Also av. He
CONFIDENTIAL HKKRICOS.
No. Ji
SO
1
Mr Quantrill
HONG KONG EXTERNAL TRADE
10
OFFICER
INDEX
REGIS MY
Action
On 22 September, Mr Stagg and I met wilt Mr Mills of the Hong Kong Trade, Industry and Customs Department who wée transitting London on one of his periodic visits to Europe. He again took time off to keep us up to date on activities.
US Non-rubber footwear
Mr Mills was able to reach a satisfactory arrangement with the American authorities whereby Hong Kong will export licence all exports of non-rubber footwear throughout the world and in addition, for products destined for the US market only, they will issue Certificates of Origin. Both sides are hopeful that this will reduce the massive increase of sales to the US market of these products. The increase was due almost exclusively to Taiwanese manufacturers trying to circumvent the "orderly marketing arrange- ment" agreed between the Governments of Taiwan and the USA. The Taiwanese manufacturers had been sending to Hong Kong partially completed products which had then been finished in Hong Kong and exported to the USA. Because of Hong Kong's interpretation of "origin" such products will not be eligible for a Hong Kong Certificate of Origin.
I asked Mr Mills why Hong Kong had made this major concession in agreeing for the first time to the regulation of non-textile trade. He claimed that it was simply because it was an expedient solution to a genuine problem. However it was quite clear that the Hong Kong Government was under pressure from domestic footwear manufac- turers to take steps against import penetration by Taiwanese products!
MFA
There are two minor problems with the workings of last year's agreemt: categorisation and Certificates of Origin. The details are somewhat complex but hopefully unimportant since Mr Mills was confident that an amicable solution would be reached. He was also anxious to have the bilateral agreement between the EEC and Hong Kong signed since the major agreement was now almost one year old.
Norway
Mr Mills confirmed that the recent negotiations produced no solution to the dispute. The Hong Kong Government are now considering what further action they should take. While they do not want to have to make a formal complaint in GATT they recognise that in all probability they will have to. If so they will ask us for our help. Mr Mills expressed his appreciation for the help afforded to the Hong Kong negotiators by our Embassy in Brussels Oslo.
Mr Dell's visit
Although Mr Dell made a number of points which could not reasonably be expected to be popular in Hong Kong the overall impression was that he came over very well. Mr Mills was adamant that it was far better for British Ministers to make realistic if hard statements than platitudes which nobody believed. Mr Dell did not apparently make the point in his brief that we have no objection to Hong Kong's present status in GATT. Mr Mills agreed that it would be useful if Mr McLaren made this point and I have included it in his brief.
CODE 18-77
CONFIDENTI AL
(Imports
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