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Senior BLMC representatives are expected to visit Hong Kong early in the New Year to give considered comments on the proposed programme.
Points to be made to the Governor
6.
(i)
We can confirm that, provided that BLMC are able to give the assurances mentioned in the previous paragraph, HMG attaches importance to the retention of the 'Buy Commonwealth' clause all the more so if HMG acquires a substantial financial stake
in BLMC.
(ii) We endorse the Governor's view that the 'Buy Commonwealth' clause (with the streamlined procedure for granting exemptions) is the most useful weapon we have to being pressure on BLMC to perform satisfactorily.
(iii) It is clear that BLMC double-decker buses are the most suitable vehicles for both bus companies on grounds of price and performance; despite delivery difficulties neither company has yet asked for exemption from the clause.
Comment
7. We do not agree with the suggestions in the Executive Council that the 'Buy Commonwealth' clause is unacceptable because it is discriminatory. Since the clause pre-dates the GATT, which was concluded in 1948, the GATT Articles relating to discrimination do not apply. If the reference to discrimination was made in the general political sense, it would be worth pointing out that the
Buy Commonwealth' clause is (apart from the preference on alcohol and motor vehicles) the only trade concession which Hong Kong makes to Britain; Hong Kong on the other hand has enjoyed Commonwealth Preference on all its exports to the UK and will continue to enjoy residual preferences until mid-1977; and on
the strength of these preferences has built up a substantial favourable balance in her trade with the UK. Against this background, it would be a matter of considerable regret to HMG if Hong Kong withdrew one of the few advantages she has so far
adcorded to us in her market.
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/8. We
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Private notes are available after approval.