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8. The UK draft Order does not go as far as the Security Council draft Resolution. This would prohibit new service contracts, of any kind (not just industrial, scientific or Technological) related to industrial projects (not just new projects). However, again, the practice of our Community partners is very ambivalent, and our limitation of the scope of the sanction envisaged in the draft Security Council Resolution is therefore defensible.
DEPENDENT TERRITORIES
9.
The
The French decree banning exports and re-exports to Iran applies equally to the French overseas territories. Dutch have told us that their measures will not apply to their Dependent Territories.
10. Our draft Order under the 1980 Act would extend to the Dependent Territories. In view of the fact that the French are not discriminating between the metropolitan territory and their overseas territories, and because of the need to avoid creating obvious loopholes, the Order should include our Dependent Territories. However, there is a particular problem regarding Hong Kong, which, besides exporting certain goods of Hong Kong origin, also acts as a port for the transhipment of some £60,000 worth of goods per year from China. China is opposed to the introduction of sanctions against Iran, and would object to the Hong Kong authorities at finding its trade thus frustrated. Also relations between the Hong Kong authorities and HMG are not good at present.
The best pro- cedure would appear to be that the Dependent Territories should be included in the Order under the 1980 Act which, since it relates to contracts rather than to the actual export of goods, may in any case not cover the Hong Kong trade originating from China. (Dependent Territories are excluded from the 1939 Act which covers the actual export of goods.) In any case, provided this trade does not grow inordinately in response to the sanctions being imposed in Europe, the best solution may be that the Hong Kong authorities should indicate to the Chinese that the measure is not designed to catch their normal trade.
Middle East Department
Foreign & Commonwealth Office
London
28 May 1980
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