CONFIDENTIAL

VISIT OF LORD CAITHNESS TO JAPAN 13-16 FEBRUARY

AIR SERVICES: LINE TO TAKE

1.

We very much hope that the Japanese Government will soon

be in a position to negotiate a separate Hong Kong-Japan Air Service Agreement. The establishment of a separate air service agreement not only gives expression to the autonomy in these areas guaranteed to Hong Kong by the Joint

Declaration, it also enables airlines to plan with

confidence about the future. This is particularly important given the large investment required by the establishment of

a new airport.

2. I understand that the Japanese Government has recently

received commitments from the Chinese Government of its

support for the separation process.

WEDADS/1

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