TNAG-0521-FCO40-616-Visit-of-Lord-Goronwy-Roberts--Parliamentary-Under-Secretary-1975 — Page 150

KESTRICTED

LORD GORONWY-ROBERTS'S VISIT TO HONG KONG:

11-17 JANUARY

BRIEF NO. 22:

THE "BUY COMMONWEALTH" CLAUSE IN THE FRANCHISES OF THE HONG KONG BUS COMPANIES

1.

Bus services in Hong Kong are operated under government franchises by two independent companies, the Kowloon Motor Bus Company and the China Motor Bus Company. The franchises have traditionally contained a stipulation requiring the companies to buy buses of Commonwealth origin (for all practical purposes this has meant BIMC vehicles).

2.

The franchises of the companies are now due for renewal and, in the course of consideration of the revised terms, the appropriateness of the inclusion of the "Buy Commonwealth" requirement has been questioned in the Executive Council. The challenge though ostensibly on grounds of discrimination and therefore possible incompatibility with GATT principles, is in all probability inspired by the professed opposition of the bus companies to the retention of the clause. It is also unpopular with the public in Hong Kong at large. Earlier criticism had already led the Hong Kong Government to modify the provision in the draft franchises so that exemptions may in future be granted by the Governor alone instead of, as previously, by the Governor in Council.

3.

During his visit to London in December, the Governor received two senior representatives from BLMC who explained to him the importance which the Corporation attaches to the retention of the clause in the new franchise agreements. They feared above all that if the Hong Kong market were to be lost to BLMC, other markets in Asia would also be threatened. The Governor replied that provided BLMC could meet their obligations on deliveries, there was no reason to fear loss of orders from Hong Kong. The Governor agreed to defend retention of the clause the next time the matter is debated in the Executive Council provided he could in the meantime be furnished with a suitably worded assurance from BLMC that they would do their utmost to meet deliveries to Hong Kong on time. The BLMC representatives agreed to provide such an assurance.

/Background

Page 150Page 151