TNAG-0426-FCO40-472-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 19

CONFIDENTIAL

So much then for the next step.

With regard to the

questions on page 5 of your letter of 20 December, the

answers are:-

a.

there is some disenchantment in London with the

Hong Kong Government's decision; I am not sure how

far this will affect decisions on other issues;

undoubtedly it makes the task of those who would like

to look after Hong Kong more difficult.

b.

the answer to this is subsumed in the answer to

(a); we have never had any doubt here that the Hong

Kong Government would have to be allowed to take

their own decision. Equally, that they would have to

stand by it if they found that at some future date

they were called upon to honour a guarantee.

in the circumstances any such guarantee would have

to be met from the Colony's financial resources and

not from those of HMG in the UK.

Clearly

C.

whilst a direct subsidy from the Japanese Government

would undoubtedly be contrary to the relevant GATT

Declaration on Export Subsidies of 1960 to which the

Japanese Government have subscribed, we are not very

hopeful that they would provide a subsidy in a way

which allowed us to demonstrate that the Japanese

Government were in breach of their obligations.

Normally these things seem to be done, if they are

done, by financial manipulation behind the scenes.

Nevertheless, should you or Tokyo pick up any specific

evidence about Japanese Government subsidisation we

in London would be most interested.

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