TNAG-0441-FCO40-506-Visits-of-leading-personalities-of-Hong-Kong-to-UK-1974 — Page 61

CONFIDENTIAL

To EEC

ма

Work?

3. On 6 November, however, in the Council of Ministers,

the

Chancellor of the Duchy of Lancaster put the Community on notice that

in the context of next year's review we intended to press "most

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

in the Community scheme from 1975 onwards. He pointed out that

whilst the arrangements agreed in 1971 may have seemed to our

Community partners not ungenerous, an important consideration was

the fact that since 1971 the situation had changed to the detriment

of Hong Kong in that the Philippines, Thailand and Yugoslavia, all

of them competitors of Hong Kong, had become beneficiaries under the

Community scheme in respect of cotton textiles. In present

circumstances therefore it was no longer acceptable for such

discrimination to be applied against Hong Kong.

4. Although we sympathise with Hong Kong over this discrimination,

preferences, or the lack of them, are actually of much less import-

ance than quantitative restrictions. As regards preferences on

textiles the competitors about whom Hong Kong is most concerned

(principally South Korea and Yugoslavia) obtain limited benefit from

the GSP and are also held down to a much lower level than Hong Kong

by quantitative restrictions.

What to say

Line to Take

5. Sir Y K Kan as Chairman of the Trade Development Council is

likely to criticise HMG for not even attempting to remove the

discrimination before UK alignment. This should be firmly rebutted.

It would be useful if Mr Blaker could make the point that the

Chancellor of the Duchy's statement on November 6 (see paragraph 3

above) was of major importance in political terms. It should have

/been

CONFIDENTIAL