TNAG-0384-FCO40-430-Trade-relations-between-Hong-Kong-and-the-EEC-1973 — Page 152

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CONFIDENTIAL

on 23 July Hong Kong officials reminded us of the undertakings and asked for them to be fulfilled. The Governor has since reported his anxieties

in his telegram No 827 of 28 July, saying inter alia: "I am particularly worried about the likely shortterm political impact of a situation in which the UK is discriminating against Hong Kong, and Hong Kong only, in respect of textiles and footwear. It is just the

sort of issue likely to raise emotive hackles

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He has also set out statistically the effects which Hong Kong's exclusion will have on llong Kong's export

performance.

6.

In addition to pointing to past predictions and

promises the Hong Kong Government argue that

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discrimination against them within both the Community and Britain will divert trade away from ilong Kong.

They claim that this is already happening. afraid that the precedent will be used by the United States, Canada and Japan as an excuse

for their discriminating also against Hong Kong, not

only in textiles or footwear, but in other exports

such as electronics. They maintain further, that

the EEC's GSP for textiles is not the same as it was

in 1971; it has been improved for other beneficifaries as regards the sizes of quotas and the numbers of

beneficiaries involved. These now include most of

Hong Kong's principal competitors, eg Yugoslavia,

Brazil, South Korea and Singapore; not however, Taiwan, which is not included in the ECC's GSP. With effect from 1 January 1974 Hong Kong will also lose

some Commonwealth Preference: this will further

aggravate the situation in relation to her non-

Com onwealth competitors.

CAFIDENTIAL

16.