(12)
lattached
CONFIDENTIAL
Mr Paul
FED
нак
18411
RECEIVED & 240STAY NO. 51
24 DEC 1981
DESK OFF.CLA
INDEX
No
PA cae
REGISTRY Action Taken
18/1
Pas 1511!
CHINA AIR SERVICES:
CABOTAGE
MRA 154/301/2
Reference..
J
done | Af 30/12
Attached
1. I refer to your minute of 31 July, addressed to my predecessor in this Department. This question has been held up while action on the legal front regarding cabotage generally has been pursued. But as the Dept of Trade will be formulating their strategy early in the New Year, for dealing with the Chinese at the forthcoming air services talks, this matter now becomes rather pressing.
2. The question of considering, should the need arise, the grant of cabotage rights to the Chinese was first raised by Handley Stevens (D/Trade) in his letter of 31 July. A considered FCO view was sought.
see (14
Attached See
3. The opinions of the posts at Hong Kong and Peking, and FCO Departments, lean towards the view that there would be no objection to granting cabotage rights to CAAC, providing (a) we could extract from the Chinese satisfactory compensatory air service benefits, (b) our legal position was secure in the context of civil air services, and (c) that this would not adversely affect our sovereignty over Hong Kong.
4. Proviso (a) will be a matter of horse trading at the air services talks, and probably is best left to the very able negotiators in the DOT, who will aim to extract compensating concessions in the light of the airlines commercial aspirations in the area: (b) has been the subject of a considerable amount of research by Legal Advisers, resulting in a draft FCO paper, due to issue soon; the main conclusion for our purposes, is that the lega position of cabotage generally is open to a variety of interpretat- ions and should not in itself preclude the grant of these rights to CAAC (a copy of the draft paper is attached): on (c) the way now appears open to give further consideration to the political questio of whether such a move would be considered to be detrimental to Hong Kong's wider interests in the long term (Mr Darwin's minute of 23 July). I should be grateful for your comments.
Attached
R W Sindon
Maritime, Aviation and Environment Department
23 December 1981
Copied to: Mr Williamson (HKGD)
Mr Gardiner (Legal Adviser)
CONFIDENTIAL
CODE 18-77