TNAG-0358-FCO40-394-Registration-of-merchant-shipping-in-Hong-Kong-1972 — Page 84

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In view of the foregoing considerations, it is suggested that we should not only offer to the Hong Kong Government the relaxations referred to in your recent submission to the Prime Minister but share our thinking with them on the problems of establishing a separate register and the repercussions which might flow from this. This would include the problem of avoiding the transfer of registry by UK companies to Hong Kong, the maintenance of standards of qualifications in the face of pressure from large Hong Kong owners and the need to avoid giving the impression that Hong Kong was becoming a flag of convenience. As a result of this dialogue with them, we might agree to set up a separate register provided that admission to it were limited strictly to bona fide Hong Kong residents and companies with their principal place of business in that territory. At the same time we might agree that the present arrangements enabling aliens to take examinations for certificates of competency at Second Mate and Second Engineer levels should be extended to cover certificates at First Officer and First Engineer levels but not at Master, but that eligibility for certificates at these levels should be restricted to aliens who are bona fide Hong Kong long term residents. A subsidiary, but not unimportant, advantage would be to discourage such aliens from seeking to obtain British citizenship purely for the purpose of qualifying to take examinations at the higher levels.

6. There can, of course, be no question of permitting Hong Kong to become a flag of convenience on the lines apparently favoured by Mr Pao. He has previously referred to Singapore as providing a suitable model. But their registry arrangements are essentially those of a flag of convenience country. The flag of convenience issue is a topic still causing much controversy internationally and was the subject of a recent OECD report. The conclusion then reached was that flag of convenience countries posed two major problems: firstly, the danger of unfair competition resulting from special economic advantages and, secondly, the threat to the maritime community as a whole which might result from inadequate safety standards and their ineffective enforcement. The latter aspect, with its associated danger of pollution of the environment, was said to require particular attention in the future and OECD have established a special working group to consider the matter further in consultation with other UN bodies including the ILO and IMCO.

7. It is suggested that Mr Pao should be informed that while we still have an open mind on the question whether Hong Kong should be given a separate register and we are consulting the Hong Kong Government on this, there are various difficulties to be resolved which we are studying. However, the main purpose of the meeting should be to try to get Mr Pao to elucidate whether his real objective is for Hong Kong to become another flag of convenience. If he should deny that this is in fact his wish, perhaps he could describe the minimum conditions which are, in his view, necessary to persuade Hong Kong shipowners to transfer their ships to the proposed Hong Kong register.

8. In that connection, it is suggested that Mr Pao might be invited to answer a number of leading questions as follows:-

(i)

How strongly does Mr Pao hold the view that a Hong Kong register should be open to all shipowners

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