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W(B)L 51-7406
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Hong Kong were first to record their under-
standing of the agreement, which they did a year
ago in a despatch clearly reflecting the
Governor's hard feelings, and which also placed
on record that Hong Kong saw no reason to alter
the growth factors in the Heads of Agreement.
It should be noted also that the Board of Trade
agreed to provide mid-1969 import statistics in
the light of which the modifications accepted by
Hong Kong might be reviewed in 1970.
They have
not done so. Hong Kong argue that they could
not tell whether the situation by mid-1969 would
justify a proposal that growth should be 3%; or
more as provided in the Heads of Agreement.
It was three months before a reply was sent
to the Governor's despatch. In this reply the
Board of Trade made their first formal statement
about growth, to the effect that there could be
no question of allowing a rate above 3%. They
said then, and continue to say now, that because
they had not previously allowed any growth for
Portugal, and did not subsequently allow any
growth for India, it was unthinkable that they
should agree to the 6% Hong Kong demanded (as of
right).
It appears that the most compelling argument
with the Board of Trade against conceding Hong
Kong's argument is that it would tilt the balance
against India. It may be the case that it would
be embarrassing to the Board of Trade to make a
concession to Hong Kong which they did not make
to India. But should this incidental considera-
tion weigh as heavily against Hong Kong's
interests, as the positive undertaking in the
Heads of Agreement? In the absence of any
/ subsequent
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