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Mr Jordan repeated that in any revised Community Scheme, Hong Kong should not be treated worse than previously. If the territory was alone in having her access to the market reduced, and her textiles were still excluded, serious trade and political difficulties would arise in Hong Kong. Mr Jordan confirmed he would be content if imports of textiles from all beneficiaries into the Nine were to be excluded from the Scheme.
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He objected to the proposal to introduce lower butoirs for the so-called super-competitive beneficiaries. In no case where Hong Kong's exports had reached the butoir limits had the tariff quotas been filled. This showed that each beneficiary was getting the market share its own capacity and the sensitive system allowed.
Mr Ingram agreed the proposal did not further assist the developing countries adding that it had been prompted primarily by Italian feer of Yugoslavian competition.
Mr Jordan went on that he did not regard Hong Kong as a super-competitive exporter. Rising manufacturing costs were blunting her competitiveness. Diversion of trade to her competitors was occurring because of the exclusion of textiles and footwear. In 1973 only 73% of the territory's UK textile quota had been used; 79% of Germany's quote had been taken up, and only about 60% of those for Belgium, Netherland, Luxembourg, and France. Experience had shown that while inclusion in the various GSP schemes conceded no positive advantage to the exporter, exclusion did positive harm by encouraging diversion of trade to those of Hong Kong's competitors, such as Korea, who were not also excluded. In Mr Jordan's opinion the application of a 10% butoir would be as harmful as exclusion, particularly if strong demand existed for the products affected. The statistics showed, he said, that the existing GSP scheme was sufficient to safeguard the Community's interests. Mr Preston assured the Hong Kong team that Britain would press hard for parity of treatment of Hong Kong textiles in the EEC's GSP.
On footwear, Mr Jordan said the industry was inefficient, under-capitalised and was exporting less each year. During 1973 footwear exports were valued at HK 8 300m compared with Hong Kong's total exports of HK$ 10,000m. The meeting agreed there was no case for the EEC's continuing to exclude the territory's footwear exports from the GSP. Mr Ingram mentioned there was a small possibility that the Community would agree to remove this item from the exclusion list. Mr Jordan emphasised the importance to Hong Kong of achieving this objective; other GSP donors would hardly be likely to include footwear in their schemes while the EEC, with Britain as a member, continued to exclude it.
Mr Jordan concluded by thanking the Embassy in Tokyo for keeping up the pressure on the Japanese Government to reduce the discrimination against Hong Kong in their GSP scheme. The latest concession by the Japanese represented a real improvement for the territory.
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DRAFT MEMORANDUM TO THE COMMUNITY
Mr Preston commented this was a useful document deploying many valid arguments. He saw no reason why the Hong Kongers should not put it direct to each member state. Mr Jordan however preferred that it should be delivered by the
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