TNAG-1054-FCO40-1304-Trade-relations-between-Hong-Kong-and-the-UK-1981 — Page 146

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MR BAKER'S VISIT TO HONG KONG: CONSUMER ELECTRONICS

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18.77

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My minute of 6 April suggested that we leave free for now the slot on the morning of 29 April for a possible call related to consumer electronics. The Minister will be aware of the increasing concern of RIC/BREMA at growing levels of imports into the UK of portable, clock and car radios and portable monochrome TVs and music centres. Discussions so far have failed to secure a VRA. (It has to be said that given the somewhat ephemeral nature of the Hong Kong Electronics Association one will be difficult to secure.

This absence of a VRA is having a knock-on effect. There is evidence of leakages from VRA countries via Hong Kong and the risk that so long as we have no VRA with Hong Kong other VRAS will begin to crumble. For all of these reasons IT Divisions firm recommendation is that the Minister should discuss the issue of a VRA with the Hong Kong Authorities; in fact the Director of Trade, Industry and Customs.

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The Minister should be aware that the Foreign Office are unable to endorse this advice. They rightly point out that given the open nature of Hong Kong Trading the Director of Trade Industry and Customs will maintain that he has no power to act on a VRA and that such agreements are a matter for the industry. That to raise the matter at all will

further risk our relations with the Colony, already under pressure as a consequence of the Nationality Bill, and that our wider trade prospects may be damaged. In particular they emphasise that the Castle Peak B contract has yet to be finally tied up. The Foreign Office advice would certainly be echoed by the governor. The view of the Department of Trade is that whilst the Minister could raise the issue of a VRA we should accept that we are unlikely to secure anything and that the discussion will be a difficult one. Not least the Hong Kong Authorities will claim that suffering under the MFA has led them to look to alternative industries; having found that industry w now wish to control its success as well.

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3 On balance it is difficult to see how a visit to Hong Kong which did not involve discussion of consumer electronics could be justified domestically. The real difficulty is that to have any meaning these discussions must include the

Pipest issue of VRAS, where a strong pet is likely. It seems unlikely that discussion of consumer electronics including VRAS would risk us losing Castle Peak B, although the final stage of discussions may well be made more difficult. however, the case that our prospects for future major projects are hardly likely to be enhanced if we allenate the Hong Kong Authorities over consumer electronics. Alienation which will take place in the knowledge that there is nothing the Hong Kong Authorities are likely to be prepared to do to see a VRA reached by the two industries.

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