TNAG-0375-FCO40-421-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1973 — Page 21

with the Community scheme on 1 January, 1974. In the

enlargement negotiations we with difficulty persuaded the

Community to agree that its scheme should apply to

Hong Kong, but they insisted, and we accepted, that textiles

and footwear should be specifically excluded. Thus on

1 January, 1974 we will in effect have to discriminate against

Hong Kong exports in these sectors in favour, for example,

of South Korea. The arguments against trying to reopen at

Brussels something which was settled in the negotiations are

formidable. But you will appreciate the political difficulties

here and in Hong Kong of being seen to discriminate against

Hong Kong in this way. The problem is being urgently examined

by my officials.

8.

Air services agreements in which Britain gains

handsomely by controlling landing rights at Hong Kong (while

paying nothing for the building or maintenance of the

facilities at Kai Tak) are another bone of contention.

In

the context of the EEC negotiations we decided for political

reasons that it was in the United Kingdom interest to permit

KLM a service to Hong Kong. Now SAS want a similar service,

and the Hong Kong Government regard it as very much in their

interest that it should be granted. But this is opposed here

by the Department of Trade and Industry on civil aviation

grounds.

CONFIDENTIAL

19. There