TNAG-1054-FCO40-1304-Trade-relations-between-Hong-Kong-and-the-UK-1981 — Page 137

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Mr. Mamie 10% Mr. Willinger

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Foreign and Commonwealth Office

London SW1A 2AH

From The Minister of Statë

Peter Blaker MP

Dear Minister

10 April 1981

HKK 121|16

PA

RECHTER IN BLESTRY NO. 51 14 APR 1981

DECK OFFICER INDEX

CONSUMER ELECTRONICS IMPORTS FROM HONG KONG

PA

REGISTRY Action Taki

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I understand from my officials that you wish to raise the subject of a Voluntary Restraint Arrangement (VRA) on exports to the United Kingdom of consumer electronics goods during your visit to Hong Kong. Whilst fully appreciating the reasons why the UK industry is pressing for a VRA, I thought that in the wake of Peter Carrington's own visit to the Territory, I should let you have our views on the dangers which such a course of action would pose.

First, it would be a totally new and in many ways unacceptable policy departure for the Hong Kong Government to negotiate a VRA or to encourage its industry to contemplate one. The Territory believes in a totally free and open trading policy and is

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punctilious in abiding by GATT rules. A VRA on consumer See HKK. 121

electronics would offend against this policy and leave them open to similar demands from other developed countries. Hong Kong's electronics sector is a recent product of the need to diversify away from traditional manufactures such as textiles. Pressure for a VRA would increase claims that HMG has little interest in maintaining a stable and prosperous Hong Kong. Relations between London and Hong Kong have been under some strain already over the British Nationality Bill and the decision to charge Hong Kong students in the UK full cost fees. Peter Carrington has done a great deal on his last trip to persuade opinion there that we understand their problems and that we are committed, as indeed are the Chinese, to a stable and prosperous Hong Kong. The success of his efforts will be put to a severe test over the coming months when Hong Kong will be watching us closely over our defiance of their interests during re-negotiations of the Multi-Fibre Arrangement. To weigh in now with a request to open negotiations for a VRA would be severely damaging and, besides, have no prospect of getting anywhere.

Caf

Kenneth Baker Esq MP Minister of State Department of Industry

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