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responsible for Hong Kong, is a very difficult one. There
is a feeling in Hong Kong that we have not fulfilled our
obligation to protect their interests. If the Governor should repeat this accusation, I recommend that the Secretary
of State should firmly repudiate it and stress that a successful conclusion of the negotiations now going on in
Brussels is the only way in which Hong Kong can be given security of access over the years to come while at the same time providing the protection which is needed by the British textile industry.
The Governor will probably not wish to enter into detailed discussions on the textile negotiations with the
Secretary of State. He will be calling on the Permanent
Secretaries in the Departments of Trade and of Industry.
If
he complains of hostility in those departments towards Hong Kong, it might be worth pointing out to him that one of the causes is the continuing gross imbalance in trade between Hong Kong and the United Kingdom. Although there has been some improvement this year, Hong Kong will buy from us less than half as much as she sends us: in these circumstances it is
difficult for Ministers to accept that they should protect
Hong Kong's right to send us unreduced quantities of low-cost textiles. Hong Kong's image is bad in Britain at the moment
and one of the reasons for this is the well-known imbalance in visible trade. The Governor might be urged to do his best to ensure that British manufacturers get a maximum share of coming big contracts, e.g. the China Light and Power development and the Mass Transit Railway extension.
The Governor will almost certainly suggest that British firms do not take the Hong Kong market sufficiently seriously. In particular he will point out that the Hong Kong market is four times larger than that of China, but gets much less
attention from senior British businessmen.
22 November 1977
cc: PS/Lord Goronwy-Roberts
OLA
Mr Stern (EID(E)
JA
4.0. B. Steen.
AB Stewart
Hong Kong & General Department
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