TNAG-0778-FCO40-982-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 25

CONFIDENTIAL

5. WE ARE SYMPATHETIC TO THE ARGUMENT OF THE ADVANTAGES THAT WOULD ACCRUE TO THE HONG KONG ECONOMY BUT, AS YOU WELL KNOW, WE DO NOT NORMALLY ALLOW NON-AVIATION ISSUES TO ENTER INTO THE GRANTING OR WITHHOLDING OF CONCESSIONS IN AIR SERVICES NEGOTIA- TIONS. YOU WILL REMEMBER THAT DURING THE THAI NEGOTIATIONS, THERE WERE STRONG PRESSURES FOR CONCESSIONS TO BE MADE TO THE THAI AIRLINES AT CPA'S EXPENSE IN THE INTERESTS OF FURTHERING UK EXPORT OPPORTUNITIES INCLUDING BAC1-11S AND LEYLAND BUSES: THESE WERE FIRMLY RESISTED FOR THE FOREGOING REASON. IT WOULD BE WRONG NOW TO REVERSE THAT POSITION AND THUS, IN THE CIRCUM- STANCES, WE REGRET THAT WE ARE UNABLE TO AGREE TO THE CONCESSION TO KAL.

6. SINCE, SO FAR AS WE KNOW, THERE HAS BEEN ONLY AN ORAL APPROACH FROM KAL'S DEPUTY REGIONAL MANAGER IN HONG KONG TO BCARFE ON THE SUBJECT, IT WOULD SEEM MOST APPROPRIATE THAT THE DECISION IS COMMUNICATED THROUGH THE SAME CHANNEL.

OWEN

FILES MAED

HK & GD

FED

MED

MR MURRAY

MR WEIR

/COPIES SENT TO CAD/DOT/

--2-- CONFIDENTIAL

1