TNAG-0154-FCO40-190-Exports-of-cotton-textiles-to-Canada-1970 — Page 81

in detail from London.

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The whole trend had been greater delegation. The practice had grown up that the Governor was not over-ruled without Hinisterial authority but this

had not apparently been obtained in the case of the recent

negotiations with Canada. He did not believe that limi tcd voluntary restraint would prejudice wider issues such as

the extension of the CTA in time, the question of an

agreement on man made fibres or the Stans' initiatives. on this occasion Hong Kong had not been evenpermitted to negotiate ad referendum and the TAB and EXCO had therefore

bcen very concerned because of the practice which had grown

up in the past.

10.

But

The situation had had to be reported to the TAB who had said that they thought that the position had been defined in the past and that it must be defined for the future. The

internal political situation was serious. The Communists

had failed to gain ground in 1967 because they had played

their hand badly, but Communist subversi on continued. It was cssential to conduct Hong Kong's affairs in a way which

would retain the support of the population. In the future more subtle attempts at subversion could be expected. The

Communists would have an excellent case if they could say that British interests were being put before Hong Kong's

interests and that Hong Kong was being dictated to from London and the Governor's advice being disregarded. This

would raise a major political issuc.

11. The meeting with the TAB had been very difficult. There had been talk among the members of walking out and of informing the trade associations of the situation immediately. They had given the Government a two day ultimatum to clarify

the situation but had subsequently extended it to ten to fourteen days (which expired on 2 September).

12. The Hong Kong Government felt that voluntary restraint with Canada would not prejudice other major issues.

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There