CONFIDENTIAL
FM HONG KONG
TO PRIORITY FCO
TELNO 788
OF 0210OOZ MARCH 90
INFO PRIORITY PEKING
CONFIDENTIAL
Now on own
file
Remove
HKCBI
FRECE!
-9 APR 1990
Acuon Taken
JUMPLIA
15
021330
JMOLIAN
MDLIAN 2958
cc Mr Firest
Mr Townsend
COMED
447 HKC0311 (87)
443
OUR TELNO 2717, YOUR TELNO 1837 AND 197 AND PEKING TELNO 1293 OF 1987 : INVESTMENT PROMOTION AND PROTECTION AGREEMENTS (IPPAS)
BACKGROUND :
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472
1. OF THE IPPAS TO WHICH THE UK IS A PARTY, NINE HAVE SO FAR BEEN EXTENDED TO HONG KONG. THEIR SURVIVAL AFTER 1997 COULD BE SECURED ON THE BASIS OF JD 178. HOWEVER, AS A MEANS OF ENCOURAGING INVESTORS TO CONTINUE TO INVEST IN HONG KONG AFTER 1997, THESE AGREEMENTS ARE NOT VERY EFFECTIVE. FIRST, THEY ARE WITH COUNTRIES WHICH HAVE LITTLE OR NO INVESTMENTS HERE. SECOND, BY BEING HEDGED WITH PROVISIONS ALLOWING EXCHANGE CONTROL TO BE EXERCISED BY HONG KONG, THEY SEND THE WRONG MESSAGE TO OUR INVESTORS, WHOM WE OUGHT TO BE REASSURING ON THE BASIS OF JD 98.
PRESENT POSITION
2. RATHER THAN EXTEND ANYMORE OF THE UK'S IPPAS TO HONG KONG BEFORE 1997, WE CONSIDER IT TO BE IN HONG KONG'S INTEREST FOR IT TO NEGOTIATE AND CONCLUDE ON ITS OWN A NETWORK OF IPPAS WHICH WOULD CONTINUE TO APPLY AFTER 1997 WITH COUNTRIES WHO ARE ITS MAJOR INVESTORS. A DRAFT MODEL AGREEMENT HAS BEEN PREPARED AND IS BEING SENT TO YOU BY SECURE FAX.
3. OUR INITIAL LIST OF COUNTRIES WITH WHICH WE WOULD LIKE TO NEGOTIATE IPPAS INCLUDE THE NETHERLANDS, CANADA AND SWEDEN, AS THEY HAVE EXPRESSED THEIR INTEREST IN ONE WAY OR ANOTHER IN CONCLUDING IPPAS WITH HK. THEREAFTER, WE INTEND TO PROCEED WITH USA, JAPAN, AUSTRALIA AND FRG WHO ARE TH MAJOR INVESTORS IN HK'S MANUFACTURING SECTOR. CHINA AND UK ARE EXCLUDED FOR THE TIME BEING FOR OBVIOUS REASONS.
COURSE OF ACTION :
4. WE PROPOSE TO GIVE THE CHINESE SIDE A COPY OF THE CRAFT MODEL AGREEMENT AT JLG XV, AND TO EXPLAIN TO THEM THE BENEFITS OF IPPAS
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