TNAG-2978-FCO40-1470-Trade-relations-between-Hong-Kong-and-the-UK-1982 — Page 33

HKG Deple Advice soon please

Mr A E Donald

Foreign & Commonwealth Office

INFORMATION TECHNOLOGY

Anthald

Hong Kong & General Department

DEPARTMENT OF INDUSTRY

29 Bressenden Place London SW1E 5DT

Telephone: Direct Line 01-213 5589

Switchboard 01-213 3.000

Hiele

3876

12116

*

Gater

& rembat

24 June 1982

4

Room W90

Downing Street West

Dear Donald

with draft reply.

CSE

No

2/7

Play 817

SUPPORT FOR PROPOSED PAL QUOTAS ON EXPORTS OF COLOUR TV SETS FROM HONG KONG TO THE UK DURING 1982

I am writing to seek your agreement to the accompanying draft letter being sent to Mr Evans of Thorn EMI Patents Ltd (TEPL) who looks after the administration in the UK of the patents and manufacturing agreements associated with the Phase (reversal on) Alternating Lines (PAL) colour television CTV broadcasting system used in the UK, much of Europe and elsewhere.

PAL was devised and patented originally by AEG-Telefunken in the 1960s. These patents have formed the basis of manufacturing licences which have been issued to a large number of CTV set manufacturers throughout the world but particularly to those in countries which have adopted the PAL colour broadcasting standard. Until recently the terms of such licences dictated that only 50% of production could be exported, thereby providing partial protection for UK set manufacturers against low-cost sets imported into the UK, for example, from the Far East. Thus protection has proved to be of inestimable value to the survival of the UK consumer electronics manufacturing industry which has virtually abandoned large-scale manufacture of most other mass market electronic goods in the face of severe competition from the Far East and in spite of voluntary export restraint agreements negotiated by the Radio Industries Council (RIC) with their opposite numbers in several Far Eastern countries. Thus, the UK consumer electronics industry has effectively retreated into the manufacture of colour TVs behind the protection that PAL has hitherto provided, while at the same time attempting to rationalise its operations and deepen its capital invest- ment in modern (mainly Japanese and US) CTV production technology.

Special licensing arrangements apply in countries where CTV broadcasting is based on the US NTSC or French SECAM standards and which limit such countries' exports of PAL sets to very much lower levels of domestic production. Unfortunately several of the key PAL patents are now expiring (although the exact date of expiry varies from country to country). This has now made it virtually impossible to enforce the blanket export limit of 50% of production from PAL countries. Conse- quently, AEG-Telefunken and Thorn-EMI decided recently to abandon this constraint and to allow unlimited exports from PAL-standard countries expect for exports to Germany and to the UK, for which PAL quotas need to be negotiated.

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