TNAG-0465-FCO40-530-Entitlement-of-Hong-Kong-to-EEC-Generalised-Scheme-of-Prefer-1974 — Page 15

VISIT OF MR TRAN AND MISS FULANA DE TAL

Present:

Miss L L Lowne

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Mr R Hart

Mr A Stewart

EID FCO HKIOD FCO

REC.

Mr N Bown

TRED FCC

Miss K Tait

CRE1 Do1'

I ULL

Mr J De Fonblanque UKREP Mr D B Lodge

CT

(w/213)

Miss Lowne welcomed Mir Tran and confirmed the unanimous determination in the UK administration that Hong Kong should be included in the GSP scheme for textiles. Mr Tran said that there were divergent views in the Commission and that Member States, with the possible exception of Denmark, were opposed. He must therefore follow a devious route to this aim and sought assistance from UK officials. Particularly, he needed a clear demonstration that the UK was undivided in its aim, and that the aim was inclusion of Hong Kong in the GSP scheme rather than exclusion of textiles, which would be politically unacceptable to other beneficiaries eg India and Pakistan.

Although the EEC scheme covers only 71,500 tonnes of the one million tonnes of textiles imported annually into the EEC, there were worries about the effect on employment and the Trades Unions oppose any extension. Member States are reluctant to make any concessions before the bilateral negotiations under the MFA are concluded. These negotiations with Hong Kong would not be finished in time to allow the 3-4 months thought necessary to prepare the ground for proposals eliminating discrimination against Hong Kong to be made in May. Mr Tran was therefore thinking in terms of a further interim arrangement for 1975, with some GSP benefits for Hong Kong textiles, the final arrangement to be brought into effect in 1976.

Mr Stewart made clear the political importance of GSP for Hong Kong; and that the UK could not admit that any interim regime, with less than equity for Hong Kong was acceptable. Mr Lodge commented on the direct commercial effects of the exclusion of Hong Kong textiles from GSP benefits.

When asked what final form he foresaw for the textile GSP, Mr Tran said that there was a link with quantitative restrictions, He repeated his idea that GSP benefits should be inversely proportional to quotas, with safeguards to protect large exporters of low income levels (eg India) and provision for GSP on unrestricted products. It was suggested that the system developed this year for "super-competitive" beneficiaries could form the basis of a suitable scheme; Miss Lowne urged the simple inclusion of Hong Kong among the beneficiaries without further complication.

Mr Tran said that he hoped to visit Hong Kong in February/March, and suggested that Hong Kong should arrange a visit for officials concerned with GSP as a means of convincing them that their fears of Hong Kong were unjustified. Miss Lowne suggested that the result would be an enhanced fear.

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D B Lodge

CT1

9 December 1974

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