CONFIDENT ·

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damage to relations between London and Hong Kong. We have been considering how we can limit it.

3.

One element would be to avoid too much coincidence one of an unfavourable decision with other measures which may be unwelcome in Hong Kong. The most important would probably be the publication of the White Paper on Nationality Law. Obviously we will not have much control over this but we will do our best to see that the two events do not occur too close together.

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4. We will also be particularly careful to consult you

from Lian about the timing of any visits which might be misplaced in the aftermath of an unfavourable decision. have already been in touch with you about the Department of Trade's proposal that Sir Kenneth Clucas/should go to Hong Kong after the British Airways inaugural flight. For the moment that project seems to be shelved and the Department of Trade now realise that it will need careful consideration.

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5. There remains the question of públic relations. was a point which particularly struck Michael Burton, Head of MAED, during his recent visit to Hong Kong.

are familiar We re all familiar with The problems here. Of course we understand that the Hong Kong Government, having publicly supported CPA before and during the appeal, be expected to comment on and presumably to regret the decision. From the British point of view, however, the position will be rather different from that when the initial CAA decision was announced. Then HMG were inhibited from commenting because of the CAA's independent position and because of the impending appeal. Mr Nott decides against CPA, there will be points which should be made, either on the record or as background, to explain his decision. Putting this over could be tricky. We do not want a prolonged slanging match

between London and Hong Kong. It would not be proper, or commercially sensible, for the British Trade Commission to put the 'British case', We think that, despite the limitation on his activity in Hong Kong, it would be right for Graeme Wilson to put over to his contacts the background and rationale of Mr Nott's decision. But he

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