CO129-517-2 Correspondence on proposed Chinese and Hong Kong agreements over Customs 13-11-1929 - 28-12-1929 — Page 23

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(2).

China in order that I be in a position to reply to

r

the Foreign Office regions fem by considered observations

on proposed agreement.

As at present advised I incline to the opinion that

Article 5 should be cut out altogether as in view of

declared policy of Chinese Government of reserving inland

water navigation to vessels flying the Chinese flag, even

if British owned, there would be no chance whatever of

their agreeing to it.

On the other hand, I am equally inclined to regret

the Chinese proposal that Article 5 should be modified

so as to apply to Chinese flag vessels only as by agreeing

to it we allow a precedent to be set up which might

seriously weaken our position in regard to coastal and

inland water navigation rights in our commercial treaty

negotiations. We may possibly have to surrender the

whole or part of our present inland water rights in order

to secure a continuation of our coasting and river navi-

gation rights but we hope to be able to make surrender or

restriction of the former a quid pro quo for continued

enjoyment of the latter.

As to Hongkong trying for privileged factory treat- ment referred to in Article 10, I do not myself think that there is the slightest chance of Chinese agreeing

in view of present attitude of the Chinese towards foreign- owned factories in China as revealed in recent corres-

pondence regarding textile and printing companies applica- tions. Moreover I feel that any such privileged treat- ment might be very double-edged and increase the likeli- hood of feeling in China that Hongkong after all

approximates