TNAG-0299-FCO40-335-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 91

prevailed at an inter-Ministerial meeting in Tokyo at

official level on 28 May. This decision goes com-

pletely contrary to the message from the Prime Minister

delivered to Mr Sato on 27 May, and of which some of

the participants must have been aware. The Foreign

Ministry have told us that it is unlikely that we shall

get a formal reply to the PM's message before the

officials' recommendation comes before the Japanese

Cabinet on 20 June. The talks with Mr Aichi are there-

fore the last effective opportunity to apply pressure

to the Japanese to extend a worthwhile GPS offer to

Hong Kong ab initio. HM Ambassador at Tokyo urges that

we perist in this attempt.

4. It would therefore be helpful if the Secretary of

State were to express forcibly to Mr Aichi HMG's sur-

prise and concern that Japan, whose GPS is in any case

less generous in scope than that of the other major

donors, should, notwithstanding the PM's message and

Mr Sato's statement in the Diet, apparently still find

it too difficult to contemplate the inclusion from the

outset of Commonwealth dependent territories as bene-

ficiaries. Among these, only Hong Kong has any signi-

ficant industrial exports, yet a deliberate discrimina-

tion against Hong Kong would be especially regrettable

because:-

a. Japan exports four times more goods to Hong

Kong than she imports from Hong Kong.

b. The Japanese example is bouna to influence the

decision of other donors, notably the Americans,

against Hong Kong. Inevitably it will appear

that Japan's action has been motivated by a

desire to injure a competitor in the US market.

2 CONFIDENTIAL

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