CONFIDENTIAL
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use Hong Kong, could easily spill over into other areas of our relationship with Hong Kong. As you know, that relationship, with
much effort on the part of the present Government, has recently
improved very considerably.
3.
The basis of the Hong Kong grievance as it emerges from
official and commercial circles is that whereas Britain gets advantage
from 'the Hong Kong card' in air service negotiations round the world, Hong Kong will be getting inferior treatment in what in other circumstances would amount to negotiation of bilateral air services. In equity, it is felt, CPA, as 'Hong Kong's airline', is entitled to a degree of reciprocity. In the public eye the case emphasises the more anomalous aspects of colonial status. Hong Kong opinion seems particularly bitter because of the contrast with Singapore, the other Chinese city state, whose airline has a frequent service
to London.
4.
The
This issue has come at a particularly bad time. We have
continually to reassure Hong Kong of our commitment in the light of
relations with China and, as you know, we can easily have difficulties
with local sentiment there on commercial and other issues.
Ministry of Defence are currently renegotiating a Defence Costs
Agreement with the Hong Kong Government for which we expect a greater financial contribution from them; and later in the year we will move
into the run-up to a new Multi-Fibre Arrangement. These are areas
on which the Governor has to take care to retain the confidence of the
Unofficial Members of the Executive and Legislative Councils.
Resentment over the air services issue could well make them far less
ready to support a sympathetic approach.
5.
You are best placed to judge the probable effect on our
exports to Hong Kong. I believe however that there is a real danger, because of the feelings aroused in commercial circles in Hong Kong,
of damage to our trade there. Partly as a result of pressure from
successive British Governments, we have made considerable progress
in persuading Hong Kong to buy British. An important example was
the changed decision on the Mass Transit Railway, whereby a major
/quantity
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