TNAG-0440-FCO40-505-Visits-of-Hong-Kong-officials-to-UK-1974 — Page 29

CONFIDENTIAL

TRADE AND THE EEC GENERALISED SCHEME OF PREFERENCES

1.

In February 1971 we agreed with the Six, during the

enlargement negotiations, that Hong Kong should be admitted to the

Community's GSP, subject to the exclusion of her textile and footwear

exports. As some of Hong Kong's principal competitors among the

developing countries receive benefits in these categories, we have,

since 1 January 1974, on aligning to the Community's GSP, been

discriminating against Hong Kong. Hong Kong is concerned about this,

both for its own sake, because of the constitutional implications,

and for the precedent it sets for other importing countries

(especially the United States and Japan) in their Generalised

Preference Schemes.

2.

When we accepted this arrangement in 1971 the Community

were told that it would be our continuing concern to avoid

discriminating against Hong Kong in favour of her principal competitors

among the developing countries. The Hong Kong authorities reminded

us of this last year and put pressure upon us to re-open the matter

with the Community. On 6 November the former Chancellor of the

Duchy of Lancaster said publicly that we would be pressing "most

resolutely" for the inclusion of Hong Kong's textiles and footwear

in the Community scheme from 1975 onwards.

Present Situation

3.

When the Hong Kong Director of Commerce and Industry,

Mr Jordan, was in London in April, he discussed this subject with

the Department of Trade, the Department of Industry and ourselves.

He was assured by senior officials that no reason was seen to expect

any change in UK undertakings on this issue. Mr Jordan made a press

announcement to this effect when he returned to Hong Kong.

CONFIDENTIAL