CONFIDENTIAL

Trade office in Hong Kong need not preclude it from offering

a visa service to Hong Kong residents. The views of the

Chinese have been sounded out in Hong Kong with the NCNA and

there was no adverse reaction. The Hungarians claim to have

spoken to the Chinese Ambassador in Budapest who said the PRC would have no objection to Hungary opening a permanent

office in Hong Kong.

7. Visa policy for Soviet and East European nationals was

relaxed by the Hong Kong Government on 16 July 1990 and as a

result visa application processing time for Hungarian

nationals (and Poles and Czechs) has been reduced to 10

working days, and purpose of visit extended to include

tourism and pleasure visits.

8.

The way forward now seems clear although further

informtion, eg to the size of the office, and date of

opening are awaited, from the Hungarians, who thought they

would be ready to open negotiations on the proposed office

some time after mid-July. They have not yet reverted. It

has been agreed here that it would not be wise to make the

establishment of this office a high profile issue during the

PM's visit to Hungary, given that it is a matter between the

Hong Kong Government and the Hungarians in an area where

Hong Kong enjoys autonomy, and also that an announcement

during this visit could be seen by the Chinese as a case of Britain using Hong Kong for its own diplomatic purposes. For much the same reasoning it is thought that there should

not be a formal agreement between Hong Kong and Hungary regarding the establishment of the trade office.

BUSAIB/3

CONFIDENTIAL

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