TNAG-2978-FCO40-1470-Trade-relations-between-Hong-Kong-and-the-UK-1982 — Page 53

CONFIDENTIAL

9

DSR 11C

policies including threats and possible counter-measures such

However, past

as aid cuts or other economic sanctions.

experience of sanctions suggests that while they may exert

some influence on the target, the influence is never decisive.

If they are to have much effect they are best applied multi-

laterally; even then enforcement is difficult and it is hard

to maintain solidarity among countries with different trading

interests for any length of time if indeed solidarity can

be achieved in the first place. In most cases sanctions will

be ineffective and the benefit of applying them will rarely

outweight the cost.

19. It would be extremely difficult to restrict exports and

imports to an offending LDC except on a Community basis. And

if the UK alone denies a country goods and services, the country

will turn elsewhere except in those very rare cases where we

have a monopoly of products that are urgently needed. It is

unlikely that the UK will be able to apply unilateral financial

snactions without serious risk of damage to confidence in the

British financial system. Only where one of the less powerful

LDC is dependent on the UK and chooses to embark on a

particularly quixotic course will bilateral sanctions stand

much chance of success. Moreover, there is a risk, where NICS

are concerned, that aggressive UK action could cause NICs to

gang up (for example, through ASEAN).

20. While the bias should be against sanctions, the case for

them should be reviwed in the light of individual circumstances.

Apart from traditional means of protest such as cancelling

ministerial visits and public ocndemnation, possible steps

that might be threatened or taken include the following:

(a) Action through the GATT (which would normally be taken

by the Commission on our behalf). If the relevant