Registry No.

SECURITY CLASSIFICATION

Top Secret,

Secret.

Confidential.

Restricted.

Unclassified.

PRIVACY MARKING

DRAFT BRIEF

To:

تمر

CONFIDENTIAL

In Confidence

SHIPPING AGREEMENT

Type 1 +

From

Telephone No. Ext.

Department

DSR 11

LINE TO TAKE

1.

We believe that the increased economic activity between our

two countries following the signature of the Economic Cooperation

Agreement (ECA) should benefit the shipping industries of both countrie

I understand that the Chinese Ministry of Communications has agreed

in consultation with the Ministry of Foreign Trade, to study the UK

text of a proposed exchange of letters under which both parties would

recognise this principle. I hope that it will be possible to reach

such an understanding which would be in accordance with the spirit of

the ECA, and that this will lead to further discussion on how the

principle can be put into effect.

BACKGROUND

2. With the firm prospect of increasing trade with China following

Mr Varley's visit in February, there is now strong pressure from the

UK shipping industry for action to ensure that British shipping obtains

a reasonable share in the carriage of that trade. At present British

shipping is virtually excluded from the China trade, because of the

control on shipping terms exercised by the China Foreign Trade

Transportation Corporation.

3.

The Economic Cooperation Agreement signed by Mr Varley includes

shipping as one of the areas where the parties agree to expand

cooperation. During Mr Varley's visit officials gave the Chinese the

text of a draft exchange of letters under which the parties would

/confirm

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