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death penalty. Although no death sentence has been carried out since 1966, the death penalty issue has several time given rise to difficulties. A particularly awkward situation arose in 1973 when the Governor decided against commuting the death sentence on a convicted murderer. In the event, the Secretary of State of the day advised The Queen to exercise the Prerogative of Mercy. This caused much resentment in Hong Kong on the grounds that local opinion had apparently been overruled by domestic political considerations in the UK. An announcement by the Governor in late 1975 that he would impose life sentences, save in exceptional circumstances, when commuting the death penalty, appears to have taken some of the sting out of this issue but it remains sensitive.
UK/Hong Kong Economic Relations
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16. UK trade with Hong Kong is substantially in deficit and this trend has been increasing rapidly over recent years. In 1976 we imported goods from Hong Kong valued at £439.6 million against exports of £204.4 million. HMG and the Governor of Hong Kong have been concerned for some time about this trend and when the Permanent Secretary at the Department of Trade visited Hong Kong in October 1976 it was agreed that a study group should be set up to investigate ways in which the UK's export performance might be improved. The
UK is represented on the group by the Senior British Trade Commissioner in Hong Kong, and the group is at present studying selected industrial sectors, in which there may be scope for increasing British sales. Plans are also being made for the Hong Kong General Chamber of Commerce and the Hong Kong Trade Development Council to send buying missions to the UK this year. The Governor is very much alive to the need to ensure that the UK's political links with Hong Kong are backed by strong commercial links.
17. There are differences between the UK and Hong Kong over the question of textile imports from Hong Kong to the UK. Sixty-seven percent of Hong Kong's exports to the UK are in the field of textiles and the Hong Kong Government are worried lest any renegotiation of
/ the Multi-Fibre
CONFIDENTIAL