CO537-6035 — Page 16

Zij

53627/50

FC 1371/19

SECRET

Dear Trench

The Church House,

Great Smith Street,

London, S.W.1.

ск

9 January, 1951.

You will remember that I spoke with you on the 23rd November, 1950, about Hong Kong telegram No.1277 of the 21st November, about the negotiations with the Chinese taking place in Canton on goods traffic on the Kowloon-Canton Railway. We agreed on our reply to Ilong Kong authorising the Governor to proceed as he suggested in paragraph 5 of his telegram. (See our telegram No. 1753 to Hong Kong).

I now enclose a copy of Hong Kong Saving No. 184 Secret, of the 22nd December, 1950, which explains more fully the factors affecting the Governor's decision to continue the negotiations for a working Agreement. The main point made is the one which we had already noted before replying to Hong

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Kong that in view of Article 9 of the 1948 Customs Agreement we are in a position to maintain if necessary that railway arrangements have always been and should be now the subject of separate ad hoc agreements and that the facilities now contemplated at Kowloon do not in consequence involve any of the provisions of the 1948 Customs Agreement.

We agree with the Governor's reasoning, and see no objection to the text of the relevant passage in the draft Agreement (in paragraph 5 of the Governor's savingram). Subject to any comments you may have, we propose to reply

N.C.C. TRENCH ESQ.,

FOREIGN OFFICE.

/as