CONFIDENTIAL
20.
The airline set up on the Japanese side to operate services to Taiwan was a wholly-owned JAL subsidiary named Japan Asia Airlines. CAL resumed services from Taiwan. Both ground services at Haneda Airport and ticket sales in Japan for CAL were to be handled by JAA; while in Taiwan, CAL would perform for JAA the services undertaken in Japan on its behalf by JAA. This is the arrangement envisaged at clause (vi) of the Japanese six-point programme, but it was not put into operation as CAL suspended services. Similarly, Japanese undertakings in 1974 to close CAL offices and to regulate the number of Taiwan employees were overtaken by events.
21. Chinese reaction to the resumption of air services between Jhpan and Taiwan was on the whole muted and directed more against Miyazawa's statement on the status of the Taiwan flag, which they felt carried implications of a "two-Chinas" policy, than against the resumption of flights as such.
Possibi
Taiwan reaction to British comment on the status of CAL
[Taiwan
22. Taiwan's reaction to the Japanese statement denying national status to its flag and casting CAL into a subsidiary role was, as seen, very severe and led to the severance of air links with Japan for over a year. It cannot be ruled out that Taiwan might react in the same way to a similar public statement from HMG and might suspend air services between Hong Kong and Taiwan despite the consequent loss in revenues to CAL. In support of this possibility one might cite Chiang Ching-kuo's reported opposition to any compromise with Japan and Taiwan's continued determination to hold its own against China. Against the possibility of rupture one can set the following arguments:-
i)
ii)
iii)
in the years since China and Japan started negotiations over an air services agreement, Taiwan's diplomatic isolation has increased, and Taiwan now holds a weaker position in the international scene. Knowledge of this may induce Taiwan to take an acquiescent rather than intransigent attitude towards a British statement on the status of CAL.
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Taiwan may, in fact, be unwilling to countenance a second loss of earnings for CAL. The Taiwan- Hong Kong route is a lucrative one.
Taiwan's eventual accommodation with Japan over the resumption of air services may prompt a more conciliatory attitude towards HMG and even encourage Taiwan to seek a compromise formula at the beginning of negotiations.
On point (iii), however, the gap of over a year, during which time. CAAC flights to Japan had established themselves, clearly made it easier for the Chinese to accept Miyazawa's' partial retraction of Ohira's 1974 statement. However much it might ease things with Taiwan, HMG could barely hope to be able to offer such a sop to Taiwan in the course of negotiations with the Chinese. (It is interesting to note that in their discussions with the Japanese, the Chinese accurately predicted Taiwan's reaction: severance of air links for a year or so until Taiwan felt that such a break did not pay).
CONFIDENTIAL
/23.
Yes: hatred has more Istake thinCAL.
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