CONFIDENTIAL
TO ALLOW A HONG KONG BASED CARRIER TO OPERATE ON THAT ROUTE WHEN BA OMIT HONG KONG FROM THEIR TRUNK ROUTE SERVICES.
IF THEY ARE
ALLOWED TIME TO REFLECT, THE UNCERTAINTIES FOR THEM, AND WHAT. THEY SEE AS CONCESSIONS TO US, MAY THEREFORE OUTWEIGH THEIR DESIRE,
FOR AN EARLY AGREEMENT. AS WE HAVE DIS- ON POLITICAL GROUNDS, FOR AN EARLY AGREEMENT.
COVERED FROM OUR EXPERIENCE THIS TIME, THE CHINESE POSTION MAY HARDEN AND WE MAY GET A WORSE DEAL NEXT TIME. WE BELIEVE WE SHOULD THEREFORE RETAIN THE ADVANTAGES THAT HAVE BEEN ACHIEVED AS A RESULT OF THESE NEGOTIATIONS AND SETTLE FOR THE BEST DEAL NOW ON OFFER.
13. AS BETWEEN OPTION AND OPTION B (1.E. EXCLUDING OPTION C FOR THE REASONS GIVEN IN PARA 9 ABOVE), OUR STRONG PREFERENCE IS FOR CPTION A. IT WOULD GREATLY IMPROVE THE TRAVEL FACILITIES TO CHINA AVAILABLE TO THE PUBLIC BOTH IN THE UK AND HONG KONG. IN OUR VIEW, IT OFFERS PROSPECTS FOR DEVELOPING INTO A MORE WIDESPREAD AND MORE EQUAL SYSTEM IN THE LONGER TERM, THROUGH THE ARRANGEMENTS FOR REVIEW WHICH THE CHINESE HAVE ACCEPTED. ALTHOUGH OPTION A FALLS WELL SHORT OF THE CONDITIONS IN YOUR TELNO. 317, WE DO NOT BELIEVE FROM OUR EXPERIENCE IN THESE DIFFICULT AND PROTRACTED NEGOTIATIONS THAT THE UK WILL BE IN A STRONG ENOUGH BARGAINING POSITION TO EXTRACT EQUALITY FROM THE CHINESE ON THE REGIONAL ROUTES FOR AS FAR AHEAD AS WE CAN FORESEE. IT CAN BE ARGUED THAT IN A FEW YEARS' TIME, PRESSURE WILL HAVE GROWN ON THE CHINESE TO BUILD UP A NETWORK OF SERVICES BETWEEN CHINESE CITIES AND HONG KONG AND THAT OUR NEGOTIATING POSITION WILL BE STRONGER. BUT THE CHINESE FERVENTLY BELIEVE THAT THE QUOTE SPECIAL SITUATION UNQUOTE OF HONG KONG ENTITLES THEM TO THE LION'S SHARE OF THE REGIONAL TRAFFIC: AND THEY KNOW FULL WELL HOW TO CIRCUMVENT US BY CHANNELLING IT ON TH THEIR SERVICES
IN OUR OVER CANTON OR BY ORGANISING IT INTO CHARTER FLIGHTS. VIEW, WE SHOULD THEREFORE BE PREPARED TO ACCEPT WHAT IS IN AIR' SERVICES TERMS A LESS THAN SATISFACTORY ARRANGEMENT NOW. IT AT LEAST OPENS THE DOOR WHICH OPTION B WOULD LEAVE SHUT.
14. WE STRONGLY RECOMMEND THEREFORE THAT ROGERS SHOULD B AUTHORISED TO CONCLUDE AN AGREEMENT ALONG THE LINES OF OPTION A. WE HOPE THAT IF YOU DO NOT ACCEPT THIS ADVICE YOU WILL AGREE THAT WE SHOULD PROCEED ON THE BASIS OF OPTION B. SINCE WE
6 CONFIDENTIAL
/BELIEVE