TNAG-2978-FCO40-1470-Trade-relations-between-Hong-Kong-and-the-UK-1982 — Page 50

CONFIDENTIAL

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6

DSR 11C

Preventive Measures

11.

Prevention is better than cure. Appendix 'C' therefore

We are

sets out to identify a number of Third World countries where the

UK could be particularly vulnerable, on the basis of the

volume of UK trade, the size of the UK direct investment and

the value of UK contracts under way or in prospect.

already doing our utmost to minimise the risk of discrimination

arising from the UK's position on such major issues as Arab-

Israel or Southern Africa. We have already made strenuous

efforts to increase the number of signatories to the GATT

Government procurement code or to increase the number of LDCs

with whom the UK has Investment Promotion and Protection

Agreements (IPPAs). Perhaps more important is to ensure that

Britain does not set itself up as an obvious target for further

discriminatory action in future. This may be difficult in the

present economic climate.

12. While it would be in the UK interest to have some general

agreement in the EC that other members would refrain from

exploiting situations where individual member countries become

targets for discrimination, it seems highly unlikely that

such a 'non-undermining' proposal would find much support in

this or any other international forum. The competitive press-

ures, which are exacerbated in the present world recession, are

too great and the lure of inidiviudal contracts would almost

certainly prove overwhelming. Moreover, countries like the

FRG, which have not been exposed to trade discrimination by

LDCs, would have difficulty in justifying support

for an

agreement of this kind domestically, when unemployment is at

its highest level since the war.

13. One relevant lesson of the dispute with Indonesia is that

British interests

terests in the Third World can be seriously jeopardise

C