TNAG-1551-FCO40-2115-Possible-cultural-agreement-between-Hong-Kong-and-Japan-1986 — Page 20

CONFIDENTIAL

2

4.

(b) the use of the grant has been broadened to

include "other educational purposes as agreed between the Government of Japan and the designated institution". This is because we would not wish, as HKG, to foist onto the institutions an agreement obliging them to buy only "equipment" they may want other forms of

(c)

(d)

assistance;

the reference to prompt unloading at the port has been dropped hardly necessary in Hong Kong!

the reference to tax exemption has been dropped, for the reasons described earlier.

Mr. Ito of the Japanese Consulate-General agreed to consider this draft. At the same time he said that his government wanted to use the PNG model as a standard text for "third world countries" (we did not rise to the bait on this phrase). He appreciated our difficulty over direct government involvement in the administration of the aid, but sought assurance that HKG would not abdicate all responsibility if an institution abused the terms of the agreement. We told him that we would of course be ready to hear Japanese representations and if necessary take up complaints with the institutions. He seemed partly satisfied with this.

he

5.

At the same time Ito gave us two amendments (attached) which said Tokyo was prepared to offer to meet our concerns. The first simply adds to the PNG text that a university may act as the designated authority of the Government. It retains the reference to HKG "or its designated authority". We pointed out that this formula begs the question of who decides which of the two is responsible; Ito accepted that this was odd, and undertook to report.

6.

Ito's second amendment reinserts the point about tax exemption, but makes it the responsibility of the institution to meet any charges rather than calling on HKG to waive them. We told Ito that this looked a possible starter, but we would have to consult the institutions before making any agreement with this provision. We have since confirmed with our own legal advisers that there would be no legal problem for us in such an arrangement.

7.

Ito's successor (he is leaving this week) will get back to us in due course with Tokyo's reaction. Judging from our contacts so far, we have the impression that the Japanese room for manoeuvre is very limited. On our side, to put it crudely, we cannot overturn our established practices for the sake of 50 million. We are also a little wary of the disproportionate weight that such a grant, which would be a large sum for one department of one university in one year, could give to Japanese studies in the teaching profile of our institutions, though this must be for the institutions

themselves to say.

CONFIDENTIAL