TNAG-0377-FCO40-423-Defence-and-Oversea-Policy-Committee-review-of-UK-relations--1973 — Page 48

NOTHING TO BE WRITTEN IN THIS MARGIN

ORCID I

prospect, together with the question of presentation

in Hong Kong. Our aim should be to enable the Prime

Minister to point to what has been achieved and to fit

this into the theme of a mutually profitable

relationship between Britain and Hong Kong.

4.

On Sterling, an interim agreement covering the

period up to March 1974 should shortly be reached.

The outstanding problem is how to get this across

to official and unofficial circles in Hong Kong as a

success, without jeopardising our agreements with the

other major holders of Sterling. There is also the

question of the longer term future. If no formal

agreement remains after March 1974 governing Hong

Kong's use of its reserves, how far can they in fact

be left to make their own decisions, and how far will

we still expect them, as a dependent territory, to do

what we tell them?

5.

We have made a declaration to the Council of

Ministers on the exclusion of Hong Kong's textiles

and footwear from the Community's GSP. The problem

of presentation arises from our acceptance of the

fact that we cannot remove discrimination on these

items until after we ourselves have aligned with the

scheme. There will therefore inevitably be a period

during which we are seen to discriminate against our

own colony. The damage can be minimised by stressing

our determination to get this discrimination removed

in the context of the 1974 annual review. But this

would be dangerous if we are not really resolute, or

do not anyway believe that the Community will in the

end agree.

6.

We can at this moment say little in Hong Kong

AECRET

/on the

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