CONFIDENTIAL
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3.
Part of my problem in writing is that I do not know whether Tran will recommend in the same sense as he spoke to us, or whether British Ministers would support such recommendations if made. But they ought to know how serious the implications would be for Hong Kong if extreme courses were adopted and how angry people here would be. You may remember
Kadoorie warned the Prime Minister that harsh action on textiles could affect the attitude of his Board to the China Light & Power package deal. I am afraid he was right. There are also the contracts for the Mass Transit Railway extension to Tsuen Wan which will be let next year. I mention these two contracts because they are very big, Ministers are involved, and I have a shrewd idea of which members of the Boards would switch if they thought the UK had let them down on textiles.
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So long as the EEC acts with moderation along American lines, and in a way that will not
undermine Hong Kong's position in third markets, reactions with these unpleasant effects can be avoided, but I don't think they could be if anything like Tran's proposals were imposed.
10.
?
As I wrote above I do not know what the Commission will recommend, and I do not wish to cry 'havoc' too soon. But it is clear from Tran's remarks that there are some wild and very damaging ideas in the Commission, and I am also conscious of how difficult it would be to get an EEC negotiating mandate changed once it is agreed. It is therefore important for British exports interested in major projects in Hong Kong, as well as for the general economy and consequently social progress in Hong Kong, that the FCO keeps a very close eye on how this develops. I there- fore certainly think that Michael Palliser should see, this letter. If it appears that the extremist view is likely to prevail in Whitehall, I think that in fairness
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