C.C.

CONFIDENTIAL

2.

by officials in the Department of Trade, Industry & Customs.

4. It is, in fact, a classical example of the voice of Britain not being heard on an occasion when our policies are in conflict with those of the Government of Hong Kong. There have, of course, been other examples of this in the past (e.g. Godber, sterling deposits, capital punishment etc.) but we have been able to keep out of the fray because there was no direct threat to our trading position. We should not change this sensible policy but I hope you will consider with the Department of Trade whether we should not commission an authoritative article, either from the COI or in consultation with the EEC Commission, which is directed specifically towards the Hong Kong situation and which we could quietly feed to our contacts in the local media. My Information Officer assures me that editors would happily publish any statement from an informed source on the British and/or the EEC case if it were to be made available. At the moment our case is going by default and even sensible commercial contacts are tending to believe that Britain has something to hide.

5.

Now that the negotiations have ended with an agreement which is being presented here as a grossly unfair to Hong Kong, we need some statement giving a more balanced view of this major problem in our bilateral relations. We cannot go on forever pretending that the textile negotiations are a separate issue. Lionel Lightman, who was her last week faced a barrage of angry comments. He made a noble attempt to widen the argument away from narrow concern for the 8 sensitive items but could not mount an entirely effective defence because he is not directly concerned with the textiles question, and we had no up-to-date knowledge of events. Even now were it not for the Hong Kong press I would be unaware that the Brussels talks have ended and you can guess that there is precious little reporting of the EEC's version of the final outcome.

6.

I know that you are well aware of the difficult situation which we face but I thought you would find it useful to have something further in writing reflecting my continued concern due to our inability to counter the more silly and emotional reactions which are being fueled by one-sided press reporting. Even if we cannot give detailed answers to the experts, we need a line to take with the general trading community until the storm blows over. A great deal of goodwill is at stake.

J.C.Priston, Esq., CRE 4.

Yours ever

Desch.

D. M. March

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