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7.
Mr Moore stressed that he understood the constraints on visibly thickening up the relationship with Taiwan. But he thought that there was a great deal of scope for allowing much more discreet cooperation at a practical and administrative level. The Taiwanese were genuinely committed to increasing their commercial links with Europe and the UK in particular. They wanted progress on substance not form. If we responded he thought it likely that the Taiwanese might meet our concerns on whiskey tariffs. If we failed to respond we would lose out. There was also a risk of Taiwanese retaliation. He would not put it beyond them to use as political leverage the £2 billion of reserves they held in London. He understood the need to placate China in order to preserve cooperation over Hong Kong. But he wondered whether we were not showing undue sensitivity to China. We were behaving like "pansies".
8.
Mr Moore added that he had been pressed hard by Taiwanese parliamentarians on membership of GATT and of the IPU. He had also been asked to lobby Ministers in London to receive a delegation of Taiwanese MPs. But he recognised that this sort of high profile contact would not be helpful.
9.
Lord Caithness said that he sympathised with much of what Mr Moore had said. We were trying to improve relations with Taiwan and were reviewing representation in Taipei and London. We had already made some changes (which Mr Moore acknowledged were in the right direction). But Hong Kong was a real Achilles Heal. We needed Chinese cooperation in order to govern Hong Kong effectively. China could very easily retaliate if provoked over Taiwan. It was true that Taiwan
a potentially very important market for British companies, but there were also major British interests in Hong Kong. Lord Caithness noted that Holland's relations with China had suffered after concluding an arms related deal with Taiwan. Mr Moore replied that as a result several major Dutch companies were now well installed in Taiwan. On air services, Lord Caithness said that there were commercial judgements to be made which were only for the companies concerned. But here too Hong Kong was a factor. China effectively controlled access by air to Hong Kong, since all flights went through its airspace. Cathay Pacific, the home fleet, which was a British owned company would therefore be vulnerable to retaliation.
Comment
10. Mr Moore's arguments are not new, but they were put with great force. He had anticipated Lord Caithness' emphasis on the Hong Kong dimension and was clearly not convinced. Implicit in much of what he said was that Britain had greater long-term interests in Taiwan than in Hong Kong. He was also frankly sceptical of China's willingness or ability to
retaliate.
/12. Mr Moore
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