5.
In reply I explained whilat we wore auxions to conclude u Maritime Agreement with Chire, there vode a number of difiiculties, In the first place we had a new Permanvert Bennetary and is von not clear whether his other commitments would permit him to take an early active part in these negotiations. Secondly, there w&D the Hong Kong problem; a recent telegren from Peking had indicated thet in the Chinese view it was a matter of finding the "beat words" and it would be very helpful if the Odinese would take the initiative by proposing how this could be done. that while a Maritime Agreement would be very useful, its value
Thirdly, I caid would be mich reduced unless there woro retsonable assurances of an equitable distribution of the cargo between the ships or our two countries on remuncrative terms; we ad put proposals about this to the Chinese in February and it was rathon cubarrassing that we had not so far had any reply. (luce the meeting with Mr Shen we have received a telegram from Peking to the effect that the Chinese now accept that there is a problem about cargo alloce- tion and suggest that British shipowners should discuss the matter with them,) It was desirable to know the Chinese thinking on the two latter points before getting down to detailed negotiations.
6. Mr Shen admitted that he was not qualified to carry on a dis-- cussion on the various points I had raised, but under took to report back to Peking for further instructions.
7. This approach and the response from Peking about cargo shering has come at en very opportune time since Mr Pryor is about to visit Hong Kong (on route to UNCTAD in Manila) where be will be having discussions with the Hong Kong authorities and shipowners about their position in relation to the Maritime Agreement. sion is that the Chinese attitude to Bong Kong is very much more
Our impres- relaxed than it was a few years ago, so that there in very real prospect of making significant progress with the Chinese.
8. There is no need for any action by the Secretary at this stage. We shall keep him ini ormed of developments.
NESN
M S Morris US/ST
Room 702
Ext 5102
1 Victoria Street
11 May 1979