CONFIDENT1A in
3-
Condition (v)
'CAL's Hong Kong offices and ground staff should be withdrawn before the opening day of air traffic between Britain and China'.
Hong Kong would find great difficulty in agreeing this (although they might try to effect some reduction and reduce the number of people with access to the airport. Anything else would be bound to provoke retaliation against CPA which Hong Kong are unwilling to cause. (ibid) The Chinese are aware that we are unwilling to risk the income of Cathay Pacific which is largely derived from the run to Taiwan.
The Japanese told the Chinese that they would not allow the Taiwanese to maintain an office in Japan and would regulate the number of Taiwanese employees working on aircraft security. CAL closed its offices and stopped all flights when the Japanese made their statement on condition 1(b). Flights were resumed by CAL and JAL's dummy company when the Japanese partially restricted their statement linked to condition 1. CAL operate an office in Tokyo using the name 'Empire Tourist'.
We told the Chinese in 1976 that we thought that our proposals were as good in practice as the political and practical arrangements arrived at with Japan. (The Japanese however forced-the-closure of the CAL-office in Tokyo- although it-re-opened-later-in-a-different guise) Ever since we have taken the line that to press signature upon the Chinese would only be a source of irritation in view of their firm stand. British Civil Aviation had, and probably still has, nothing to gain from an Air Services Agreement. CPA and Hong Kong have much to lose and unless the Chinese are prepared to move we should stick to our position.
FED/FCO
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