a Maritime Agreement. Although earlier negotiations on this broke down over China's unwillingness to extend the benefits of the Agreement to Hong Kong

seamen and vessels registered in Hong Kong, there have lately been signs that should now be more accommodating. Any dilution of the British link could make

the position more difficult again.

7 The foregoing is written on the assumption that Sir Y K Pao is seeking not

freedom to employ officers with any certification but freedom to employ officers

who would still meet British standards in terms of qualifications, skills and

experience. If this assumption is dropped, that is, if British standards are not

to be maintained, the resultant fall in standards reinforces the economic arguments

against the separate register.

Conclusions and line to take

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8 Your visit to Hong Kong gives the opportunity not only to assess the strength of support for the separate registry idea, and to test the need for it, but also to put to Hong Kong some of the difficulties which we see even with the proposal

to retain British certification. This in itself would present difficulties for

us (since under current regulations only British subjects can obtain certificates of competency from the UK and from Hong Kong and other Commonwealth countries which issue certificates having equivalence with UK certificates - entitling them to serve as master, first mate or chief engineer on a British vessel) but even if

standards of manning and equipment could be maintained there are doubts on wider

economic grounds whether a separate register would benefit either Hong Kong or

the UK in the long run. We would be prepared to look at any difficulties, apart

from those arising from the need to meet British standards, which operation under

the British flag currently entails. In particular we could consider whether any-

thing could be done to increase the number of Hong Kong Chinese officers on Hong Kong ships (there are training facilities in Hong Kong but it is not known here

how many of these go to sea on locally-registered ships) but we do not see any

advantage in any dilution of the British link at the present time.

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