TNAG-2794-FCO40-4034-Relations-between-Hong-Kong-and-Taiwan-1993 — Page 146

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CONFIDENTIAL

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TELNO 148

CONFIDENTIAL.

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MISS PAINTING'S (FED) FAX OF 21 JANUARY:

GUIDELINES

1.

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MDADAN 1724

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TAIWAN: DEFENCE SALES

I AM SORRY THAT WE HAVE FAILED TO COMMENT EARLIER ON THE DRAFT

SUBMISSION IN FAX/UR.

2.

I DO NOT THINK THAT NOW IS THE RIGHT TIME TO CONTEMPLATE ANY RELAXATION IN THE GUIDELINES FOR DEFENCE SALES TO TAIWAN APPROVED

LESS THAN A YEAR AGO. MY MAIN REASONS ARE:-

(A) THE CURRENT CHINESE SENSITIVITY ABOUT FOREIGN ARMS SUPPLIES TO TAIWAN, HEIGHTENED BY US AND FRENCH SALES OF FIGHTERS AND THE POSSIBILITY THAT THE DUTCH WILL SUPPLY SUBMARINES (THOUGH THE GERMANS HAVE DECIDED NOT TO DO SO).

(B) THE DELICATE STATE OF OUR RELATIONS WITH CHINA OVER HONG KONG.

(C) THE SLIGHTLY HIGHER PROFILE WE ARE NOW ADOPTING IN OUR POLITICAL/COMMERCIAL RELATIONS WITH TAIWAN.

I THEREFORE HOPE THAT MINISTERS WILL AGREE TO MAINTAIN THE STATUS

QUO FOR THE TIME BEING.

3.

THE MAIN REASON FOR LOOKING AGAIN AT THE GUIDELINES SEEMS TO BE THE LARGE 'GREY AREA'' IN THE CURRENT VERSION. I ACCEPT THAT THIS MAKES THE GUIDELINES DIFFICULT TO ADMINISTER AND LEAVES

COMPANIES IN DOUBT AS TO WHETHER SALES WOULD BE APPROVED IE NEGOTIATIONS WERE SUCCESSFUL. BUT IN PRACTICE PROPOSALS FOR SIGNIFICANT SALES HAVE ALWAYS BEEN CONSIDERED ON THEIR MERITS, IN THE LIGHT OF POLITICAL AND OTHER FACTORS RELEVANT AT THE TIME. THE COMPANIES KNOW THIS. WE (AND I ASSUME OTHERS) WOULD NOT WISH TO ADVISE AGAINST A PARTICULAR SALE UNLESS WE WERE CONVINCED, TAKING ACCOUNT OF ALL THE CIRCUMSTANCES, THAT THE POLITICAL RISKS WOULD OUTWEIGH THE COMMERCIAL BENEFITS.

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