TNAG-0337-FCO40-373-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster--Sir-Geoff-1972 — Page 16

}

DRAFT

FUTURE OF THE GPS IN THE ENLARGED COMMUNITY AND HONG KONG'S POSITION IN IT

In considering Hong Kong's position in the light of our entry

into the EC, the following points are relevant:

(1) The bulk of Hong Kong exports to the UK, other than

textiles, enjoy duty-free entry under Commonwealth Preference.

In textiles, wool is duty-free, but man-made fibres, silk

and (since 1 January 1972) cotton are all dutiable at about

85% of the mfn rate. Hong Kong is also a beneficiary und er

the UK's generalised preference scheme, but this excludes

most textiles.

(ii) In the accession negotiations the Community ruled out

associate status for Hong Kong. She will, of course, benefit

from the transitional arrangements negotiated by the UK: this

will help her to adjust to the new situation. But it is

mainly to the GPS that Hong Kong must look to mitigate the

consequences of our entry. We will be aligning to the

enlarged EEC GSP scheme on 1 January 1974 and Although it is

true that hong Kong will have to share the benefits of this

scheme in our market with other developing countries it is

unlikely that Hong Kong would have secured inclusion in the

existing EEC scheme, and thus access on a preferential basis

to these important markets which she had not previously

enjoyed had it, not been for our impending entry into the EEC.

(iii) The argument about loss of Commonwealth preference margins

in the UK market as a result of our accession to the EEC

is partly academic.

Our own GSP scheme which covers, apart