Each project was then discussed.
CAAC
Miss Vowles and Mr Duffy explained that the ATP offer in respect of Cossor's bid for this project was due to expire on 21 August but that the French (against whom Cossor and Marconi are competing along with the Italians) had proposed an aid freeze. ODA (with Treasury support) were supportive of this line provided that the agreement could be made watertight and binding. In addition, as the line had been proposed by the French (and not initiated by the UK) ODA believed that Ministers would be more receptive to this proposal than to the extension of the offer. Mr Palmer disagreed, believing that the delay imposed would work to the commercial advantage of the UK companies involved and, more importantly, would work to the advantage of the French. Miss Vowles made the point that if the Italians were to agree to the proposal we would find ourselves out of sync with two of our EC partners thereby attracting publicity. Mr Adams emphasised the need for DTI to consult Marconi and Cossor and undertook to see both companies during the week. It was agreed that we would allow the offer to lapse for the time being until pressed by the Chinese for a response. In the meantime, ODA would seek clarification of the validity of the French and the Italian offers.
BEJING METRO
Mr Parry updated the meeting on the current position the Chinese were very keen to sign the contract during September and a decision would therefore need to be taken soon. Mr Seaton felt that if this project could be construed as a pre- commitment, FCO Ministers would be likely to stand by it, particularly as this was a very high profile project.
It was agreed that if Balfour Beatty have to sign the contact by mid- September a submission should go up to Ministers on their return from leave recommending that contract signature go ahead.
FACTORY 520
The contract for this joint venture project had been signed since August 1988 and the aid offer accepted by the Chinese. There were problems over agreeing the equity structure of the JV, and there was a query over whether this would be acceptable to ECGD.
Mr Sedman was unsighted on this subject and promised to look into it. No official action was required
for now.
BOHAI II
Miss Vowles explained that the soft loan agreement covering this project was due to expire on 30 September and that ODA were taking legal advice (since the agreement was a treaty) on how to take this forward. It was recognised that there was a
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