TNAG-0464-FCO40-529-Entitlement-of-Hong-Kong-to-EEC-Generalised-Scheme-of-Prefer-1974 — Page 108

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MINISTERS HAD REPEATEDLY DRAWN ATTENTION TO THE SERIOUS DIFFICULTY

IN WHICH THE UK WAS PLACED BY BEING REQUIRED TO DISCRIMINATE

AGAINST ITS OWN COLONY, WE WERE SURPRISED BY THE DOCTRINE OF

COMMUNITY PREFERENCE BEING INVOKED AND WE WOULD EXPECT THE

COMMISSION TO OPPOSE IT VIGOROUSLY.

IF ENDORSED, IT WOULD MEAN

THAT THERE WOULD BE NO GENERALISED PREFERENCE AT ALL AND NO

TARIFF REDUCTIONS. IN ANY CASE THE COMMISSION'S PROPOSAL, IN

PERSPECTIVE, REPRESENTED ONLY A LIMITED EFFORT BY THE COMMUNITY;

EFFECTIVELY THE 1974 QUOTA WAS BEING FROZEN SUBJECT TO AN

ADDITIONAL 20% BUT WITH HONG KONG ALSO ADDED. OTHER QUOTAS WERE

NOT BEING SO FROZEN. THE FRENCH DELEGATION HAD THOUGHT IT

AN ARGUMENT AGAINST HONG KONG THAT IT WAS ALSO LOSING EXPORTS TO

OTHER MARKETS. WE CONSIDERED THAT THE REASON WAS PRECISELY DISCRIMINATION PRACTISED AGAINST HONG KONG IN THESE OTHER MARKETS AND THAT (FOLLOWING THE COMMUNITY'S PRECEPT) IT WAS REASONABLE FOR HONG KONG TO LOOK TO THE COMMUNITY MARKET FOR A

CERTAIN GROWTH. BUT MUCH OF WHAT HAD BEEN SAID AROUND THE TABLE

ABOUT THE IMPLICATIONS OF HONG KONG EXPORTS WAS MISCONCEIVED.

THE MAIN PROBLEM IN THE BRITISH AS IN OTHER COMMUNITY MARKETS

WAS NOT HONG KONG BUT IMPORTS FROM EASTERN EUROPE AND SPAIN. IMPORTS FROM THE DEVELOPING COUNTRIES ALL ROUND WERE RELATIVELY SMALL.

7.

THE COMMISSION (MALTZAHN) CAME IN TO HELP US ON THIS LAST

POINT. HE SAID THAT THE COMMISSION HAD RECENTLY MET A DEPUTATION

FROM THE EUROPEAN SHOE INDUSTRY. THE WORD HONG KONG HAD NOT BEEN

MENTIONED DURING A THREE-HOUR DISCUSSION. THE INDUSTRY WAS

UNDER THE IMPRESSION THAT THE WHOLE OF COMMUNITY IMPORTS WERE UNDER GSP. IT HAD BEEN POINTED OUT TO THEM THAT THE FIGURE WAS ONLY 6%. THE REAL PROBLEM WAS IMPORTS FROM THE EASTERN BLOC AND SPAIN AND, IN GSP TERMS, FROM BRAZIL. ALTHOUGH THE COMMISSION ACKNOWLEDGED

THE STRUCTURAL CRISIS IN THE NORTHERN PART OF THE COMMUNITY --

GERMANY, BENELUX AND THE UK, (ITALY AND FRANCE NOT BEING SO AFFECTED) THEIR PROPOSAL FOR THE ADMISSION OF HONG KONG TOOK ACCOUNT OF THIS SIGUATION, SHOULD NOT HARM THE INDUSTRY AND SHOULD BE ACCEPTABLE.

8. THE CHAIRMAN SAID THAT ALL DELEGATIONS NEEDED TO REFLECT ON WHAT HAD BEEN SAID AND THAT DISCUSSION WOULD BE RESUMED NEXT WEEK.

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