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not the case and have emphasised our unwillingness to hand over CMUs which are commercially sensitive documents. CAAC are undoubtedly influencing thinking on the Chinese side and would like the commercial advantage of knowing about its competitors' arrangements. A further round of expert talks in September made no progress towards resolving these difficulties. The Chinese continue to wish to see CMUS and stressed that the Hong Kong/Netherlands ASA should not be considered a precedent. Discussion on these points will continue at JLG VIII.
9.
We are at various stages of discussion about separate Hong Kong ASAS with Canada (a text has been initialled), Brunei (text initialled but further technical difficulties remain), Australia, Thailand, New Zealand and Japan. All of these, once initialled, will have to be shown to the Chinese. Unless we resolve current problems in relation to the Switzerland ASA further difficulties probably lie ahead.
Dra Jonair
10. Dragonair is a fledgling airline incorporated in Hong Kong in September 1984. Sir Y K Pao and companies under his control hold 35% of its shares. It qualifies as a British airline under standard "ownership and effective control" criteria. operates limited regional services from Hong Kong.
11.
Dragonair
The Air Transport Licensing Authority in Hong Kong (ATLA) has recently granted Dragonair's long standing application for licences to operate scheduled services from Hong Kong to both Peking and Shanghai. Under current UK/PRC arrangements rights are not available for Dragonair in these routes. Moreover, HKG have a general policy of designating one airline per route and Cathay Pacific alreeady operate on the Hong Kong/Peking and Hong Kong/Shanghai routes. But HKG have said that if Dragonair applied for designation they would consider the case for seeking additional rights for a second Hong Kong airline on the routes. If HKG agree that Dragonair should be designated, in that case, it would be for HMG to seek rights for Dragonair to serve the two points through bilaterial negotiations with the Chinese. The prospect of eventual
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