TNAG-0384-FCO40-430-Trade-relations-between-Hong-Kong-and-the-EEC-1973 — Page 175

CONFIDENTIAL

WE HAVE DEEN AWARE FOR SOME TWO YEARS THAT HONG KONG HAS

DEEN EXCLUDED FROM THE EUROPEAN ECONOMIC COMMUNITY SUMEDAL PREA

ERENCE SCHEME IN RESPECT OF TEXTILES AND FOOTWEAR, WE APPRIOLATE THAT THE HONG KONG GOVERNMENT HAS REPEATEDLY MADE REPRESENTATIONS ON

THIS MATTER BUT TO-DATE WITHOUT SUCCESS, HOWEVER, IT NOW

APPEARS EVEN MORE IMPERATIVE THAT THESE REPRESENTATIONS NOT ONLY

BE REPEATED BUT WITH GREATER FORCE.

THIS URGENT REQUEST STEMS FROM THE FACT THAT IT IS NOW THE

STATED INTENTION OF HER MAJESTY'S GOVERNMENT THAT WITH EFFECT FROM

1ST JANUARY, 1974, THE UNITED KINGDOM GENERAL PREFERENCE SCHEME

SHOULD BE HARMONIZED WITH THE SYSTEM CURRENTLY OBTAINING IN THE

COMMON MARKET.

THE DAMAGING EFFECT UPON HONG KONG'S TEXTILE AND FOOTWEAR

INDUSTRY OF SUCH CONTINUED AND INCREASED DISCRIMINATION, PARTICULARLY BY THE UNITED KINGDOM, WOULD PLACE THESE LOCAL INDUSTRIES AT A

GRAVE ECONOMIC DISADVANTAGE IN RELATION TO SIMILAR EXPORTS FROM

SUCH CLOSE COMPETITORS AS SOUTH KOREA, PAKISTAN, INDIA, THAILAND, YUGOSLAVIA AND THE PHILIPPINES.

THE DAMAGE TO THESE TWO INDUSTRIES HAS ALREADY BEEN EXPER-

TENCED IN THAT DURING THE LAST TWO YEARS ORDERS FOR THESE SPECIFIC

COMMODITIES TO THE EUROPEAN ECONOMIC COMMUNITY (THE SIX) HAVE BEEN

DIVERTED FROM HONG KONG TO THE ADOVE NAMED COUNTRIES,

MANY FOREIGN BUYERS HAVE RECENTLY COMMENTED TO THEIR OLD AND

ESTABLISHED HONG KONG PARTNERS THAT THE EXCLUSION OF HONG KONG FROM THE EUROPEAN ECONOMIC COMMUNITY GENERAL PREFERENCE SCHEME HAS RESULTA

ONLY IN THE IMPORTER BENEFITTING SINCE THE EFFECT OF THE GENERAL

PREFERENCE SYSTEM AS LONG AS HONG KONG IS EXCLUDED IS TO MAKE IT

MORE ATTRACTIVE TO: THE IMPORTER TO BUY FROM ANY COUNTRY WHICH IS

INCLUDED IN THE SCHEME.

WE CONSIDER THAT WITH THE INTENTION OF HER MAJESTY'S GOVERNMENT

TO HARMONIZE THEIR GENERAL PREFERENCE SCHEME IN THE NEW YEAR AND

AT THE SAME TIME REDUCE THE BENEFITS UNDER THE COMMONWEALTH PREFERENCE SCHEME, THE EFFECT REFERRED TO ABOVE COULD HAVE ALMOST DISASTROUS EFFECTS FOR HONG KONG IN THE FUTURE. THIS WILL OCCUR IN SPITE OF ASSURANCES IN THE PAST THAT THE UNITED KINGDOM WOULD

ASSIST IN EVERY WAY IT COULD TO AVOID ANY DAMAGE TO HONG KONG'S

INTERESTS.

-2- CONFIDENTIAL

/IN FACT