R
CONFIDENTIAL
HONG
HONG KONG
INFO PEKING
Peking Tel No 168 to FC
Given the unsatisfactory outcome to the recent talks in Peking
we agree that there would be much to be said for giving the
required one year's notice to the Chinese as soon as possible and not later than 30 April 1982 of our intention to withdraw
from the CMU of 26 July 1979 governing regional services between
Hong Kong and points in China.
The
2 As seen from here there is no chance of negotiating more
satisfactory arrangements on the basis of the existing CMU.
recent talks confirmed the difficulty of making even the
smallest advance, and there was no progress at all on the
fundamental issue of Cathay Pacific's designation, much less
on their ambition to serve Peking as well as Shanghai. Thus
we have a clear choice between giving notice of termination, or
acquiescing indefinitely in the present highly unsatisfactory
situation on the regional routes.
3 Although notice of termination of the CMU is a formal act of
some consequence given careful presentation it need not be seen
as unduly provocative. A whole year is allowed for the
negotiation of new arrangements and we could stress that it is
our wish to do so. The Chinese for their part have much to lose
if CAAC's most profitable services are put in jeopardy and although
they may well take us to the brink of a total breakdown of air
services we think it highly unlikely that they would in fact allow
services to cease especially as the proposed date of termination
would be at the beginning of the busy and profitable summer season.