true of Japan and the USA. Mr Cater thanked the UK team for the efforts so far made on Hong Kong's behalf. The celebration of the Chinese New Year had some- what delayed the response of the Hong Kong Government.

In addressing itself to the Community's proposals the Hong Kong Government was primarily concerned that there should be no discrimination against the Colony in favour of such competitors as Taiwan and South Korea. Hong Kong was concerned to protect its trade interests in the existing and enlarged EEC and aimed to ensure that, as far as possible, the operation of the Generalised Preference Scheme did not bring with it harmful consequences in other important markets (particularly the USA).

2.

In the course of discussion the following points were made:

(a)

It was recognised that Hong Kong is not satisfied either about the treat- ment accorded to individual items or the general level of the Community offer.

However, in the UK's view there is no scope for securing improve- ments at this stage. Insofar as the EEC Commission was concerned the offer represents a very considerable achievement which would evoke a good deal of hostility from other recipient countries in the 77.

The 20% "cut-off" figure represented a very considerable improvement on the 5% originally mooted. We knew that attempts within the Community to improve on this 20% figure had met with no success, Furthermore, the Community was not disposed to believe that the US authorities regarded their offer as inadequate from the point of view of "burden sharing", Since it was virtually certain that the Community could not be persuaded to improve its offer any attempt we made to re-open the discussion would undoubtedly prove completely counter-productive. The time for seeking improvements could undoubtedly come when the UK was a member of the enlarged Community. The scheme's annual review would provide the appropriate opportunity.

(b) The Community's offer was a considerable improvement on its original bid.

It was a helpful sign that the "cut-off procedures" for sensitive products are to be operated on a non-discriminatory basis. It would be important to ensure that the rules of origin envisaged by the Community should also

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