TNAG-0629-FCO40-777-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 59

Mr Cortazzi

CC:

CONFIDENTIAL

Mr Fretwell

Mr Jenkins EID(E)

Mr Milton HKGD

165

_HKK 121/616/1 12/616/1

R.

• ave

2 1 SF 1933

INDEX

PA

6. 31

REGISTRY Action Taken

165

HONG KONG AND THE MFA

1. I had a brief word this morning with Mr Fretwell and EID(E). After EID(E) have gathered what information they can today from Mr Tran, they will reflect on the position with regard to Hong Kong and will submit in conjunction with HKGD - on Monday. I have suggested that this sub- mission should go through Mr Fretwell and yourself. The purpose will be to warn Ministers of the Hong Kong dimension and consider how best this can be taken into account (one obvious course being to summon the Governor to state the case to Ministers in person).

2.

Meanwhile, as you know, I asked HKGD to analyse Sir M MacLehose's letter of 3 September, and its enclosures as quickly as possible. This analysis is attached, and I agree generally with its conclusions that Sir M MacLehose has overstated the Hong Kong case.

3. This being said, and assuming throughout that we get the "worst case" from Mr Tran, that Hong Kong is in for a tough ride, the submission will have to take into account that:-

(a) the Government has a duty to protect the interests of the Crown Colony of Hong Kong and, where these conflict with Britain's own interests, at least to try for reasonable treat- ment for Hong Kong;

(b) there is validity in Hong Kong's fears that a bad deal

in Hong Kong's eyes) from the Community would have a snowball effect with other consumers exercising MFN rights (cf the confidential American Note);

(c) the Governor has frequently stressed that the climate of opinion in Hong Kong is crucial not only for British exports there but also for the execution of the social programme Ministers' desire. Any setback on textiles will be said to be Britain's fault, whether or not this is true, and it is with the climate of opinion that we must concern ourselves;

(a) we should avoid, if we can do so without damaging our own interests, giving those in Hong Kong who oppose the pace of social reform an excuse for saying that this pace must be slowed down if there is something of a textile-led recession;

CONFIDENTIAL

/(e)