TNAG-0464-FCO40-529-Entitlement-of-Hong-Kong-to-EEC-Generalised-Scheme-of-Prefer-1974 — Page 63

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3 The Commission, in response to criticism of these proposals by.

Member States, is working on a modification of them, which preserves

the main elements of their original scheme, but discriminates rather

more overtly against Yugoslavia.

Hong Kong Views

사

Hong Kong has protested vigorously against the Commission prop-

osals. She would prefer a continuation of the original scheme with

enlargement of quotas. She objects to the 1975 proposals on 3 grounds

i

Her preferences will be reduced.

ii

Trade diversion will arise from the special butoirs.

also considers the proposals discriminatory in effect

(whatever their form) because Hong Kong, having a restricted

industrial base, does not nave the same opportunity to

diversify her production as do her competitors.

She

iii

The change is unnecessary the smaller developing countries

already have enough scope in GSP as the fact that no quota

has been filled in the existence of the scheme demonstrates.

5

We would respond as follows:

i Loss of Freference

It is clear that the concept of a 15% butoir will mean in bino a relative

/loss in the opportunities of the scheme. But in 1975 liong Kong

will have the same entitlement to preference as in 1974. (If

the 1974 scheme had been continued into 1975 on the same basis,

Hong Kong's preferences would have been about 3-4 million ua

greater).

Hong Kong has quoted a loss of reference to her in

1975 of about 40 willion wa we think the basis of this calculation

2