SECRET
ник
18411
Reg.
Mr Donald
No
саб
29/4 R2918
UK/CHINA AIR SERVICES
PROBLEM
1.
amended poros
This has been misatul pas
amended.
2614
J23.4.82.
See(in)
Whether to serve CAAC notice of termination of the
Regional Confidential Memorandum of Understanding dealing with
air-services between Hong Kong and China. ́
RECOMMENDATION
2.
Subject to the provisos in para 15 below, I recommend that (a)
the Embassy in Peking should warn CAAC and the MFA that we are
contemplating serving notice of termination, and (b) that unless
the response of CAAC and the MFA within the next month gives us
good reason to expect substantial progress at the next review of
air services, we should duly serve one year's notice.
HM Ambassador, Peking, the Department of Trade, MAED and HKGD
agree. The Governor of Hong Kong has reservations.
BACKGROUND
3.
After long and difficult negotiations the UK/China Air
Services Agreement was signed in 1979. At the same time we
agreed to Confidential Memoranda of Understanding (CMU) dealing
with trunk routes London-Peking and the regional routes Hong Kong-
China. Implementation has been partial and acrimonious. A
'Hong Kong-based airline' was given rights to operate, Hong Kong- Shanghai services as some balance to Civil Aviation Administration
of China (CAAC) flights between Peking, Shanghai, any 4 other
cities and Hong Kong. But CAAC refused designation to Cathay
Pacific Airways (CPA) ar a CPA subsidiary to operate the route when CPA/secured London-Hong Kong rights, because the text of the
CMU said that the service should be operated by a Hong Kong-based airline not also serving London. Later they agreed to allow CPA
to operate the service on a temporary basis, on payment of a
royalty and in exchange for CAAC rights from 3 more points in
China. CAAC have used these additional rights to evade agreed
restrictions on the number of their flights from Hong Kong to
Peking and Shanghai by same plane connecting services through Tientsin and Nanking.
SECRET
/4.