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Mr O'Keeff
Geffe
HONG KONG: IMPORT CONTROLS
1. In paragraph 4 of my submission today to PS/Lord Goronwy-Roberts I said that the next step on the Defence Costs Agreement would be to bring the Governor up to date on the outcome of the MES Committee's consideration today and the question of import controls as they affect Hong Kong.
2. I have spoken to Mr Blanks in the Cabinet Office, who was present at the MES Committee Meeting and prepared the draft minutes. As approved, Mr Blanks told me that the minutes as they relate to Hong Kong read to the effect that no action would be taken against Hong Kong for the time being but that the question might have to be considered at a later date. I under- stand from Mr Arbuthnott, who spoke earlier to the Cabinet Office, that an announcement about import controls will be made on Wednesday, 17 December, and,consistent with the MES conclusion, Hong Kong will not figure in it.
3. Mr Blanks told me that he had been in touch earlier with Mr Andrew, MOD, about, the outcome of the MES Committee Meeting and would be letting hem know what the minutes would say as regards Hong Kong. I understand that the minutes will be distributed first thing tomorrow morning.
4.
My initial reaction is that the conclusion reached by the MES Committee and the fact that an announcement will be made on 17 December which will not mention Hong Kong, res the Governor's concern over the timing of an announcement on the Defence Costs Agreement. Mr Blanks's view, which I am inclined to share, was that it would be better not to tell the Governor that the question of imposing import controls against Hong Kong might be considered at a later date. Mr Arbuthnott's impression is that this possi- bility was left open in order to soften the blow for the Secretary of State for Industry and that nothing may in fact be done about Hong Kong. In any case, I imagine that it would be the New Year, at the earliest, before anything might be done and even if it were to be to Hong Kong's disadvantage, the Governor's concern about timing would still have been met.
D.F. Milton
DF MILTON
Hong Kong and Indian Ocean
Department
(K 245 4381)
CODE 18-77
15 December 1975
cc: Mr Male
W ketten Dim
·70412.
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