CONFIDENTIAL
4.
As we read it, the full extent and implications of the oil situation do not appear to have been recognised in llong Kong. The situation is certainly difficult to quantify but all the indications are that a pretty revolutionary change has taken place which will entail changes and adaptation on a world-wide scale. We are doing what we can to help the Hong Kong Government focus on the problems by keeping them informed of developments this end and sending all relevant material to them, but the realities do not appear to have sunk home.
5.
One final point before I turn to particular items - the postponement of the Prime Minister's visit. Whilst Mr Heath's proposed visit to Hong Kong had helped to focus Ministers' minds on the many conflicting bilateral issues outstanding between ourselves and Hong Kong and had given the stimulus to settle them, most remained undecided when the January visit was cancelled. In the immediate aftermath of the ExCo decision on the underground our view is that a visit by the Prime Minister at that time would have been more likely to upset our bilateral relations with the Colony further. I doubt if Mr Heath would have taken kindly to criticism from, e.g. the textile lobby with their tunnel vision. So it is probably just as well that external events intervened. Clearly, the Prime Minister will have to consider as soon as possible a date for his visit to Peking but there has been no move in this direction yet.
6.
GSP
7.
Let me now turn to current issues.
It has been agreed that we should encourage the Commission to propose the 1974 review of the GSP early in the New Year (probably February). This will help Hong Kong as we would hope that the review would be completed by the end of July. This will, of course, be in respect of provisions for 1975 but as David Jordan has already pointed. out, a decision taken at the end of December, even if it comes into effect in practice at the beginning of January, does not have any practical results for at least six months.
8.
We considered whether HMG should take the initiative in raising this but have accepted that for us to do so would be unlikely to bring about the same practical effect as if it were raised by the Commission. We have put this point to the Governor on the basis that we assume he prefers to get results and that we can therefore expect him to make clear to relevant organisations in Hong Kong that HMG is supporting the Commission's move behind the scenes. As you know we are convinced that the only way to improve our image in Hong Kong is through the Hong Kong Government.
CONFIDENTIAL
ནོ
/Sterling