TNAG-0777-FCO40-981-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 93

CONFIDENTIAL

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FURTHER TEL NO.191 OF 17 FEBRUARY MERELY AMPLIFIED OUR EARLIER TELEGRAM, THEREFORE WE CANNOT ACCEPT THAT THE LATE ARRIVAL OF THIS CONSTITUTES ANY EXCUSE FOR IGNORING OUR POSITION.

NOT HAVING

RECEIVED OUR SECOND TELEGRAM AT THE TIME OF THE DISCUSSIONS, OUR FIRST TELEGRAM WAS CLEARLY VALID AND CALLED FOR CAPACITY LIMITATION ON ANY REPLACEMENT OF 737'S BY 707'S.

3. AS FOR PARA.4 OF TEL UNDER REF, WE FIND THIS QUITE INCONSISTENT

WITH THE PAST HISTORY OF NEGOTIATING WITH THE MALAYSIANS. THE BRITISH OBJECTIVE IN MORE RECENT TIMES HAS BEEN TO HOLD DOWN THE MALAYSIANS, TO RESTRICT COMPETITION ON THE LONDON ROUTE AND TO REDRESS THE IMBALANCE OF EARNINGS IN THE REGION WHICH RESULTED FROM B.A OBTAINING TRUNK ROUTE RIGHTS THROUGH KUALA LUMPUR AT THE EXPENSE OF CPA. ANY FURTHER CONCESSION IN THE REGION AT THIS STAGE CONTRARY TO THE ACCEPTED OBJECTIVE WILL NOT ANIMATE MAS TO VOLUNTEER CONCESSIONS AT ANY FORTHCOMING REVIEW BUT WILL MERELY MAKE IT MORE DIFFICULT TO ACHIEVE A BETTER REGIONAL BALANCE. VIEW OF THE ABOVE WE CANNOT ACCEPT THE VIEW EXPRESSED IN PARA.4 AND TRUST THAT THIS LINE WILL NOT BE ADOPTED ON ROGERS' RETURN VISIT TO KUALA LUMPUR.

MACLEHOSE

IN

FILES:

MAED

SEAD

HK & G D

MR BURROWS

[COPIES SENT TO CAD/DOT]

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CONFIDENTIAL