TNAG-0464-FCO40-529-Entitlement-of-Hong-Kong-to-EEC-Generalised-Scheme-of-Prefer-1974 — Page 23

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Mr Preston, summing up this part of the discussion, said that there seemed to be no marked difference of opinion on this subject. HMG hoped that the continuing liberalization of international trade would bring further benefits to Hong Kong, and our efforts would be in that direction.

HONG KONG AND THE COMMUNITY GSP

In

5 Mr Preston outlined the present positin within the Department of Trade on the proposals for the 1975 GSP. Ministers had given their full support to the objective of liberalization, and officials had acted accordingly in Community discussions. Because of the General Election, however, Ministers had not been approached for further decisions in the past two months or so, and it would be necessary to seek directions again very soon. It was hoped that the matter would be opened in the Council on 12 November, though final agreement was unlikely before December. discussions at official level the range of realistic possible outcomes had began to emerge.

Ministers would have to decide how far the position reached was in line with our renegotiation objectives, and whether something more might be achieved by intervention at political level. The UK would in any case continue to make representations on behalf of Hong Kong and the other countries the Foreign Secretary had mentioned in his statements on our renegotiation objectives. It would, however, have to be kept in mind that the GSP, unlike other aspects of renegotiation, was a part of the Community's normal business. It had to be renewed each year, so no position achieved could be permanently guaranteed. Equally, the flexible nature

of the scheme left open the possibility of further improvements year by year. Mr Preston invited Mr Jordan to give his views on the subject.

6 Mr Jordan recalled that he had often described the Hong Kong authorities' objectives as two-fold. On the one hand, of course, they hoped for the greatest possible genuine improvement of the terms as they affected Hong Kong.

It was recognized that the UK had only limited powers in this direction. The other main objective, however, should be attainable. This was simply to ensure that the UK and the Hong Kong authorities were seen by the Hong Kong public to be doing everything possible on their behalf. As to the first'aim, he thought his views were well known. He did not feel that exclusion of Hong Kong from the textile scheme could be justified. Hong Kong was not the threat some people imagined: in 1973, for instance, she had only been able to supply two thirds of her textile quota with the Community. Hong Kong was concerned about 'the discrimination against her not only in textiles but that implied in the proposals for special treatment of 'supercompetitive' suppliers. As to the second, presentational objective, his main concern, which he would like the meeting to concentrate on, was with demonstrable progress towards the "substantial improvements" in Hong Kong's position referred to in Mr Callaghan's statement in June, which had been widely publicised in Hong Kong. He hoped we could tell him what we would be recommending to Ministers which would fit this description.

7

At Mr Preston's request Mr Ingram gave an assessment of the state of play. The persistent background to discussions was the desire of some Member States to protect their own industries. Italy in particular was anxious to protect herself against Yugoslavia. The Netherlands for quite different reasons wished to exclude from the benefits of the scheme those countries which in Dutch eyes did not merit 'developing' status. Against this pressure the UK had taken the view that the poorer developing countries should not be helped by restricting the more competitive but by improving the product coverage of the scheme.

But this approach had received little support. The latest developments, however, were more encouraging. The Commission had very recently put forward ideas which, in their view, would discriminate effectively against Yugoslavia, thus satisfying the Italians, without worsening Hong Kong's position.

CONFIDENTIAL