TNAG-2498-FCO40-3636-Relations-between-Hong-Kong-and-Taiwan-1992 — Page 103

CONFIDENTIAL

a non-starter.

ot touched upon, the idea of selling to Taiwan any equipment we would be prepared to sell to China, seems

expect them to approach us to discuss the issues raised in this

letter in due course.

8.

We

The Taiwan arms market is valuable, and Taiwan has a requirement for many of the defence-related products manufactured by the UK. The UK currently has a considerable trade deficit with Taiwan. Over the past couple of years, we have stretched our policy (almost to breaking point) to allow a number of sales in "grey areas", and in at least one case have broken our policy, ie with our approval in 1990 for the sale of parts for a 105mm light gun to be assembled in the US and then sold on to Taiwan, a sale which would

be permitted under our new guidelines. What we now recommend is a fairly minor amendment to the guidelines.

We would not, by implementing it, fall foul of any broader commitments on arms sales. We have no obligation to declare such sales, including under the UN Arms Transfer Register as agreed at UNGA in 1991.

9.

Despite the fact that these new guidelines would still not give us as much leeway as some of our EC partners,

some of our EC partners, we must expect the Chinese to criticise us for sales under our new policy. The guidelines would require manufacturers to undertake to avoid publicity, but word of any sale may well leak out. We have to accept that. At least the revised guidelines would provide us with a clearer and more comprehensive basis for an explanation.

W Morris

Far Eastern Department

WH245

270 3725

CONFIDENTIAL