Mr. Carter
Reference. HKK 6/548/6
4%
At He.9 copy of Telex to Hong Kong Government Office giving text of
Mr. Sorby's statement on the 27 November about the Import Deposit Scheme.
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2. This statement was no doubt suitable for delivery to a Hong Kong audience which might have needed to be reassured that the Import Deposit Scheme would not damage their trade with the United Kingdom too much. On the other hand, it would not be suitable at this end where it might provoke the sort of restrictions on overseas financing of customs deposit, which would greatly increase the impact of these measures on Hong Kong's export trade. It is a good thing that the Hong Kong Government Office do not intend therefore, to publicise the statement in this country. There has already been enough publicity on the lines of the recent D.T. article "Driving ▲ Coach and Four through the Import Scheme".
Of course, the tone of the statement is very loyal to the United Kingdom as you would expect it to be, and this is all to the good.
3. As I told you the Hong Kong and Shanghai Bank has asked the Hong Kong Government Office to sound out Treasury and the Bank of England's reaction to a scheme by which the Hong Kong Banks by a sort of co-operative effed, would raise block finance to cover import deposits payable on goods already in transit, and place these funds with Customs so that importers could draw on them as necessary. The Hong Kong Government Office does not seem to favour such a scheme, because they envisage accounting and admini- strative problems at the Hong Kong end in which they would be involved. Whether or not the Treasury would allow the scheme, it seemed to us that it might attract yet more publicity of the sort we wish to avoid about the ineffectiveness of the recent measures to restrain imports. I have told Mr. Sellers that we would not be willing to recommend the scheme to the Treasury or the Bank of England, and that we can see disadvantages in it for the time being.
2nd December 1968
(H. H. Stewart)