SECRET
in any case, enter into force until April 1976 when the present Defence Costs Agreement with Hong Kong expires. The Treasury and the Ministry of Defence have agreed that there will be no need to reach final agreement, particularly on the division of defence costs between the UK and Hong Kong, until
May.
If consultations are postponed, it would be pointless and damaging for the Governor to inform Executive Council now of our detailed position. The message should therefore be confined to the advanced text of the relevant passage in the Prime Minister's 3 December statement and the information that it is HMG's intention to carry out these consultations probably in May 1975. The Governor should be authorised to tell his Executive Council.
(e) Subsequent Discussion
There will be continued confidential
discussions between the MOD, FCO and Treasury and
the Governor and his senior advisers about the level
of forces and the size of Hong Kong's contribution. The aim will be to reach agreement in principle before the May consultations with Executive Council.
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