RESTRICTED
63259
1
GEC'S BID. (FOR YOUR INFORMATION, THE EXTENSIO
OF ECGD SUPPORTED FINANCE TO LOCAL COSTS WAS A
CONCESSION MADE ONLY UNDER STRICT AND DELIBERA
CONTROLS. THE CEILING FOR LOCALS WAS
INTENTIONALLY SET WITH REFERENCE TO THE SO-CALLED
FIRM UK ELEMENT OF GEC'S CONTRACT. THE GEC
CONTRACT ALSO INCLUDES CONTINGENCY ELEMENTS AND
NON-UK ELEMENTS WHICH DO NOT COUNT IN THE
CALCULATION OF THE LOCAL COST CEILING.)
B)
C)
IF PLANT IS TAKEN OUT OF UK SUPPLY FOR MANUFACTURE
IN CHINA, THIS WILL REDUCE THE FIRM UK CONTENT IN
GEC'S BID AND THUS REDUCE THE CEILING FOR FINANCING
LOCALS. SUCH PLANT COULD BE COVERED BY THE ECGD
SUPPORTED LOAN AS A LOCAL COST, BUT THE REDUCTION IN UK CONTENT WOULD MEAN A REDUCTION IN THE TOTAL LOAN VALUE, WHICH WE UNDERSTAND IS UNACCEPTABLE TO
GNPJVC.
OPEN SQUARE BRACKETS IF PRESSED ON WHY CHINESE MANUFACTURE CANNOT BE INCLUDED IN UK CONTENT CLOSE
SQUARE BRACKETS ECGD'S STATUTORY DUTY IS TO
SUPPORT THE EXPORT OF UK GOODS AND SERVICES. ECGD
CANNOT THEREFORE TREAT GOODS MADE IN PRC IN THE
SAME WAY AS THOSE MADE IN UK.
3
WE ASSUME ABRAHAMS OF GEC WILL CONTACT YOU ON HIS ARRIVAL
IN PEKING.
4
THERE REMAINS AN OUTSTANDING CONTRACTUAL PROBLEM BETWEEN
JVC AND GEC WHICH THREATENS CONTRACT SIGNATURE. GEC ARE SEEKING
TO RESOLVE IT WITH JVC IN SHENZHEN. THE PROBLEM RELATES TO GEC'S RIGHT TO SUSPEND THE CONTRACT, WHERE THE JVC IS REFUSING TO ALLOW THE TERMS OF THE CONTRACT TO BE MADE CONSISTENT WITH THE TERMS OF
THE LOAN AGREEMENT, WHICH HAS JUST BEEN INITIALLED. WE ARE
TELEGRAPHING SEPARATELY ON THIS.
5
YOUR INDUS 180. BOTH GEC AND MIDLAND HAVE TELEXED GUEST
LISTS TO YOU TODAY, INCLUDING THEIR OWN PERSONNEL.
HOWE
OCMIAN 3259
GUANGDONG
LIMITED
HKD
FED
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[COPIES SENT TO NO 10 DOWNING STREET]
PS
PS/MR RENTON PS/PUS
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MR DAUNT
MR WILSON MR SLATER
ADDITIONAL DISTRIBUTION
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