TNAG-0299-FCO40-335-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 112

CONFIDENTIAL

Hong Kong

5.

On Hong Kong, Mr. Stern thought that the most likely White House decision at this stage was to defer consideration until after legislation had been proposed and the mood of the Congress had shown itself. He believed, in view of the

predictable difficulties that the Congress would find in swallowing the inclusion of Hong Kong, that this might be a safer course than announcing from the start that Hong Kong was included, even on a restricted basis. It might be possible for the Administration to explain the issues to the Chairman of the Iouse Ways and Means Committee, and if Congressman Mills was willing there was then a hope that a modified G.P.S. could be worked out subsequently within the authority of the legislation. He went on to say that in any case a decision to include Hong Kong could not be made while it was still uncertain what the E.E.C. and Japan were going to do about Hong Kong.

6.

We pointed but that though Japan had admittedly not ret made a detailed offer, the E.E.C. had made a firm offer, with certain non-discriminatory restrictions, which the United Kingdom lad accepted on behalfof Hong Kong. We then rehearsed thousual arguments, concentrating on the economic and political consequences that would follow the exclusion of Hong Kong; the fact that Hong Kong was not seeking trade advantages but merely asking for protection against damage to its trade; and Hong Kong's willingness to join in consultations at any time to work out a formula that would protect Hong Kong from injury while providing safeguards against undue benefit. To the last point Stern said that, though consultations might well be useful, he still thought they might more advantageously take place after Congressional hearings rather

than before.

Timing

7.

Stern, who gives the impression of really. understanding what he is talking about, did not think a decisionwithin the White House was imminent; it would almost certainly await the return of Samuels (Deputy Under Secretary of State for Economic Affairs) on 12 June from a European trip (which will include the forthcoming O.E.C.D. Ministerial meeting). This was because the Peterson office would want to discuss some of the matters in the submission with Samuels and others before putting final recommendations on the decisions that were called for to President Nixon.

It was the general intention of the Administration that legislation should be introduced in the Congress in June, but this now might prove to be too early a target date. In any case it was unlikely that hearings in the Congress would start before September.

8.

We asked, with refeence both to the Caribbean countries ard to Hong Kong, how Stern thought we might best proceed if H.M.G. wished to make further démarches at higher levels. said that, within the White House, an approach to Dr. Kissinger

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CONFIDENTIAL