4.
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Sir M MacLehose said that Hong Kong understood UK problems but Hong Kong exports of sensitive items to the EC had actually declined since 1977. Hong Kong exports couldnotbe accused of causing trouble. He was, however, afraid of Hong Kong being made a scapegoat for exports from other countries such as the United States. The latter was safe from controls because it could retaliate but Hong Kong could not.
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5. Mr Dorward said that his impression from recent contacts was that some of the discredited ideas which had bedevilled the 1977 pegollaliqus werG PASTIAT Zging. He believed that the idea of finite level of imports to the EC from developing countires would be revived. There would be pressure for the cust to fall on the major suppliers in developing countries (and not the United States which was the real culprit), and Hong Kong would suffer.
6. Sir M MacLehose pointed out that in 1977 it had been claimed that cuts in exports from Hong Kong and other suppliers would benefit weaker developing countries. In fact those who had benefitted had been the developed countries. He asked that the Secretary of State should keep an eye on the problem. Sir Keith Joseph said that he understood but there was limited room for manoeuvre. There were serious political difficulties. Mr Dorward pointed out that the British Textile Industry was a different one from that which had been under consideration in 1977. Mr Baker said that the industry was nevertheless still being ripped to pieces by threats from imports. Mr Dorward pointed out that it was the United States which was mainly hitting the sector of the British Textile Industry which was vulnerable to job losses. He added that it should be made clear that Hong Kong was not necessarily asking for an improvement in terms but that the new MFA should not represent a deterioriation. Sir Keith Joseph said that he took the point and would do his best.
CABLE AND WIRELESS
7. Sir Keith Joseph referred to his statement in the Commons on 9 March about HMG's intention to sell part of their holding in Cable and Wireless. The sale would take place in September. He was very grateful for all that Sir M MacLehose had done to help over proposals for setting up a new Hong Kong subsidiary and over the dispute between Cable and Wireless and the Hong Kong Telephone Company. He asked when an adjudication would be made between the two companies in Hong Kong. Sir M MacLehose said that this should be done soon.
8. Mr Baker referred to rival bids for operation of telecommunications in Macao by the Hong Kong Telephone Company and Cable and Wireless. Sir M MacLehose commented that he thought that the Hong Kong Telephone Company bid was a legitimate one if it were for internal communications. He could not really intervene between two commercial rivals.
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