CONFIDENTIAL
4. I am sure that you are right to say that the improvement of Kai Tak (another subject on which I have a word to say) is another scheme which Hong Kong feels is not essential in her own interests but of greater importance to ourselves. Unfortunately, this is not a stage in our negotiations with the Treasury at which to develop this line of argument too far. It is all very well to say, as I did at a recent meeting with the Treasury, the Board of Trade and ODM, that the U.K. stands to benefit greatly from the extension of the airport, but we lose half the case- and possibly the whole of it in these days of financial stringency if we pretend that there is nothing in it for Hong Kong. The Treasury have now asked us to prepare a sort of cost/benefit analysis demonstrating the value of the exercise to the Colony and I have sent Hong Kong a telegram asking them to provide information on these lines in the best monetary terms they can manage. Because I can well believe that John Cowperthwaite will find this request very irritating and may well argue that it is impossible to quantify potential benefits of this sort, I followed up my official telegram with another, personal to him, asking him to do his best with the figures even if they were only guesstimates". I am afraid that we just have to play along with the Treasury over this. Although I believe myself that any figures we produce will have little real value, I also think that it is a somewhat encouraging sign that we have been asked to provide them. I am not yet going to suggest that your next conversation with Cowperthwaite about Kai Tak should be less pessimistic than your last, but I think there is some hope. I understand from John Moreton that he was told that Hong Kong were not too worried if they can get an answer within the next four or five months. Long before that I expect the argument to reach Ministerial level when political factors can be expected to carry quite a lot of weight.
5. You may not have heard that after a good deal of haggling on the Board of Directors, with a Pakistani Director raising a lot of contentious objections, Hong Kong's membership of the Asian Develop- ment Bank has finally been recommended for decision by a postal vote of the Governors. It looks as though Hong Kong will get in.
6.
Another round of trading negotiations with the Swedes is in the offing towards the end of April. You will be aware that as a result of negotiations at Geneva last month, agreement was reached to restrain Hong Kong exports of anoraks and certain outer wear, but at levels which I think leave Hong Kong fairly satisfied with the outcome. Hong Kong wants the next discussions (for which no formal request has yet been made) to be "at home" and the Swedes apparently have no objection; if Shaun Stewart gets his way Hong Kong will be asked to refuse any extension of the current agreement. We are not sure yet whether the Board of Trade will want to take part in these talks as they did last time. Hong Kong of course would much prefer to handle the matter by herself but if the Board of Trade feel sufficiently concerned to take part in the proceedings, then we shall have to face once again, to the problems of a joint U.K./Hong Kong delegation.
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CONFIDENTIAL
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