TNAG-0781-FCO40-985-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 259

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AN ACQUIESCENT ATTITUDE TOWARDS A BRITISH STATEMENT: TAIWAN MAY BE

NWILLING TO INCUR A SECOND LOSS OF EARNINGS FOR CAL1 WHILE

TAIWAN'S EVENTUAL ACCOMMODATION WITH JAPAN MAY ENCOURAGE IT TO

SEEK A COMPROMISE FORMULA WITH BRITAIN AT THE BEGINNING OF NEGOT-

IATIONS. HOWEVER, THE GAP OF A YEAR MUST HAVE MADE IT EASIER FOR THE CHINESE TO ACCEPT JAPAN'S PARTIAL RETRACTION OF ITS 1974

STATEMENT, AND HMG COULD BARELY HOPE TO OFFER SUCH A SOP TO TAIWAN IN THE COURSE OF NEGOTIATIONS WITH THE CHINESE.

7. A STATEMENT ISSUED PRIVATELY BY HMG TO THE CHINESE ON CAL'S

STATUS, TOGETHER WITH A MUTUALLY AGREED REORGANISATION OF CAL GROUND SERVICES AT HONG KONG, MIGHT BE TOLERATED BY TAIWAN. SUCH A COURSE, HOWEVER, WOULD DEMAND A CONCESSION FROM THE CHINESE WHO HAVE INSISTED ON A PUBLIC STATEMENT FROM HMG.

OWEN

FILES

FED.

HAKIGD.

MAED

RES.D.

MR MURRAY MR CORTAZZl.

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