â).
sion on Hong Kong, ie relegation to
hypothetical second stage of inclu-
sions, will not alter the repercusi
set out in (b), above. It would
merely be a form of lingering death:
with a less obvious, but no less o
aaverse effect on the American deci
ion than a Japanese exclusion of H
Kong outright.
Some sectors of Japanese industry may view with equanimity the prospect of economic difficulties in Hong Kong and a consequent reduction of the ter- ritory's imports from Japan, so long
as this were balanced by a reduction of Hong Kong competition in the U.S.
market. It is by no means certain
that this would profit Japanese indust
in the long term. In any case, it would be politicalshort-sighted of th- Japanese Government to acquiesce in a
manoeuvre which risks introducing fur- ther and wholly unnecessary instability
in the delicate South-East Asian theat.
We must therefore ask the Japanese Governmer to consider post seriously the request which The Prime Minister has recently made to Mr F for the inclusion of Hong Kong and ther ish dependencies from the outset in the Japa; se scheme of generalised preferenges.
• 3
CONFIDENT IAL
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