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Sir Lonson
DEFENCE CONTRIBUTION
1.
You will wish to reply today to Sir D Trench's telegram No. 317. A draft is attached.
2.
I am also attaching the draft of a submission covering 3 draft telegrams. The final form of the submission cannot of course be settled until we know what line the Treasury are going to take in response to our pressure for transitional arrangements excluding from the tariff cotton textiles shipped against quotas in 1971 but arriving in the United Kingdom after 1 January 1972. The 3 draft telegrams have been agreed with the Treasury and the MOD for more than a week now. The trouble is that the proposed paragraph 7 of the instructions to the Governor will be very weak if we cannot include something about the transitional arrangements for textiles. A copy of the Governor's telegram No. 291 is at Flag A in the attached file. I had originally hoped that we might be able to make a reference in paragraph 7 to the general assurances set out in paragraph 5 of the annex to the Secretary of State's message. However the DTI have correctly in my view pointed out that if we were to do this we would in effect be telling the Unofficial Members that if Hong Kong were to run into serious difficulties then HMG would reconsider policy on the replacement of quotas by a tariff on imports of cotton textiles from the Commonwealth producers. I have therefore thought it best to hold up the submission in the hope that we would soon obtain the Chancellor's agreement to our proposals. The latest position on this front, as I know it, is set out in Mr Heath's minute to Mr Gallagher of 13 May of which a copy is attached.
3.
You may wish to discuss this. and can come down at any time.
I have no meetings today
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E O Laird
Hong Kong Department
14 May 1971
Tel. Ser wont
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