CONFIDENTIAL

170133. MDLOAN 1444

IT.

4. IT IS ALSO IMPORTANT, HOWEVER, TO AVOID OR AT LEAST TO MINIMISE CHANGE AT THE TIME OF CHINA'S RESUMPTION OF SOVEREIGNTY. WE NEED TO GIVE CONFIDENCE TO USERS OF CALL SIGNS IN HONG KONG THAT CONDITIONS AFTER 1997 WILL REMAIN BASICALLY UNCHANGED. MORE GENERALLY, AT A TIME OF POSSIBLE UNCERTAINTY AND POTENTIAL INSTABILITY IT WOULD BE HELPFUL TO AVOID BOTH IN THIS PARTICULAR AREA. WE THEREFORE INTEND TO INTRODUCE AS SOON AS POSSIBLE A NEW SYSTEM FOR THE ALLOCATION OF CALL SIGNS FOR HONG KONG WHICH CAN TRANSIT 1997 WITH MINIMAL IF ANY CHANGE IN THAT YEAR. AS REALLOCATION OF CALL SIGNS WILL TAKE AT LEAST THREE YEARS TO COMPLETE, WE WANT TO DECIDE ON A SPECIFIC OPTION WITH A VIEW TO EARLY DISCUSSION WITH THE CHINESE AND SUBSEQUENTLY THE ITU. SINCE HONG KONG SHARES ITS SERIES WITH OTHER DTS, MOST OPTIONS WILL CAUSE SOME DISRUPTION TO THE LATTER. WE HAVE SOUGHT A SOLUTION WHICH BALANCES DISRUPTION TO HONG KONG, DISRUPTION TO OTHER DTS AND THE NEEDS OF HONG KONG CONFIDENCE.

OPTIONS

5.

WE CONSIDERED THE OPTION OF SEEKING ALLOCATION FROM THE ITU OF A NEW SERIES FOR HONG KONG'S EXCLUSIVE USE. THIS WOULD HOWEVER INVOLVE MAXIMUM DISRUPTION TO HONG KONG (CHANGE OF ALL CALL SIGNS) AND MAY BE RESISTED BY THE ITU (OTHER ITU MEMBERS MAY BE COMPETING FOR ANY VACANT SERIES).

6. WE ALSO CONSIDERED ALLOCATION FROM CHINA OF ONE OF ITS SERIES FOR THE EXCLUSIVE USE OF HONG KONG. THIS TOO WOULD INVOLVE MAXIMUM DISRUPTION TO HONG KONG AND CHINA MAY IN ANY CASE BE RELUCTANT OR UNABLE TO SPARE CALL SIGN SERIES. THERE IS A FURTHER POLITICAL POINT: HONG KONG WILL BE SETTING UP ITS OWN SHIPPING REGISTER IN ADVANCE OF 1997. IT WOULD NOT PROMOTE ITS AUTONOMY FOR SHIPS REGISTERED ON IT TO USE A CHINESE NATIONAL CALL SIGN.

PROPOSAL

7. THE SOLUTION WHICH SEEMS TO US TO INVOLVE LEAST DISRUPTION FOR BOTH HONG KONG AND OTHER DTS IS TO ALLOCATE FOR HONG KONG'S EXCLUSIVE USE SERIES FROM WHICH MOST OF ITS PRESENT CALL SIGNS ORIGINATE. WE SHOULD LIKE TO PROPOSE TO THE CHINESE THAT THE VR AND VS SERIES BE REASSIGNED EXCLUSIVELY TO HONG KONG AND

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