shipping industry here. They have already been sounded on this subject and are not well-disposed to changes which would look like the establishment of a flag of convenience under the Red Ensign and would reduce employment opportu- nities for British officers. However, we think we might be able to move along the lines of the consultative document without a major row on a flight of ships from our register to that of Hong Kong. It remains to be seen whether Hong Kong shipowners would be prepared to register more of their ships there but this we should be able to judge from discussions in Hong Kong.
4. Would you kindly authorise us to proceed on these lines. The Hong Kong shipowners have sought greater con- cessions since Mr Pao was in London and the Hong Kong
Government have been moved to follow suit. It is important that they should not feel that they can force us to concede further in advance of negotiations within EEC. We would like to be sure that you regard our proposals as a reasonable attempt to deal with a difficult issue for our shipping interests both nationally and internationally.
M.R.D.H.
March 1973
5 19/3