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at a later stage candidate countries which are not members of the Group of 77. The United Kingdom would obviously take account of any resultant additions to the E.E.C. list in considering any future modifications of our beneficiary list, which would in any
case have to be harmonised in due course with that of the E.E.C. as part of the process of adaptation (see paragraph 8 below).
Adaptation to the E.E.C. Scheme
8.
It is possible that some Governments may be uncertain about the relationship between the E.E.C.'s scheme and ours in view of the fact that we are negotiationg for entry into the E.E.C. It is true that the two schemes are designed to operate in different ways. The principal difference is that the Community will be applying duty-free quotas for industrial items which they regard as "sensitive", and will not permit any one beneficiary to have more than a specified share of these, quotas. We on the other hand shall be offering duty-free entry (or in one or two cases tariff reductions) on all industrial products in our scheme without any ceiling, though we exclude altogether certain products, e.g. most textiles, which are in the E.E.C. scheme. We retain however freedom to withdraw or modify any concessions which cause or threaten serious injury to domestic producers should this be necessary to protect them. We recognise that on enlargement of the E.E.C. our arrangements (and those of the other new members) would have to be adapted to those of the Community. Talks with
the Commission about this have begun.
Dependent Territories
9. The E.E.C.'s inclusion of Hong Kong and other dependent territories as beneficiaries has been made subject to certain
restrictions in that they will not benefit on textiles and footwear.
10. Although they have not done so initially the Japanese also seen likely to concede beneficiary status to Hong Kong. The Communiqué issued after the visit of Mr. Aichi, former Japanese Foreign Minister to London in June this year stated "that it was the intention of the Japanese Government to include Hong Kong in the scheme subject to certain restrictions and some delay in application". We believe that the Japanese also aim to include at a later date (perhaps 1 April 1972) such other dependent
territories as may want it and can satisfy them of their effective
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