4
shipping enterprises of either party.
The UK in turn suggested, for 3 (2):
8.
Each Contracting Party shall refrain from taking any action which would constitute flag discrimination against vessels flying the national flag of third countries accept- able to that party, operated by the shipping enterprises of the other contracting party.
It may be difficult to get the Chinese to accept the unqualified commitment to eschew flag discrimination in our original draft: even the German Agreement does not achieve this. However if HK is exclud ed HK vessels would once again be at risk from the Chinese proposal. We cannot therefore make a decision on this until the HK issue is resolved. If we were in due course to accept a reformulation, ours has the advantage over the Chinese one that it would not give grounds for arguing that we were obliged to discriminate against flags which the Chinese did not find acceptable or, that we were party through the Agreement to any unilateral discrimination by China. Agreement on our re-formulation would also put us in a slightly better position than the other Western countries who have accepted the Chinese word- ing. (This is where they have flag discrimination clauses some do net: there are no prizes for guessing which!).
9. The Chinese proposal regarding Article 7(3) (see above, paragraph 4) also raises the discrimination issue. Once again we cannot resol- ve this until we have resolved Hong Kong.
10.
The discrimination issue does not appear to arise in relation to the articles not reached in the earlier negotiations except where these follow on from Article 7.
Other Issues
11.
There are a number of secondary issues disclosed by the earlier negotiations. In addition we have since the earlier negotiations ourselves considered some amendments to the original text. A brief outline of these is given here for information only.
12. The Chinese proposed two deletions in Article 4: the words 'and internal' in the second line and the words 'furnishing spare gear, equipment and fittings required by the vessel' in lines 10 and 11. We could accept the first of these, on the understanding that access continues to be allowed by special promulgation to the two ports (Whampoa and Hsinkang) we had in mind in drafting the original text.