CONFIDENTIAL
DSR 11C
32. A significant expansion of civil exports to China
would have no repercussions for British exports in third
countries. Defence sales could, however, incur negative
reactions, notably in the Soviet Union and the United
States. If, for example, Rolls Royce were seen to be
actively involved in a large sale of Harriers to China at
a time when their RB211 deal with the Soviet Union was
still under negotiation, the Russians might perfer on
political grounds, to turn to Rolls Royce's American rivals.
The Spey deal does not, however, appear to have harmed
either Rolls Royce's or general British exports progress
in the Soviet Union. The Russians normally hardheadedly
seek the best product for their purpose on the best terms.
But political considerations are not be to excluded. No
rules can be laid down in advance except to say that, in
the first instance, the firm must judge its own commercial
advantage. If wider British commercial interests looked
like being involved, however, the Government would need to
intervene.
33.
British firms involved in sales of defence technology
to China might also in certain circumstances incur
difficulties with US customers or component suppliers.
This would generally apply only in cases which were "swing"
cases in a COCOM context. Much would depend on the attitud
of the US Administration.
In general, the British firms
concerned are as well placed as anybody to weigh the baland
of commercial advantage.
/SECTION V
CONFIDENTIAL
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