TNAG-1401-FCO40-1873-Future-of-Hong-Kong-continued-participation-in-the-General-A-1985 — Page 74

Я

CONFIDENTIAL

Office of the United Kingdom Permanent Representative

to the European Community

Rond-Point Robert Schuman 6 1040 Brussels

Telephone 230.62.05

In. Elyfan Mr. Purely

but

Price 61 M

J A Shepherd Esq

ECD(E)

FCO

AKK 84-5/24

Your reference

Our reference E021/615/28

Date

6 Kay 1985

Dear John.

CHINA AND THE GATT

مرغ

27

1. Tony Lane sent me a copy of his letter of 27 March to Robin Renwick on the trade policy considerations relevant to China's application to join the GATT. I have also seen your letter of

4729 April attaching a revised FCO draft paper with which we agree

in very large measure.

2. Seen from here the key question is whether we judge China's membership of the GATT to be inescapable. All seem to be agreed on the general assessment that a determined Chinese application could not be prevented. Two main conclusions follow from this premise.

༣. First, it could be at best pointless, at worst counter- productive and dangerous for the UK, or the Community, to take any lead in canvassing the view that China's application should be headed off. It is difficult to see how such lobbying could long escape the notice of the Chinese or how we (and/or Community) could then explain away our efforts once the Chinese got to hear about them. Meanwhile, there could well be serious implications for the future of the Hong Kong agreement (as clearly set out in paragraphs 7-9 of your revised paper). I suggest too that our wider trade policy objectives, in aining both to develop Community trade with China and more generally to strengthen the multilateral trading system, could be jeopardised. I accept (paragraph 11 of the DTI note) that China's accession could add to the strains on the GATT system; but it could also be argued that the exclusion of an increasingly competitive China from the GATT could make for even more tension in the multilateral trading system in the long run.

4. It follows from this that priority should be given to considering ways to overcome the trade policy difficulties identified in the DTI paper (it would, as you say, be helpful to see the detailed analysis on which they are based). The possible options for special terms set out in paragraph 19-21 of the DTI note and now incorporated in your revised paper seem to us to be a very useful starting point for discussion, subject to the following considerations:

(a) China's

CONFIDENTIAL