TNAG-0334-FCO40-370-Visits-of-Secretary-of-State-for-Foreign-and-Commonwealth-Af-1972 — Page 21

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which will enable standards of living to be raised by an expansion

of international economic relationships and an even greater

liberalisation of world trade.

4. The fact that the crisis triggered off by the economic measures

introduced by President Nixon in August 1971 has been resolved will no

doubt have been greeted with particular relief in Hong Kong, in view

of her dependence on overseas trade. What we now have to work for is

a definitive resolution of the basic problems of the world monetary and

trading system. This will require careful preparation and will take

time to set up, let alone carry through.

5.

Completion

We think a plausible scenario would be as follows: 1972.

of bilateral trade negotiations between the US and the EEC/Japan/Canada.

Passage of the Gold Bill through Congress.

Preparatory work for GATT

negotiations (under Article XXIV) on the effects of EEC enlargement.

1973. Ratification of the Accession Treaty. GATT Article XXIV

negotiations. Simultaneously, Congress equips the President with trade

negotiating powers. Late 1973 or 1974. Opening of global trade

negotiations.

6. Particularly during the period leading up to the global

negotiations, Hong Kong's interest should continue to be focussed on

parity of treatment with her competitors, this being the most she can

hope for. It is unfortunate, but a tribute to Hong Kong's dynamism,

that her competition remains a ready cause of alarm to the developed

countries, whether in Western Europe, North America or even Japan

herself. This is likely to remain a factor with which Hong Kong has to

contend, whatever happens.

EEC Enlargement

7.

Commonwealth preferences will be phased out during the transitional

period after British entry into the Community, in accordance with the

/agreed

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