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27
Mr Crowson
Mr Wilford
Sir D Watson
Mr Logan
Sin D Watson
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Mr Stopfent
20/3
PA
Crowson 7 Goodfellow
CONFIDENTIAL
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1. Mr Fell ECGD returned from Hong Kong and Japan yesterday. At a meeting, which I attended, also yesterday, he outlined the present situation in regard to the British consortium.
2. Mr Fell said the result of the talks in Hong Kong was satis- factory. Although we were not "off the hook", the UK financial offer as it stands at present had proved very interesting to the Hong Kong Government. He confirmed that the first aim remained
guared up
to secure the consortium approach as opposed to package-type Contracts, and in view of the strength of our position we should keep our options open about joining other groups, remaining free to join forces if we wished with whichever group seemed appropri- ate and would provide the UK with the biggest orders. Sir Douglas Clague had said Mr Haddon-Cave was very pleased with the British offer and he, Sir D Clague, expressed himself as more optimistic than at any previous time that the British consortium could win the contract. He conceded, however, that much depended on what the Japanese might do "in the last furlong".
3.
In discussion, the Governor had told Mr Fell that he and Mr Haddon-Cave supported the British bid, but we had to recognize there was a respectable body of opinion who found it difficult to break away from the established and well-tried Hong Kong method of going out to tender.
4
•
Mr Haddon-Cave himself said he foresaw that if the Japanese final bid next month was substantially better than ours the con- tract would have to go to Japan; but we should first be warned to see if we could improve our position. If the UK offer were clearly the better it would come to the United Kingdom. The third possibility, either that the Japanese offer was only marginally better than ours, or that both were equal, could well act as a catalyst where a dual consortium approach would become valid.
5. In Japan Mr Fell continued the discussions he had had in Washington with Mr Ozu (Head of Export Insurance Division of MITI). Mr Ozu seemed to be most worried about taking any action in this respect which might upset the Chinese People's Republic. He was also concerned over the possible revaluation of the Yen.
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CONFIDENTIAL
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