TNAG-0300-FCO40-336-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 5

CONFIDENTIAL

DISCUSSION OF THIS MATTER ASIDE TEMPORARILY AND WE EXAMINED E E C

IMPORT AND HONG KONG EXPORT STATISTICS FOR THESE ITEMS AND

STATISTICS RELATING TO SHIPMENTS COVERED BY PREFERENCE CERTIFICATES.

SCHOFFER EXPRESSED SURPRISE THAT HONG KONG HAD NO TRADE WITH

THE E E C IN SEVERAL OF ITEMS UNDER DISCUSSION AND THAT

HONG KONG DID NOT EXPORT SOME OF ITEMS TO ANY COUNTRY. HE HAD

NOT BEEN AWARE OF THIS. IN REPLY TO MY QUESTION AS TO THE

JUSTIFICATION FOR THE EXCLUSIONS, SCHOFFER SAID THAT HE WAS NOT

COMPETENT TO GIVE SUCH A JUSTIFICATION AND THE COMMISSION OFFICIAL

WHO WOULD BE IN A POSITION TO DO THIS HAD UNAVOIDABLY BEEN PREVENTED

FROM ATTENDING THE MEETING. HE ASSUMED, HOWEVER, THAT THE ITEMS

WERE PRODUCTS ABOUT WHICH THE DOMESTIC INDUSTRIES OF THE MEMBER

STATES WERE WORRIED AND THAT WHERE THERE WAS NO TRADE THIS REFLECTED

A CONCERN THAT HONG KONG MIGHT DEVELOP INTO THESE AREAS. I POINTED

OUT THAT I UNDERSTOOD THIS TO BE ONE OF THE PURPOSES OF THE G.P.S.

3. I THEN SPOKE AT SOME LENGTH OF HONG KONG'S OBJECTIONS

TO DISCRIMINATORY TREATMENT IN FAVOUR OF OUR COMPETITORS AND

SAID THAT FOR THE TWO REASONS (A) THAT THERE WAS NO JUSTIFIC-

ATION FOR THE EXCLUSIONS AND (B) THAT HONG KONG COULD NOT

VOLUNTARILY AGREE TO BE DISCRIMINATED AGAINST, A GENTLEMEN'S

AGREEMENT BETWEEN HONG KONG AND THE EE.C. WAS IMPOSSIBLE.

4. I THEN SUGGESTED THREE METHODS WHEREBY THE E.E.C. MIGHT

SECURE THE PROTECTION IT SOUGHT AND WHICH I WOULD BE PREPARED

TO RECOMMEND FOR ACCEPTANCE TO THE HONG KONG GOVERNMENT.

THESE WERE:-

(A) THE EXCLUSION OF THE 12 ITEMS FROM THE G.P.S. FOR ALL

BENEFICIARIES, OR

(B) THE PLACING OF THE 11 NON SENSITIVE ITEMS ON THE SENSITIVE

LIST WITH BUTOIRS PITCHED AT A LEVEL WHICH WOULD EFFECTIVELY

INHIBIT DUTY FREE IMPORTS, OR

(C) A FURTHER TIGHTENING OF THE ORIGIN RULES FOR THESE ITEMS.

5. SCHOFFER SAID THAT THESE THREE METHODS HAD BEEN CONSIDERED BUT DISCARDED FOR POLITICAL, ECONOMIC AND ADMINISTRATIVE

REASONS. HE EXPRESSED HIMSELF AS, SYMPATHETIC WITH THE HONG KONG

POSITION IN VIEW OF THE FACT THAT FOR SEVERAL ITEMS THERE WAS

NO TRADE, AND ENQUIRED WHETHER THE HONG KONG GOVERNMENT WOULD /CONSIDER

"

2 CONFIDENTIAL,

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