TNAG-0384-FCO40-430-Trade-relations-between-Hong-Kong-and-the-EEC-1973 — Page 58

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which might be questioned if we discriminate against Hong Kong.

The Hong Kong Government also argue that such discrimination would

divert trade away from Hong Kong and that this has already begun.

They fear that the US, Canada and Japan will use this as a precedent

for discriminating against Hong Kong, not only in textiles and

such footwear, but in other exports as well as electronics. They further

maintain that the Community's scheme for textiles has changed since

1971: the number of beneficiaries, some of whom are major

competitors of Hong Kong, has increased and the size of duty-free

quotas open to them is greater.

details are at annex B. Furthermore we shall begin phasing out

Commonwealth preference for Hong Kong from 1 "anuary 1974, which

will decrease her competitiveness vis à vis non-Commonwealth

suppliers.

There is some truth in this: full

6. At his meetings with Mr Royle and the Secretary of State during

September, the Governor again stressed the political importance of

this question to Hong Kong. He pointed out that a dependent

territory was in a different constitutional and moral position even

from independent members of the Commonwealth.

He concluded that we

To do so and fail

must be seen to defend Hong Kong's interests.

would be something; not to put the case at all would he considered,

be unacceptable.

*

7. The Hong Kong side of the Office accordingly consider that the

question should be re-opened.

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THE EUROPEAN CASE