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reluctance on the Japanese side to make early progress. However talks, led by UK representatives from the Department

of Transport supported by a team from the Hong Kong Government, resumed in April. The Japanese side on that

occasion expressed doubts about the likelihood of the

Chinese honouring the ASA post-1997 and sought confirmation

that the agreement would continue beyond that date.

Accordingly the UK Representative to the Sino-British Joint

Liaison Group (JLG) raised the question of Chinese support for the separation process with his JLG counterpart and received confirmation that the Chinese Government's support

for the separation process remained firm. This has been

relayed to the Japanese Ministry of Foreign Affairs and we

hope that it will provide the assurance they seek and allow

for a further round of talks at an early day.

11. The aeronautical authorities of UK and Japan have met three times within the last year to discuss improvements to

the air services arrangements for both the Hong Kong /Japan

and UK/Japan routes. A limited agreement was reached in May under which Hong Kong airlines have access to additional

points in Japan. On the London route, additional capacity

was agreed subject to a formula intended to enable our

airlines to acquire additional slots at the hard pressed Narita airport. Access to an additional point in the UK

(Manchester) for the airlines of Japan and to an additional

point in Japan for the airlines of the UK was also agreed.

Our ambitions for a more liberal set of arrangements on capacity, routing and tariffs remain for the longer term.

RODABG/5

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