TNAG-0370-FCO40-416-Visit-of-Edward-Heath--UK-Prime-Minister--to-Hong-Kong--12-1-1973 — Page 31

CONFIDENTIAL

THIS DOCUMENT IS THE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT.

PMV (HK)(74)4

14 December 1973

31

COPY NO.

PRIME MINISTER'S VISIT TO HONG KONG

12th-14th JANUARY, 1974

EUROPEAN ECONOMIC COMMUNITY/GENERALISED SCHEME

OF PREFERENCES, AND OUTLOOK FOR TEXTILES

Brief by Department of Trade and Industry

1. In February 1971 we agreed with the Six, during the enlargement negotia- tions, that Hong Kong should be admitted to the Community's Generalised Scheme of Preferences (GSP), subject to the exclusion of her textile and

footwear exports. As some of Hong Kong's principal competitors among the

developing countries receive benefits in these categories we shall, from

1 January 1974, on aligning to the Community's GSP, be obliged to

discriminate against Hong Kong. Hong Kong is concerned about this, both

for its own sake and for the precedent it sets for other importing countries (ie the USA and Japan) in their generalised preference schemes. In accepting

this arrangement in 1971 our chief negotiator, Mr Rippon, told the Community

that it would be our continuing concern to avoid discriminating against

Hong Kong in favour of her principal competitors among the developing

countries. Mr Rippon also informed the Governor of Hong Kong that we intended

to pursue the aim of eliminating discrimination against the dependency in our

technical contacts on the adaptation of our scheme to that of the Community

and in the annual reviews.

2.

The Hong Kong authorities reminded us of these undertakings early this

year and asked us to press for the inclusion of their textiles and footwear

in the EEC's GSP. After careful examination Ministers agreed that if we were

to try to renegotiate the matter this year we should be defeated and that

instead we should follow the accepted Community procedures and wait until the 1974 Annual Review before trying to reopen the issue.

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CONFIDENTIAL