TNAG-0300-FCO40-336-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 6

CONFIDENTIAL

CONSIDER A GENTLEMEN'S AGREEMENT LIMITED TO THOSE ITEMS IN WHICH

THERE WAS TRADE. I REITERATED THAT ANY PROPOSAL WHICH ENVISAGED DISCRIMINATION AGAINST HONG KONG COULD NOT BE CONSIDERED BY THE HONG KONG GOVERNMENT. SCHOFFER SAID THAT HE WOULD REPORT IMMEDIATELY TO HIS SENIORS ON THE DISCUSSION AND MAKE CLEAR HONG KONG'S OBJECTIONS TO THE PROPOSALS WHICH OBJECTIONS WERE BASED ON

TWO ARGUMENTS.

(A) THAT THERE WAS NO JUSTIFICATION FOR THE EXCLUSIONS,

B HONG KONG'S FEARS OF THE EFFECTS ARISING FROM DISCRIMINATION

AGAINST HONG KONG.

6. I SAID THAT THERE WAS A THIRD AND IN MY VIEW OVERRIDING REASON WHICH WOULD MAKE IT IMPOSSIBLE FOR THE HONG KONG GOVERNMENT TO ACCEPT ANY GENTLEMEN'S AGREEMENT AND THAT WAS THAT THE HONG KONG GOVERNMENT, WOULD CONSIDER ANY DISCRIMINATORY ACTION BY THE E.E.C. IN RESPECT OF HONG KONG TO BE IN BREACH OF THE EEC/UK AGREEMENT ON HONG KONG REACHED DURING THE ENLARGEMENT NEGOTIATIONS. I POINTED TO THE CLAUSE IN PARAGRAPH 3B OF THE COMMUNITY OFFER WHICH MADE CLEAR THAT WHATEVER SPECIAL CONDITIONS MIGHT BE

APPLIED TO HONG KONG THESE WOULD NOT CONTAIN DISCRIMINATORY

ELEMENTS AND TO MR. RIPPON'S ACCEPTANCE OF THE E.E.C. OFFER

WHICH MADE CLEAR THAT IT WAS AN ACCEPTANCE OF THE OFFER AS

CONTAINED IN THE COMMUNITY'S STATEMENT AND WHICH ALSO DREW THE COMMUNITY'S ATTENTION TO THE CONTINUING CONCERN OF THE H.M.G. TO AVOID DISCRIMINATION AGAINST HONG KONG IN FAVOUR OF ITS

PRINCIPAL COMPETITORS AMONG THE DEVELOPING COUNTRIES. I SAID THAT I HAD BEEN AUTHORISED BY H.M.G. OFFICIALS IN LONDON AND INSTRUCTED

BY THE HONG KONG GOVERNMENT TO DRAW THE COMMISSION'S ATTENTION TO THESE STATEMENTS AND THAT ANY DISCRIMINATORY MOVE BY THE E.E.C. AGAINST HONG KONG WOULD CAUSE THE HONG KONG GOVERNMENT TO SEEK THE ASSISTANCE OF H.M.G. SINCE THE AGREEMENT WHICH WOULD BE BREACHED WAS ONE MADE BETWEEN THE E.E.C. AND THE U.X.

7. IN RESPONSE TO THIS SCHOFFER SAID THAT HE HAD BEEN UNAWARE OF THE NON-DISCRIMINATION CLAUSE IN THE COMMUNITY OFFER AND HE THOUGHT THAT THIS FACT COMBINED WITH HONG KONG'S FEARS OF DISCRIMINATION AND THE LACK OF JUSTIFICATION FOR THE EXCLUSIONS WOULD REQUIRE THE COMMISSION TO RE-EXAMINE ITS PROPOSED ACTION COMPLETELY. HE WOULD HAVE THE MATTER DISCUSSED WITHIN THE COMMISSION AS QUICKLY AS POSSIBLE BUT HE DID NOT SEE HOW THERE COULD BE ANY MOVEMENT ON THE E.E.C.'S ORIGINAL PROPOSALS WITHOUT THEIR BEING GIVEN A LOT MORE STUDY. HE EXPRESSED DOUBT THAT THE E.E.C. COULD RESOLVE PROBLEMS BEFORE THE MID-DECEMBER MEETING

3 CONFIDENTIAL

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