TNAG-1401-FCO40-1873-Future-of-Hong-Kong-continued-participation-in-the-General-A-1985 — Page 114

CONFIDENTIAL

11. These Protocols have included provisions for

specified annual increases in imports by the state

trader, and the progressive elimination of quantative

restrictions by existing developed contracting

partners. But they have not in practice produced

satisfactory results. Nor has this really mattered so

far: the East European economies are too small to have

had any significant disruptive effect on the GATT

system. The advantages which the West has in

participation by individual state traders have been

almost entirely political (encouragement of more open

economic policies, education in the ways of the liberal

market, incentives to economic and political diversity

in the Eastern bloc). In economic terms, the

advantages have been neglible. Hungary, for example,

has been assiduous in claiming the trading advantages

from the Community and others which she considers her

due as a signatory to the GATT; but acute shortage of

foreign exchange would have made it impossible for her

to live up to her obligations to increase trade with

the West even if she had been willing to do so and even

had the quota restrictions on her trade with Western

countries been substantially reduced or dismantled.

12. An important disadvantage of Chinese membership,

however, both in political and economic terms, is that

CONFIDENTIAL