TNAG-2981-FCO40-1473-Guangdong-nuclear-power-station-project-1982 — Page 244

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CONFIDENTIAL

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cipant in the project, Westinghouse are anxious that the UK Government should

now approach the State Department in Washington to seek clearance under the

Non-Proliferation Act for NC as a Westinghouse licensee to supply PWR

technology to China.

Providing outstanding contractual and technical

difficulties can be resolved, in two or three months it may be possible to

achieve a credible Anglo/American package to weigh against the Anglo/French

package which has already been developed.

6.

There are several risks attached to continuing to hold open both

options. If we delay too long in seeking to make a pre-emptive bid with

one partner, e We may miss the opportunity to influence the thinking and

attitude of such an unsophisticated and uncertain customer as the Chinese.

We run the danger of losing the goodwill and support of Lord Kadoorie.

We risk either the French or the Americans seeking to make a pre-emptive bid

on their own we know that both the French turbine company Alsthorn and

Westinghouse's turbine division have made overtures to the Chinese. And if

we had to go to the negotiating table at short notice in the near future

we could find ourselves unprepared : a detailed position on certain technical

questions and on a financial package cannot be finalised until we know

with which partner we may be working.

7.

Nevertheless, despite these risks, my assessment is that for the

present we should continue to pursue both routes and seek to bring the

American option to a state of readiness for negotiation comparable to that

on the French option. The primary advantage in pursuing this course is

that it would enable the UK to keep its negotiating strategy as flexible

as possible. It is clear that some elements at least within the Chinese

authorities are seeking to keep their own negotiating options as wide as

possible and I consider that it would be premature to narrow the options

CONFIDENTIAL