CONFIDENTIAL
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2 -
6.
The Hong Kong Government expressed disappointment that the Chinese were still insisting on any special conditions with regard to Taiwan, and said at first that they were only prepared to agree to the new formulae if we gave an undertaking to compensate CPA if there was a Taiwanese reaction against them, by making new routes available (by which they presumably meant at the expense of BA). DOT have made it plain that there can be no question of compensation but they have undertaken to do their best to negotiate such extra benefits they can if the case arises. In the light of this undertaking, Hong Kong have said that they would be prepared to agree to an ASA on the terms now proposed.
7. At official level therefore the FCO/DOT are prepared to recommend to Ministers that we should now go ahead with an agreement on the above basis. This will of course need to be submitted to Ministers soon after the General Election. In the meantime however, arrange- ments are being made for technical talks on the details of the agreement: the DOT have proposed that a delegation should go to China for two weeks from 21 May to discuss technical amendments to the 1973 agreement, made necessary by developments that have occurred in the meantime. There are also many unanswered questions about routes. Although we shall ask for it, we accept that the ASA will probably not cover Hong Kong to China flights, but that these will have to be covered by separate arrangements relating to "regional flights". As you know, since last autumn the Chinese have been operating scheduled services between Canton and Hong Kong under a temporary operating permit; they have recently indicated their interest in services between Hong Kong and other cities in China. The 1973 agreement did not give BA the right to pick up passengers in Hong Kong for the Hong Kong/Peking sector of the international route. But it is proposed to press this time for this sector to be unblinded. Alternatively we shall ask for a British airline to be given reciprocal rights for the Hong Kong/Peking regional flights.
8. The British team will also be asking for British airlines to be given the right to overfly China; we shall try to ensure that this includes CPA, even if there is no question of their being allowed to fly to points in China. toy
THE ORIGINAL HAS BEEN
CLOSED UNTIL
UNDER FOW.2. Antill
E.
EXEMPTION NO.27.6.6.&...
11 April 1979
W E Quantrill
Hong Kong and General Department
CONFIDENTIAL