CONFIDENTIAL

New Hong Kong ASAS

4. In addition to the separation programme, Hong Kong has negotiated new ASAS with Brazil and Brunei, and plans to

begin negotiations for a Hong Kong/Scandinavia ASA in the

near future.

5.

When we informed the Chinese of the latter recently

through the JLG, they replied unhelpfully. They argued that

they should be consulted before HKG was authorised to

negotiate such an ASA and suggested that both sides should

concentrate on the outstanding ASAS on the separation

programme before Hong Kong embarked on the negotiation of

new Agreements. They did not refer to the Brazil and Brunei

ASAS, to which they had not made the same objections of

principle. There is no reason why Hong Kong should not conclude new ASAS while the separation programme is in progress; moreover, the Joint Declaration specifically

provides for Hong Kong to negotiate and conclude its own

ASAS. We have made it clear that we intend to authorise

Hong Kong to proceed.

6.

Cathay Pacific Airways are particularly concerned about

these developments. The Chairman of John Swire and Sons,

Sir Adrian Swire, recently wrote to Lord Brabazon and

Lord Caithness and, in a helpful move, has expressed their

concerns in a letter to the Chinese Ambassador in London.

CAMAAL/2

CONFIDENTIAL

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