TNAG-0546-FCO40-641-Strength-of-garrison-in-Hong-Kong-1975 — Page 87

CONFIDENTIAL

INMEDIATE

GR 400

CYPHER/CAT A

FM F C O 161915Z

CONFIDENTIAL

(478)

487

TO IMMEDIATE HONG KONG TEL NO 963 OF 16 DECEMBER.

YOUR TEL NO 1265: DEFENCE COSTS AGREEMENT.

484

1. FOLLOWING IS THE REVISED TEXT OF THE DRAFT WRITTEN PQ ANSWER

WHICH WILL BE SUBMITTED TO MR RODGERS PROBABLY TOMORROW FOR USE ON

19 DECEMBER.

BEGINS.

THE HOUSE WAS INFORMED IN THE STATEMENT ON THE DEFENCE ESTIMATES

(CAND 5976) IN MARCH OF THIS YEAR THAT AS A RESULT OF THE DEFENCE

REVIEW WE WOULD BE MAKING SOME REDUCTIONS IN THE HONG KONG GARRISON

AND WOULD BE SEEKING FROM THE HONG KONG GOVERNMENT A LARGER SHARE

OF ITS COST WHEN THE PRESENT COST-SHARING AGREEMENT, WHICH EXPIRES IN 1976, WAS RENEGOTIATED. FOLLOWING MY RECENT VISIT TO HONG KONG,

DURING WHICH I HELD NEGOTIATIONS ON THIS SUBJECT WITH THE HONG KONG

GOVERNMENT, I INFORMED THE HOUSE (OFFICIAL REPORT VOL 899 COLS 279-271) THAT AGREEMENT HAD BEEN REACHED BETWEEN THE TWO GOVERNMENTS

ON THE SIZE OF THE FUTURE GARRISON.

I AM GLAD TO RE ARLE NOW TO INFORM THE HOUSE THAT AS A RESULT

OF CONTINUED NEGOTIATIONS, INCLUDING FURTHER MEETINGS WITH THE

GOVERNOR OF HONG KONG IN LONDON, AGREEMENT HAS BEEN REACHED ON THE

FUTURE COST-SHARING ARRANGEMENTS. UNDER THE NEW AGREEMENT, WHICH

COMES INTO EFFECT ON 1ST APRIL 1976, THE HONG KONG GOVERNMENT WILL

MEET 50 PERCENT OF THE COST OF THE GARRISON IN THE FIRST YEAR,

62.5 PERCENT IN THE SECOND YEAR AND 75 PERCENT IN THE THIRD AND

SUCCEEDING YEARS, THE PALANCE BEING FOUND BY THE UNITED KINGDOM

GOVERNMENT. THE AGREEMENT, WHICH CONTAINS ARRANGEMENTS FOR

REFLECTING CHANGES IN PRICE LEVELS, WILL RUN FOR 7 YEARS IN THE FIRST

INSTANCE AND WILL BE RENEWED FOR FURTHER PERIODS OF 5 YEARS ON THE

SAME TERMS UNLESS EITHER GOVERNMENT WISHES TO VARY THEM.

THE AGREEMENT PROVIDES FOR THE RELEASE FOR CIVIL USE WITHOUT

COMPENSATION OF LAND AND BUILDINGS NO LONGER REQUIRED BY THE BRITISH

SERVICES.

CONFIDENTIAL

/IN PARCTICULAR,