PP HONG KONG
HKIOD
√214
2015
GR 400
CYPHER/CAT A
FM D T 1 181648Z
CONFIDENTIAL
HKK21/4
PA
2
27:14
TO PRIORITY BTC HONG KONG TELNO CREDA 132 OF 18 SEPTEMBER.
FOR ASTON FROM WATSON, DTI (OPG).
1. YOUR CREDA 104 OF 14 SEPT. A COPY OF THE FULL SET OF DOCUMENTS
IS BEING POSTED BY NEXT BAG. YOU SHOULD BY NOW HAVE HAD A COPY OF
CAINE'S MINUTES OF THE SECRETARY OF STATE'S MEETING OF 6 SEPTEMBER.
2. OUR VIEW OF THE WAY THE MEETINGS WENT IS THAT WE THINK THE
BRITISH GROUP PRESENTED A VERY REASONABLE CASE WELL BUT THAT IF
HONG KONG STICK RIGIDLY TO THEIR PRESENT REQUIREMENTS THEN THE BRITISH GROUP WILL IN PRACTICE NO LONGER BE IN THE RACE. THIS
BROADLY CONFIRMS YOUR PARA 3 THOUGH IT IS STILL AT LEAST THEORETICALLY POSSIBLE THAT THE NEXT STAGE OF PRICING AND NEGOTIATION WILL INCLUDE THE ITALIANS AND THE FRAMCO-GERMAN GROUP.
3. GIVEN THE E AND M MANUFACTURERS GREATER WILLINGNESS TO TALK
ABOUT LIMITING PRICE UNCERTAINTIES AND THE CONSTRUCTION COMPANIES'
MUCH GREATER CAUTION THEN A PARTING OF THE WAYS IS INDICATED IN THE
EVENT OF THERE BEING A CONTINUING BRITISH INTEREST AT ALL. WHAT
OPENINGS THERE MAY BE FOR MERGING OF THE MANUFACTURERS INTERESTS WITH
OTHERS IS NOT CLEAR TO US AT THE MOMENT.
# THE LINE TAKEN BY US IS THAT:-
1. THE BRITISH GROUP'S APPROACH TO THE HONG KONG GOVERNMENT'S
PROBLEMS ARE ENTIRELY REALISTIC AND FAIR TO BOTH SIDES:
11. HONG KONG SHOULD TREAT WITH PARTICULAR CAUTION ANY OFFER TO
ENTER INTO A FIXED PRICE OR CEILING PRICE CONTRACT, GIVEN THE UNCERTAINTIES ESPECIALLY IN RELATION TO THE TUNNELLING. IN DEALING
WITH THESE PARTIES THE HONG KONG GOVERNMENT RUNS THE RISK OF HAVING
TO RENEGOTIATE THE CONTRACT IN SOME YEARS TIME WHEN IT WILL BE AT
A VERY CONSIDERABLE DISADVANTAGE:
11. IF THE JAPANESE COMPANIES APPEAR TO BE ENJOYING THE PROMISE OF A GOVERNMENT SUBSIDY IN ORDER TO KEEP THEM WITHIN A CEILING PRICE, THEN THIS IS SOMETHING WHICH HMG WOULD REGARD AS CONTRARY TO JAPAN'S INTERNATIONAL TRADING OBLIGATIONS.
5. THIS IS THE LINE WHICH YOU SHOULD FOLLOW IF OCCASION ARISES. ECGD ARE REPLYING SEPARATELY ABOUT YOUR REFERENCE TO THEM IN PARA 4.
6. A MEETING HAS BEEN ARRANGED BETWEEN THE SECRETARY OF STATE AND
SIR ARNOLD WEINSTOCK AND MR SOWDEN FOR THE EVENING OF WEDNESDAY 19
SEPTEMBER. YOUR CREDA 105 HAS BEEN RECEIVED, ANY FURTHER
INFORMATION ABOUT THE STEERING COMMITTEE'S MEETING WITH THE
JAPANESE WOULD BE PARTICULARLY HELPFUL IF AVAILABLE IN TIME FOR THAT
MEETING.
DTI
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