TNAG-0462-FCO40-527-Entitlement-of-Hong-Kong-to-EEC-Generalised-Scheme-of-Prefer-1974 — Page 91

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18

DEPARTMENT

OF

1 Victoria Street

TRADE AND INDUSTRY

(Room 448)

LONDON SW 1

12 February 1974

23

Your ref: 6/6/8

Mr R GOLDSMITH CMG

Office of the United Kingdom Permanent Representative

to the European Communities

Avenue des Arts 52

1040 BRUSSELS

GENERALISED SCHEME OF PREFERENCES: HONG KONG

Peter Preston who is in Washington sent me down his copy of your letter to Michael Butler of 1 February about the Generalised Preferences scheme.

2

We shall consider it all very carefully as you say with ODA (I have sent a copy of your letter to Bob Radford) but I must tell you that we are ab initio somewhat wary of what is suggested. For one thing there is a wide gap between the immediate step of reducing the butoir to 10% for competitive countries and getting rid of what Tran calls the paraphernalia. Presumably this gap could be filled by simply cutting the competitive countries out of the Community's gsp altogether. There is nothing like making a problem go away and if you cut out Hong Kong, India, Pakistan, Yugoslavia, Singapore, Malaysia (have I omitted anyone?) either entirely or for a range of items you will no longer need ceilings and butoirs. Equally you would have reduced almost to nothing imports under gsp.

3

More seriously I think it still needs to be proven that the less competitive countries are inhibited from exporting under gsp because the more competitive countries preempt quotas. I believe (until the contrary is shown) that the present butoirs are quite good enough to hold back the more competitive countries. There may be one or two exceptional items where the competitive countries swipe the lot but this is not the rule, If leather is such an item a contributory factor is that the quota is kept artificially small for protective reasons.

4 As for the Hong Kong aspect I an afraid I do not think they would thank us if the discrimination against them was removed in the way suggested by tran. It may be of couse Mal the sellers of footwear and textiles would feel better if their competitors are clobbered as well as them by a 10% butoir. But I doubt whether they are more numerous than the other manufacturersi in Hong Kong who would suffer by Tran's surgery. While we aust certainly do the best for Hong Kong that we can this objective has I am sure to be weighed against our interest in helping other devoloping countries in the Par Host and we should have to think

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