TNAG-0464-FCO40-529-Entitlement-of-Hong-Kong-to-EEC-Generalised-Scheme-of-Prefer-1974 — Page 35

168

n.

daft Memorandum

EID would send the

ņi Braithwaite agreed at the lunch that

to UKREP for

and advice

forsideation

Des

Mr Braithwaite

1.

p.c

25/x

I attended a meeting at the Department of Trade yesterday afternoon to discuss with Hong Kong officials the memorandum which the Hong Kong authorities would like to put to the Commission, and possibly the individual member states, linking progress for Hong Kong in the Generalised Scheme of Preferences (GSP) with Hong Kong's attitude to negotiations with the Community under the Multi-Fibre Arrangement (MFA).

2. We failed to reach agreement. We took the line that the draft memorandum represented a challenge to the Community which would not go down at all well with the Commission and member states and, on the contrary, was likely to be counter-productive. We suggested the excision of the major part of the fifth paragraph, and also, though for different reasons, of paragraph 7. The Hong Kong officials were not convinced. They argued that the Community wanted an Article 4 agreement since this ought to permit a wider product coverage than an Article 3 one where restraints would be subject to rather more stricter criteria. They seem to feel that the only card they had to play if significant progress was to be made in the GSP context was to work on the Community preference for an Article 4 arrangement under the MFA. The Hong Kong officials undertook to report our attitude to Mr Jordan.

(a)

3. When you lunch with Mr Jordan today he is almost certain to raise this question. I suggest that you take the following line:-

we see no objection to a memorandum being sent to the Commission but we do not think that it should seek to establish more of a link than there already is between the MFA negotiations and the GSP. We think it inadvis- able to lay down a challenge to the Community that if Hong Kong does not get sufficient satisfaction on the GSP then it will be less accommodating in the MFA textile negotiations;

RECEIVED IN REGISTRY No. 51

2 5 OCT 1974

(b)

(c)

(a)

the Community would prefer an Article 4 type arrangement to an Article 3 type one. But in practice they would probably consider any Hong Kong threat of this kind as an empty one. And the Community could impose restraints on Hong Kong under Article 3 of the MFA and this would not appear to be in Hong Kong's interests;

•

a challenge of this kind, whether explicit or implicit, would create a very bad impression with the Community It would erode what little sympathy there is for Hong Kong's cause within the Community. And it would not do Hong Kong's case for GSP improvements any good. On the contrary it would probably put at risk the limited improvements we are likely to secure in the GSP for Hong Kong this year;

the Hong Kong authorities should concentrate on getting the best possible deal on textiles out of the Community that they can but without laying down any challenge. When the MFA textile negotiations are concluded the prospect for getting more of Hong Kong's textiles included in the GSP are likely to be much greater,