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32/र ANNEX B Flag A
HONG KONG REGISTER OF SHIPPING
A.R.
1. I have this week attended 2 meetings between Mr Heseltine
and representatives of UK trade unions and owners respectively.
2. Both groups said that they did not like the consultative
document and hoped that HMG would not agree to setting up a
separate Hong Kong register of shipping on these lines. Both
said that despite the Minister's assurance that standards would
not be allowed to slip, they believed the Hong Kong register
would inevitably deteriorate into a red ensign flag of convenience.
Mr Heseltine's line throughout was that since Hong Kong ships
were now under flag of convenience registry, to transfer them
to Hong Kong under British control would be a positive gain
for both safety and manning standards. These standards would
not be allowed to slip. All that was needed was some flexibility.
3. Much of the argument, however, eventually focussed on
paragraph 9 of the consultative document. Both owners and the
unions pointed out that in a situation where separate companies
were habitually set up for individual ships, it would not be
difficult for such companies to establish their principle place
of business in Hong Kong. The unions were afraid that British
ship owners, using the psychological advantage that their ships
would still be under the red ensign, would transfer to the
Hong Kong register with a resulting loss of jobs to British
seamen. The owners said that if a separate red ensign register
with more flexible standards was set up in Hong Kong, they might
CONFIDENTIAL
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