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6.
I accompanied Dodge throughout. At the meetings, I referred briefly to the Secretary of State's mention of Hong Kong on 4 June and Sir M Palliser's state ent of 27 June. Dodge spoke to his brief, but also floated on a personal basis the idea that the super-competitive problem might be solved by adopting a Belgian suggestion that there should be two quotas, one for open competition among the super-competitive beneficiaries, the other for the rest. He made some ground with the arguments that all Hong Kong wanted was to be treated on a par with her principal competitors, that her industrial base was far narrower
than theirs, and that the existing system, together with delays in the framing of Commission proposals on textiles, were having a substantial trade diversion effect. But the main impression we received was that, whatever the arguments deployed, Mr Fronk's views would be decisive in framing Dutch policy.
7.
Finally, a word of caution. In pressing the point that all Hong Kong wanted was equity, Dodge appeared at times to argue that he would not mind if this was restored by the removal of benefits under the GSP from everyone else, or indeed the scrapping of the whole GSP. In my view, this is not a profitable line to pursue. It sounds selfish and unsympathetic to the problems of developing countries. As suoh, it is unlikely to be well received by the Dutcn and plays into the hands of those, like the Italians, who would like to erode rather than improve the GSP. I think we should do better to concentrate on improving Hong Kong's position.
Yours
LA^^
Kieran Prendergst
K Prendergast
CC:
P Dodge Esq, Brussels Mr P Tsao, Hong Kong
A Stuart Esq, HKIOD, FCO Chanceries: UKREP Brussels
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