CONFIDENTIAL

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4.

On safety equipment, we had assumed that, in the short term, arrangements would be made to approve items of Japanese safety equipment, tested to Japanese standards, for inclusion in Hong Kong registered ships; and that arrangements would later be made for Japanese manufacturers to have their products tested to British specifications. The proposal, however, that standards for safety equipment, materials, installations and survey ought to be the same for both the Hong Kong and U.K. registers is a new one. Coupled with the preference to have British material on U.K. ships and the understandable commercial wish to negotiate "fair" arrangements with Japan this proposal again represents a significant change from the Heads of Agreement. The point of substance here is that to revert to the original concept in the Heads of Agreement would not lose orders for British manufacturers because Hong Kong shipowners are already using Japanese equipment on their ships constructed in Japan.

5.

Here it is probably worth emphasising again that our requests on both manning and safety equipment are designed to get the separate registry started and to cover a transitional period. In the longer term, training facilities would be established in Hong Kong designed to produce an adequate supply of officers who would have passed oral and written examinations up to a standard fully equivalent to that in the U.K. And, as more ships come onto the registry, Japanese shipbuilders and manufacturers would be encouraged to test their products to British standards. But, unless reasonable provisions are agreed in the interim designed to encourage Hong Kong shipowners to bring their ships onto the proposed new registry on terms which would not undermine the commercial viability of their operations, there seems little hope of any significant progress being made on these longer term arrangements.

6.

This being said, it would assist us in assessing further the proposals for written examinations if the DOT could let us have additional details, with regard particularly to the age-range of officer envisaged, the length of sea service required and the syllabus and standards of the examinations. It would also help us if we could be provided with some indication of how the DOT see the requirements for safety equipment, etc being applied in practice. For we can see considerable difficulties in reaching agreement on the standards to be applied and in negotiating arrangements with the Japanese. A little more spelling out of detail here would help us to assess more carefully what is proposed.

7.

There are other points I could mention but the above is probably sufficient for present purposes. Needless to say, we appreciate the difficulties under which the DOT are operating in this field and we understand the efforts they are making to

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