TNAG-0138-FCO40-174-Conduct-of-Hong-Kong-commercial-relations-1969 — Page 199

CONFIDENTIAL

BRIEF J

Conduct of Commercial Relations

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The attached paper on this subject was prepared in June 1968 by Mr. Haddon-Cave, Deputy Economic Secretary, after discussion with me.

Mr. Haddon-Cave was then in London for the Swedish and Norwegian negotiations (see paragraph 5 of the paper). He wrote the paper for my personal use and stressed that it did not represent an official statement of the views of the Hong Kong Government. I understand that it does, however, accurately reflect their views and as a general statement of the position it is acceptable to

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this department.

As I see it, there is one difficulty standing in the way of gaining complete acceptance of the general thesis in Mr. Haddon-Cave's paper. The conduct of HMG's commercial relations is in practice left to the Board of Trade. On this ground we can expect Board of Trade opposition to the proposition in paragraph 8 that an F.C.O. representative should preside when it is not appropriate for Hong Kong to conduct the negotiations. They can be expected to argue this quite strongly because they undoubtedly consider (although will not openly state) that we are too identified with Hong Kong's interests. The issue is only likely to arise when negotiations are held in London; if negotiations abroad are not "conducted" by the Hong Kong delegation then it would be a member of the Embassy or High Commission staff that would take the chair in the absence of any special

arrangements. The precedents in the case of London are evenly balanced; the 1968 Swedish and Norwegian talks were chaired by the

B.O.T.; too late did we in the department get to know that in the only previous instance of negotiations in London (in 1961 talks with the Americans) Sir Eugene Melville, then in the Colonial Office,

presided.

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But clearly we must press strongly for acceptance of the principle that the F.C.0. should preside. Distrust of the B.O.T's attitude is a real political issue in Hong Kong and understandably so when Hong Kong negotiates direct with the B.O.T. representing the U.K. interest on the agreements relating to the restriction of Hong Kong's cotton textile exports to this country.

4. There is an additional factor which at the present time gravely impedes the working of the arrangements outlined by Mr. Haddon-Cave.

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