ANNEX B
TEST OF AGREED JOINT STATEMENT ON HONG KONG
DEFENCE COSTS
The
During the past week, negotiations have taken place between delegations of Her Majesty's Government headed by The Rt. Hon. William Rodgers, MP, Minister of State for Defence, and the Hong Kong Government headed by the Governor, Sir Murray Maclehose. These negotiations followed exchanges which have taken place during the last year on a successor agreement to the present Defence Costs Agreement which expires on 31st March, 1976. negotiations were based on the clear acceptance by both sides of the need for a garrison capable of maintaining the security and integrity of Hong Kong and demonstrating HMGs continuing responsibility for the colony. Such a garrison is also regarded by both governments as an important factor in maintaining confidence. As a result of these negotiations agreement has been reached on the size and total.cost of the garrison. The future garrison will be reduced from its present level of 6 2/3 units to include only four Infantry Battalions (one of them British), a Gurkha Engineer Field Squadron, five Royal Navy craft and a squadron of eight Royal Air Force Wessex Helicopters. The total cost at current prices is estimated at 450M HK Dollars (£42.5M) a year, compared with the cost of the present garrison of nearly 7M HK Dollars (£65M). Hong Kong will have to bear a
substantially higher proportion of the total cost of the garrison than in the past:
but the size of the contribution will have realistic regard to Hong Kong ability to pay. During the course of this week's negotiations the basis for sharing the costs was the major point under discussion. Other points included the release of further land at present occupied by the garrison, the method of calculating costs and the rates of exchange used, and the formula to be employed to reflect any inflation. There will be further examination of these matters. Both governments hope for an early and satisfactory settlement so that an agreement can be concluded and details made known before the end of the year.