CONFIDENTIAL
Mr Hall (European Integration (External) Department)
HONG KONG AND THE GSP
1.
Please refer to your minute of 7 September, which I have just seen on my return from leave this morning. When I dictated my minute of 27 July, I was of course aware that the Community's GSP scheme is implemented by means of annual Council Regulations. I do not consider that this fact by itself is of any major consequence, given the terms of the explicit "agreement" reached during the enlargement negotiations that the Community's GSP scheme should be applied to Hong Kong with the special exception of textiles and footwear. I should, however, record two additional factors which are relevant in determining whether any attempt should be made to seek the inclusion of Hong Kong among the list of beneficiary countries in the Annex to the relevant Regulations dealing with textiles and footwear:-
(a) The "agreement" in the enlargement conference that
Hong Kong should be omitted from the list of GSP beneficiaries in respect of textiles and footwear is not recorded in the Act of Accession itself; accordingly, it would, as a pure matter of Community law, be possible to modify the relevant Regulations by including Hong Kong among the list of beneficiary countries, since this would not involve any breach of the Act of Accession itself (it would, however, involve a departure from the terms of an "agreement" formally recorded in the records of the enlargement conference):
(b)
If
as appears to be the case, the Community GSP scheme for textiles has been modified since 1971 for other beneficiaries as regards the size of quotas and the numbers of beneficiaries involved (so that discrimination against Hong Kong in favour of its principal competitors among the developing countries has been intensified), it may be possible to advance the argument that the conditions under which Hong Kong was prepared reluctantly to forego inclusion in the GSP scheme for texties and footwear have been modified to Hong Kong's detriment to such an extent as to justify our seeking to re-open the issue.
2. Of these two considerations, I attach most significance to (b). On this, I think we need to be absolutely certain of the facts. I can see no ground for seeking to re-open an issue definitively settled in the context of the enlargement negotiations unless it can be proved beyond a peradventure that the Community have, since then, so modified their GSP scheme for textiles and footwear as to create increased discrimination against Hong Kong in favour of her principal competitores among the developing countries. For the rest, I adhere to the views expressed in my minute of 27 July; and I am conscious that, in any event, the very slight loophole which I see for seeking to re-open the issue may be open to objection on the wider grounds suggested in paragraph 4 of Mr Robinson's minute of 6 September.
10 September
Copy to:
Mr Robinson
Dr. Sue's
I M Sinclair
Second Legal Adviser
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