SECRET
?
2. In reply, the Governor said that he considered the Agreement on Defence Costs was harsh but fair.
He did
not wish to delay an announcement unnecessarily but he was in no doubt that his Executive Council would refuse to honour it if import restrictions were imposed on Hong Kong shortly afterwards. The Hong Kong Government already had
an agreement with the United Kingdom on the import of shirts. Further unilateral restrictions by the United Kingdom would be in breach of this agreement and would be bound to undermine the Defence Costs Agreement in Hong Kong.
3. The Minister expressed his grave concern that an announcement on the Defence Costs Agreement should be held up. The Defence Budget was under further severe pressure in the current round of Cabinet discussions on public expenditure and, failing an early announcement, there was a risk that the Agreement would be jeopardised by the search for additional savings. Furthermore, the terms of the Agreement stipulated that the MOD should commence action on the release of Service land in Hong Kong on 1 January 1976, and any delay in this could call into question the viability of the Agreement. In these circumstances, he would have to ask the Governor for a formal letter, which he could circulate to other Ministers, setting out the reasons why he felt unable to announce the Agreement which had now been concluded to the satisfaction of both parties.
4. The Governor said that he had no intention of making his acceptance of the Agreement dependent upon Hong Kong's exclusion from any import controls which might be announced. He was simply concerned at the effect on public opinion in Hong Kong ir two such announcements were made together. He repeated his assertion that an announcement on import
/controls
SEAD
SE O'RE T
1.
2
No comments yet.
Private notes are available after approval.