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CONFIDENTIAL

CONFIDENTIAL

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HONG KONG'S RELATIONS WITH VIETNAM

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1. WE HAVE BEEN REVIEWING OUR RELATIONSHIP TOWARDS VIETNAM IN THE LIGHT OF THE SLOWLY IMPROVING VIETNAMESE ATTITUDE ON VBPS: CHANGES IN VIETNAM ITSELF (PRIMARILY IN THE FIELD OF ECONOMIC POLICY): AND THE CHANGING US POLICY TOWARDS VIETNAM (THE US CONSUL-GENERAL AND OTHER AMERICANS HERE DO NOT RULE OUT THE POSSIBILITY THAT THE US MAY LIFT ITS TRADE EMBARGO ON VIETNAM ONCE THE FRAMEWORK OF A CAMBODIA SETTLEMENT IS IN PLACE). IN PARTICULAR WE HAVE BEEN LOOKING AGAIN AT THE POTENTIAL INDUCEMENTS THAT WE CAN OFFER, NOW OR LATER, FOR A CONTINUATION OF THE IMPROVEMENT IN VIETNAMESE DEALINGS WITH US. THESE INDUCEMENTS ARE IN THE FIELDS OF TRADE PROMOTION, VISAS, AIR SERVICES AND CONSULAR RELATIONS.

2. SUBJECT TO YOUR VIEWS, WE PLAN TO MODIFY OUR PRESENT POLICY IN THE WAYS AND FOR THE REASONS SET OUT IN THE FOLLOWING PARAGRAPHS.

TRADE PROMOTION

3. ALTHOUGH INVESTMENT IN AND TRADE WITH VIETNAM IS ALREADY ON THE INCREASE (WITH TWO-WAY TRADE UP BY 20 PER CENT SO FAR THIS YEAR), WE HAVE SO FAR DISCOURAGED THE HONG KONG TRADE DEVELOPMENT COUNCIL FROM ACTIVELY PROMOTING BILATERAL TRADE. THE LACK OF THIS MAY NOT HAVE BEEN NOTICE BY THE VIETNAMESE (THE HONG KONG GENERAL CHAMBER OF COMMERCE HAS ALREADY STARTED TO PROMOTE TRADE VISITS IN BOTH DIRECTIONS). WE DOUBT IT IT GIVES US MUCH, IF ANY, LEVERAGE. BUT SOMETHING COULD BE MADE OF IT WITH THE VIETNAMESE IF WE SANCTIONED IT. IT WOULD CERTAINLY BE WELCOMED BY HONG KONG BUSINESSMEN. MOST OF THE BENEFIT OF SUCH PROMOTION WOULD ACCRUE TO US. WE THEREFORE PLAN TO AUTHORISE THE TDC TO GO AHEAD WITH THIS.

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VISAS

4. UNDER OUR PRESENT VISA POLICY, THE VIETNAMESE ARE TREATED IN THE SAME WAY AS THE SOVBLOC. VISAS ARE GRANTED FOR BUSINESS VISITS, AND APPLICANTS GO THROUGH THE 28-DAY SECURITY CHECK WITH

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CONFIDENTIAL

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