TNAG-2478-FCO40-3608-Trade-relations-between-Hong-Kong--the-UK-and-other-countrie-1992 — Page 74

The Rt. Hon. Tim Sainsbury Minister for Trade

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1

Tim Eggar Esq House of Commons London

SW1A OAA

30

March 1992

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Tim

2

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SOS SPG

Department of Trade and Industry

Ashdown House 123 Victoria Street London SW1E 6RB

Direct Line 071-215 5356

DTI Enquiries

071-215 5000

Mr Roberts

Mr Baker OT4

Mr Meadway OT2

Mr Love/OT2

Mr' Murray Oт2/2'

Mr Payne ITP3B

Mr Crowhurst ITP3C Miss Gray OT2/2D Mr Anisfeld Sp.Adv.

K Melville OT4/3A of

Thank you for your letter of 12 March, enclosing one from Mr Bourne of Delta Crompton Cables Ltd, about South African competition for a contract in Hong Kong.

You asked me to look into the details of South African state aids to see whether they are in breach of international trade agreements. The State subsidy mentioned is most likely the General Export Initiative Scheme (GEIS), where manufacturers of products with a high level of South African content receive a rebate from the government on the value of the export. Although the GEIS would be certainly in breach of the GATT Subsidies Code, South Africa is currently only an observer to the Code and is not therefore subject to the disciplines of the Agreement.

As you will realise, until the recent and most welcome, political developments South Africa was outside the mainstream of the international trading community. The situation is changing rapidly and improvements in South Africa's external trade relations mean that trade disputes are now more likely to be pursued in the GATT. South African trade policy is due to be reviewed at the GATT Trade Policy Review Mechanism in September. The GEIS and other issues will be discussed then.

SB.W04

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