TNAG-0546-FCO40-641-Strength-of-garrison-in-Hong-Kong-1975 — Page 180

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The O'Keefe

HONG KONG DEFENCE COSTS AGREEMENT AND IMPORT RESTRICTIONS

1.

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I understand you have asked for an explanation of Sir Murray MacLehose's letter of 8 December to the Minister of State for Defence in which he proposed that the agreed text of the Defence Costs Agreement should be kept on ice while waiting for the uncertain question about import restrictions to be clarified.

2.

I should explain that at his meeting with the Secretary of State on 4 December and earlier in the week at his meeting with Lord Goronwy-Roberts, Sir Murray MacLehose had said that the rumours which had reached Hong Kong about possible import

restrictions had introduced a new factor into what was already a difficult situation over the Defence Agreement.

In doing so,

WCK6) 59872

96 Flag B Sir Murray was influenced by Hong Kong telegrams nos. 1198 of Flag, S 30 November and 1204 of 1 December reporting that the Executive KK 592 Council might seek some assurance that we would not impose such

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restrictions on imports from Hong Kong as a condition of agreeing to the Defence Costs Agreement. You will observe that the latter telegram makes it quite clear that the acting Governor understood that a condition of this kind would be unacceptable to HMG and indeed an improper condition for Hong Kong to attach. In his letter of 8 December Sir Murray MacLehose is making a point rather simpler for HMG to accept: that while agreement on defence costs has been reached, there would be an intolerable strain on the Hong Kong Government and on the Unofficial Members of the Executive Council if the announcement should coincide with the imposition of import restrictions on Hong Kong.

3.

I suggest that there is good reason to support the Governor's view. There is no reason to doubt that the new Defence Costs Agreement will be unpopular in Hong Kong but it should eventually prove acceptable. As a matter of political reality, however, the timing of its announcement must take into account the other, albeit

extraneous, factor of import controls which, if imposed, would be more

/than the

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