RESTRICTED
6.
Mr Davidson then turned to the paper in which Dr Marshall had set out his arguments for joining with Westinghouse. In his view the case rested on two points which were incorrect:
7.
(a)
(b)
Dr Marshall had described the project as though it were British. But the Chinese would take the important decisions;
he had assumed that there was some British body which could take the contractual responsibility for such a project. But this was simply not
true at present.
*
Dr Marshall accepted that there was some validity in Mr Davidson's criticisms. But he was concerned that the Chinese might in the event opt for Westinghouse and the British would be caught out. I described the position as seen by the Far Eastern side of the FCO. I said that the Chinese had not yet taken any final decision to introduce nuclear power, nor had they made up their minds about the organisation of the nuclear industry. Still less had they finally decided on a choice of foreign supplier. They might in the event go for Westinghouse, but our judgement was that the French were at present in a favoured position. Recent developments made it less likely that the Guangdong project would go ahead, but we had to work on the basis that it would. It was important for political as well as commercial reasons that UK firms should get a share of the business but our position was not all that strong, despite the Hong Kong connection. We should therefore take the opportunity to combine forces with the French. I added that since all concerned in Hong Kong (the Governor as well as CLP) were in favour of a deal with the French, further prevarication would not be helpful to UK/Hong Kong relations.
8.
In further discussion there was a general recognition that the imminent negotiations on the Castle Peak B station argued very strongly for adopting the course urged by CLP. Dr Marshall, the nuclear industry representatives and the D/Energy all recognised the force of this argument. The BNFL representative said that even if an agreement between GEC and the French were signed, BNFL would wish to continue talking to Westinghouse: they would hope to get a share of the fuel contract if Westinghouse supplied the reactor in the end. Dr Marshall said that the safety problem would be difficult to handle if the government chose the French route and he would have to seek instructions in that event.
9.
At the subsequent meeting confined to officials, Mr Manzie said he wished to recommend to Ministers that approval should be given to GEC to sign their agreement with
RESTRICTED
/Framatome.