.F.E.D.
J Gill Esq
K
CONFIDENTimu
RECIC
IN
• 1.51
10 SEP 1975
RECEIVED IN REGISTRY No/43
Export Credits Guarantee Department -9 SEP 1975
Aldermanbury House
Aldermanbury
London EC2P 2EL
Dear Jack
F5
Cc.
Treasury Chambers Parliament Street London SW1P 3AG
Telephone 01-930 1234 ext
MFN3/39311
8 September 1975
FE
Q
CREDIT COMPETITION
HONG KONG MASS TRANSIT PROJECT
Thank you for your letter of 8 September. I should make it clear that I have not, so to speak, written off the Gentlement's Agreement. This is certainly not the case. I believe however in having more than one string to my bow, if at all possible, and' envisage more active consultation on particular projects as a way of achieving this.
2. As far as the USA is concerned, I believe that there is some arrangement where export credit projects above a certain size have to be submitted to their National Advisory Council on Foreign Trade for approval, or confirmation. This is presumably akin to our own arrangements for handling S.2 cases through the Exports Guarantee Commission. From what I have heard about the recent Brazilian Steel Expansion project, it appears (I say this advisedly) that Ex-Im is not above trying to rush this particular hurdle, if it wants to offer rather generous backing for the US bidder, or to make the running on credit terms for some other reason. Seen from the UK Treasury point, it sometimes appears that Ex-Im offers terms, on its own authority, which are more generous than even a patriotically minded US Treasury would wish to see. Once these terms have been offered, it is of course virtually impossible to get them toned down.
3. I can see that the most effective way of preventing this sort of situation is to have a Gentlemen's Agreement on credit terms, which would limit the offers which are initially made. But until we get that, I feel that there is scope for better consultation on big cases in the early stages of their life. The Hong Kong one is not, I recognise, of that sort. Contenders are going round more or less the same course for the second time. This may rule it out as a subject for discussion of terms at policy level. But there are others where the bidding is less advanced, and I welcome the news that you are looking to see whether more can be done to prevent the bidding being pushed out haphazardly so to speak.
4. Whilst you are considering this it would be helpful. to have any comments which Michael Cowdy has on the US practice described in paragraph 2 above. I am not sure whether MITI has a tendency to jump
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