TNAG-0465-FCO40-530-Entitlement-of-Hong-Kong-to-EEC-Generalised-Scheme-of-Prefer-1974 — Page 18

Mr Lodge, CT Division

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Miss Lowne

Mr Ingram

Miss Welch

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Mr Stewart, HKIOD/FCO

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GSP TEXTILES FOR HONG KONG

I am sorry that you have had nothing before from me on tomorrow's meeting with Mr Tran. I would see the main purpose of the meeting from our point of view:-

1.

(i) to impress upon Tran the political importance for us of getting

Hong Kong included in the Textiles GSP for 19763

(ii) to back this as best we may with figures of Hong Kong's trade

deterioration relative to her competitors since the inception of GSP.

(iii) To hear what Tran has to say about the Textiles GSP after the MFA

bilaterals.

2. On (i), I think there is no doubt that Ministers would wish us to press strongly for the best terms possible for Hong Kong in the Textiles GSP, in 1976 in further pursuance of their re-negotiation objective of "a substantial improvement in Hong Kong's position".

3. On (ii), you have the expert command of the field. However on a quick look through the statistics I notice that there does seem to be prima facie evidence of deterioration in Hong Kong's position between 72 and 73. Of the 59 sensitive and semi-sensitive textile items in GSP, our imports from Hong Kong, in volume terms, was lower in 73 than 72 in 25 of them. For 2 of the 4 regulations, her imports were down overall and for a third there is a moderate increase.

{

Metric Tons

1972

1973

11461

3503/73

12746

10513

3504/73

12814

3505/73

174

8867 191

4.

Overall, her trade increased substantially but this is due almost entirely to imports in two tariff headings in 3502/73, 60.01 and 61.02; if these are taken away there is a drop of about 20%. While these two headings of course loom large in Hong Kong's trade (accounting for some three-quarters of the total), the average drop in all other items is rather startling.

5. I look to you to put this in perspective against Hong Kong's competitors' trade patterns.

Have for instance South Korea's exports shown this trend or has she, as the Hong Kong authorities alledge, gone from strength to strength?

6. As regards the impact of admitting Hong Kong to the Community's GSP it would seem that on a swift glance her trade is either way above the butoirs in which case the grant of GSP preferences would hardly affect it – or virtually non-existent in which case we have nothing to worry about.

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