CONFIDENTIAL
RECEIVED IN REGISTRY NO, 50
176
TOP COPT
GR 350
PRIORITY
CYPHER/CAT A
FM FCO 061715Z
CONFIDENTIAL
AKK 10|1
TO PRIORITY HONG KONG TELNO 455 OF 6 JUNE 75.
RE!
MEY
(175
REF.
6
M.I.P.T.
1. THE FOLLOWING COMMENTS ON THE DRAFT MAY BE HELPFUL:
PARA.1. THIS IS THE FORMULA IN THE PREVIOUS MEMORANDUM OF UNDERSTANDING BUT WE WONDER WHETHER IT WOULD NOT BE MORE CORRECT
TO SPECIFY THAT IT IS AN AGREEMENT BETWEEN HER, MAJESTY'S GOVERNMENT IN THE UNITED KINGDOM AND THE GOVERNMENT OF HONG KONG.
PARA.2. PARTLY IN ORDER TO MEET YOUR POINT THAT THE AGREEMENT SHOULD MAKE CLEAR THE FACT THAT THE HONG KONG CONTRIBUTION WILL BE IN LOCAL CURRENCY, WE HAVE SPECIFIED HONG KONG DOLLARS IN THIS PARAGRAPH AND IN PARAGRAPH 5. WE HAVE NOT AT THIS STAGE INCLUDED A DETAILED BREAKDOWN OF EXPENDITURE SHOWING THE PARTICULAR FORMS
OF LOCAL EXPENDITURE BY THE FORCES WHICH HONG KONG CAN BE REAGARDED AS PAYING FOR WITHIN ITS CONTRIBUTION. WE APPRECIATE YOU MAY WISH TO MAKE THIS A POINT IN DISCUSSION WITH UNOFFICIALS AND WE SHALL SHORTLY BE LETTING YOU HAVE OUR LATEST FIGURES. WE HAVE RELUCTANTLY HAD TO ACCEPT THAT THESE CANNOT APPROPRIATELY BE INCLUDED IN THE AGREEMENT ITSELF.
PARA.3. THE PROPOSAL THAT, ADJUSTMENTS SHOULD BE CARRIED OUT IN THE COURSE OF THE SECOND HALF OF EACH FINANCIAL YEAR WOULD, WE THINK, BE A FAIRER METHOD OF TAKING INFLATIONARY FACTORS INTO ACCOUNT FOR BOTH GOVERNMENTS THAN THE ARRANGEMENT AGREED IN JANUARY WHEREBY THE ADJUSTMENTS TAKE PLACE SHORTLY AFTER THE END OF EACH FINANCIAL YEAR. THE ANNEX REFERRED TO IS OF COURSE THE INFLATOR ARRANGEMENTS DRAWN UP IN JANUARY.
PARA.4.
CONFIDENTIAL
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