TNAG-0384-FCO40-430-Trade-relations-between-Hong-Kong-and-the-EEC-1973 — Page 6

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in January 1974.

Moreover the political damage will

be caused the moment we begin discrimination. We

cannot therefore wait until after alignment, but must

fulfil the first part of Mr Rippon's promise.

6.

Our

I recognise that to reopen this question will

create difficulties for us in the Community, in the UK

and with the independent Commonwealth countries.

partners will argue that the question of Hong Kong's

admission to the GSP was definitively settled in 1971.

Moreover, the Community's original agreement to admit

Hong Kong to their GSP, less textiles and footwear,

was only obtained with difficulty. Some of our

partners are showing resistance to other proposals

for improvements in the GSP. At home, critics of our

European policy are likely to argue that if we can

reopen the terms of our entry on Hong Kong's behalf,

we can also do so for ourselves. Other Commonwealth

countries, such as India, will contrast our insistence

that we have no alternative but to raise our tariffs

against them, with our efforts for Hong Kong.

CDJ

7. It is, however, possible, as a matter of Community

law, for us to reopen this question. It would not

involve any breach of the Act of Accession. The

Community's GSP is not static; the European summit

committed the Community to improving its scheme. We

can also point out to our Community partners that, at

least in the case of cotton textiles, the situation

has changed since 1971 to the detriment of Hong Kong.

Since our agreement, the Philippines, Thailand and

Yugoslavia, all of them serious competitors of Hong

Kong, have become beneficiaries under the scheme for

cotton textiles. The Community should recognise the

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/problem