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OPERATING BETWEEN CANTON AND HONG KONG YOU SHOULD SAY THAT THE OPERATING PERMIT, AS ADVISED, WAS RECENTLY EXTENDED TO 31CTOBER 1979, AND THEY WILL BE ALLOWED TO CONTINUE UNTIL THEN. BUT THE SERVICE COULD NOT THEN BE RESUMED UNTIL AGREEMENT HAD BEEN REACHED IN SUBSEQUENT NEGOTIATIONS ON WIDER REGIONAL SERVICES, OF WHICH THE HONG KONG-CANTON ROUTE COULD FORM A PART.

4. IF AGAINST OUR EXPECTATION, THE CHINESE SAY THAT A DEAL

ON THE BASIS OF OPTION C IS NO LONGER AVAILABLE YOU SHOULD

SAY THAT YOU WILL NEED TO REFER BACK FOR FURTHER INSTRUCTIONS BUT THE LIKELIHOOD IS THAT UK MINISTERS WILL INSTRUCT THE TEAM TO BREAK OFF NEGOTIATIONS AND RETURN TO THE UK.

5. THE REVIEW OF THE AIRPORTS POLICY (YOUR SECOND TUR) HAS NOT YET BEEN COMPLETED, AND CHINESE RESISTENCE ON ACCESS TO HEATHROW COULD WELL MAKE AN AGREEMENT WITH THEM VERY DIFFICULT. YOU CORRECTLY ASSUME THAT THE CHINESE POINT IN PARAGRAPH 2 OF YOUR TELNO 626 CANNOT BE CONCEDED. NOR SHOULD YOU GO FURTHER THAN THE INSTRUCTIONS IN PARAGRAPH 6 OF OUR TELNO 368. PLEASE CONTINUE YOUR ATTEMPTS TO PUT THIS QUESTION ON ONE SIDE, WHILE PURSUING THE OTHER ASPECTS OF THE DEAL, BUT REFER BACK IF IT BECOMES A STICKING POINT.

CARRINGTON.

FILES

MAED

FED

нкаа MR CORTAZZI MISS BROWN MR MURRAY

LURRAY,

COPIES SENT TO CAD/DOT

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