CONFIDENTIAL
82
CYPHER/CAT A
IMMEDIATE HONG KONG
TELEGRAM NO.662
RECEIVED IN
TO FOREIGN AND COMMONWEALTH OFFICE 20 AUGUST 1969
TRY No. 51
20 AUG 1969 LAST
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NEUTRAL
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ADDRESSED FCO TELEGRAM 662 OF 20 AUGUST RFI OTTAWA.
79) MY TELEGRAM 659.
CANADIAN TEXTILES.
YOU WILL WISH TO KNOW OF CERTAIN DEVELOPMENTS INVOLVING TAIWAN WHICH
HAVE COME CONFIDENTIALLY TO OUR NOTICE THROUGH HONG KONG MANUFACTURERS WITH INTERESTS THERE. WE UNDERSTAND THAT RECENTLY
THE TAIWAN GOVERNMENT TOOK THE INITIATIVE IN PROPOSING TO CANADA
NEGOTIATIONS ON M.M.F. SHIRTS AND WERE TOLD THAT THE RESPONSIBLE OFFICIALS WERE COMING TO HONG KONG. THEY THEN PROPOSED NEGOTIATIONS
IN HONG KONG, SUBSEQUENTLY, BELIEVING THAT IT WOULD BE DIFFICULT TO SECURE THIS GOVERNMENT'S CONSENT TO AN OFFICIAL DELEGATION, THEY
DECIDED TO CONSTITUTE AN INDUSTRIAL DELEGATION TO NEGOTIATE WITH
THE CANADIANS IN HONG KONG. VIRTUALLY THE WHOLE DELEGATION IS SAID
O HAVE ASSEMBLED HERE ALREADY.
2. IT IS FURTHER UNDERSTOOD THAT, TAIWAN HAVING COMPARATIVELY POOR ERFORMANCE IN THIS FIELD, IT IS THEIR INTENTION TO SUGGEST TO THE CANADIANS THAT, HONG KONG CLEARLY HAVING NO INDEPENDENT AUTHORITY TO NEGOTIATE, A SUBSTANTIAL PART OF HONG KONG'S EXPORT PERFORMANCE BE USED AS A BASIS FOR PURPOSES OF DETERMINING A RESTRAINT LEVEL TO BE ALLOWED TO TAIWAN. HOWEVER ABSURD THIS MAY APPEAR ON THE FACE OF
IT, THERE IS GENUINE FEAR ON THE PART OF OUR INDUSTRIAL ADVISERS THAT HONG KONG'S PRESENT IMPOTENCE IN THE FIELD OF NEGOTIATION WILL CAUSE A GENERAL LOSS OF NEGOTIATING STRENGTH AS WELL AS OF GOODWILL, WHICH WILL HAVE SERIOUSLY DAMAGING REPERCUSSIONS ON OUR TRADE.
3. FURTHERMORE, INDUSTRIAL ADVISERS ARE NOW CONSIDERING PROPOSING TO THE INDUSTRY THAT THEY FOLLOW THE TAIWAN EXAMPLE AND FORM AN INDUSTRIAL DELEGATION TO COME TO AN AGREEMENT WITH THE CANADIAN GOVERNMENT WHICH THIS GOVERNMENT WOULD NOT BE ABLE TO REFUSE TO. ADMINISTER, THEY RECALL THE EVENTS OF 1958 LEADING TO HONG KONG'S
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