TNAG-0462-FCO40-527-Entitlement-of-Hong-Kong-to-EEC-Generalised-Scheme-of-Prefer-1974 — Page 15

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it would be possible to eliminate the negative impact which Community enlargement had had on developing countries. He hoped to see the inclusion of all vegetable oils, including coconut oil and palm kernel oil, pineapples, spices (including pepper) and all unmanufactured tobaccos. And he wanted to aim for fairly substantial tariff cuts. The problem here will be the oils with the French reluctant to agree concessions on products of major concern to their African clients/5.The most disappointing (and inconclusive) part of the discussion concerned the industrial sector for the general review.

4. On Hong Kong Mr Tran thought there was a reasonable prospect of getting footwear included but the French would be difficult. He saw little hope on textiles and made the point that in any case we had accepted that Hong Kong's textiles should be excluded from the GSP in 1971. I challenged him on this saying that at that time Hong Kong's principle competitors, South Korea and Yugoslavia, were similarly not beneficiaries under the Community's scheme and so the exclusion did not matter too much then. But the situation had changed radically. South Korea and Yugoslavia were now beneficiaries and, moreover, the UK had aligned to the Community's scheme and it was quite intolerable that we should have to discriminate against one of our own dependencies.

I said that we would be pressing very hard for Hong Kong's textiles in the GSP during this year's review.

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6. Mr Tran was hopeful of being able to reduce the sensitive list quite considerably with a view to possibly eliminating it altogether by around 1977. would mean that the butoir system might probably end as well. But there was likely to be considerable resistance from some member states. In the meantime, Mr Tran was very anxious to press ahead with his special butoir system for the most competitive countries in order to improve the access opportunities for the less competitive. Mr Ingram put forward our views on this which amount to excluding the less competitive from the quota and butoir restrictions altogether. There is clearly going to be much discussion over the structure of the industrial sector of the GSP during the months ahead.

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7. On Hong Kong my feeling is that we may in due

course have to accept tha position, whereby for certain items where she is particularly competitive she will be subject to special butoir. But this will have to be on condition that Hong Kong's position is no worse in 1975 than it is this year. This would mean a freezing of Hong Kong's position. This will of course be more acceptable if at the same time we were able to secure inclusion of her footwear and certain categories at least of her textiles.

3 May 1974

Ayn

Co : Mr Goodfellow, HKIOD

). Hart.

RD Hart

European Integration Department (External)

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