C. & 1. 200
2700206
5,000-7/66-B55340
BY DIPLOMATIC BAG
CONFIDENTIAL
TELEGRAPHIC ADDRESS:-
"CANDIHONG" HONG KONG
N.. Stewart
REF.:
CR EIC 294/5/11/5 II
YOUR REF.:
5 Think we can now
रिकरि KAR (76
ok File
COMMERCE & INDUSTRY DEPARTMENT,
FIRE BRIGADE BUILDING,
HONG KONG.
30 October
196 9.
17
RECEIVED IN REGISTRY No.51 - 6 NOV 1969
bKKG | SV8/1
Dear Bunny,
retion to the charge on this.
Plse speak
152 5/1
On my recent visit to London we spoke only briefly about "growth on wide sheeting" because I hadn't got my papers with me. You told me that Peter Carey's response had been an adamant refusal to consider more than 3% growth. I wonder whether Bob Goldsmith was consulted. The more formal earlier exchange of correspondence went through him (as an Assistant Secretary in CRE then) and during my visit to London in June I briefed him and Owen Kemmis at some length (but unofficially) on the growth issue.
I find the Industries Division attitude difficult to understand unless as in some other recent discussions they have fundamentally misunderstood the constitutional and the practical position.
2.
3.
The position seems to me quite clear. We have a paper headed Heads of Agreement, which though it was never even initialled, was confirmed by Ord-Johnstone back in 1967. Head A says that our /cotton textile exports to Britain shall be restrained under a
separate country quota to be administered by export licensing in Hong Kong, Head C says 1% annual growth, Head E 5 adds a further 5% for categories in which exports reached 95% of more of the ceiling in the previous year, Head H 5 says no change except with the consent of both parties.
•/B
4.
As I have said before,
At's not a question of a con- cession of 3% growth being offered to Hong Kong, as FCO saving despatch 712 put it. A concession is being sought from Hong Kong, and it is a concession to which we did not agree in the consultations (as you know I didn't receive that note Stewart pushed under your door until after the consultations had been concluded and Stewart had left Hong Kong) and I have never given anyone any grounds for believing that I, as leader of the Hong Kong Delegation, accepted it.
5.
It seems to be preferable that this matter should be settled without a row, but we shall have to reply to the saving despatch well before the end of this year, and unless we can persuade the BOT to drop the matter, it seems to me that Hong Kong will have to reject para. 7 of the saving despatch, explaining our reasons. Then the only way the 3% could be imposed would be by a unilateral action by HMG instructing the Governor that in certain categories exports in 1970 (the issue doesn't arise in the current year, as I explained, because this year we are implementing the restraint levels agreed in our consultations with you and Stewart) should be restrained at a level lower than that provided for in the Heads of Agreement.
A I'm sure there's no need to go over again the likely local reactions to that !
CONFIDENTIAL
/6. Unless
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