TNAG-1148-FCO40-1428-Effect-on-Hong-Kong-of-the-Portuguese-and-Spanish-accession--1982 — Page 19

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cost of cereals.

They recognised the need to change,

but they could not afford to pay some 300 mecus

annually in levies.

While they would not expect to

continue to receive US credits for cereals after

accession, they did not want to switch their source of

supply too radically.

For one thing it would be better

for Portugal in the budget chapter to have a levy minus

to score up than to incur a non-budgetary cost. They

had sought an application to Portugal of the temporary

reduction of import levies on coarse grain currently

applied in Italy, but had been told by the Commission

that this was not acceptable. Mr Hannay confirmed that

this proposal was unlikely to get very far.

7.

Sugar

Dr Marta explained

this was a sensitive area

for Portugal because of its sugar cane refineries.

Their hope to get some enlargement of the quantities in

the Community sugar protocol had been discouraged by

the Commission. They recognised the need to change

their suppliers from Cuba to Africa. Mr Hannay

expressed sympathy. We had also to think of our

domestic sugar cane refineries on accession (although

we had had to close 4 out of 6 since accession because

of decline in consumption).

We had not heard that the

Portuguese had proposed an increase in the quota from

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