AUS(GS)529/75
PS/Minister of State
SECRET
480
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APS/Secretary of State
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PS/FUS
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DUS(P) ACPL
AUS(D Staff)
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Head of DS1
Head of DS6 Head of F1(Air) DDAQ
Mr O'Keeffe, FCO Mr Hansford, Treasury · Mr Aggleton, PSA
HONG KONG DEFENCE COSTS AGREEMENT
The Governor of Hong Kong spoke to me on the telephone yesterday. He had received the Minister of State's letter of 12th December pressing for the Agreement to be announced on 19th December, but said that his agreement to an announcement remained conditional on clarification of the timing of any statement on import controls, or an assurance that Hong Kong would not be affected. If this was not forthcoming he would prefer to see the announcement of the Agreement postponed until the New Year, in spite of the practical difficulties this would present. I reiterated our desire for an early announcement and said that I believed that Ministers were that morning considering the question of import controls, so that the uncertainties might soon be removed. I promised to telephone him at about 11 am today with further news.
2. I understand that at the meeting of the Economic Strategy Committee yesterday morning Ministers agreed that there should be an announcerent on import controls during the debate on employment tomorrow, but that to avoid prejudicing the Defence Costs Agreement no action should be taken against imports from Hong Kong for the time being, although the matter might have to be looked at again later. I believe that this should provide sufficient assurance for the Governor (who has been given authority by the Executive Commeil to decide the manter of timing) to agree to the announcement being made on 19th December. It is unlikely that Ministers will reconsider the question of control on imports from Hong Kong until after the Christmas recess, so that even if it were then decided to impose controls on Hong Kong there would be a reasonable interval between the two announcements. If the Minister
of State is available he may wish himself to speak to the Governor at 11 o'clock this morning to convey this information and seek agreement to the announcement on 19th December.
SECRET