TNAG-0781-FCO40-985-Involvement-of-Hong-Kong-in-air-services-agreements-1978 — Page 85

DRAFT LETTER FROM MR STEELE TO ADRIAN SWIRE

CHINA

Thank you for your letter of 15 November about the possible

implications for Cathay Pacific Airways of our concluding an air

services agreement with the Chinese People's Republic.

Throughout the long-drawn-out negotiations with the Chinese, all

of us here have had very much in mind the importance to Cathay

Pacific of their earnings from services to and through Taiwan.

Indeed, this is the only factor which has delayed the conclusion

of an Air Services Agreement with the Chinese People's Republic

for a number of years.

We do not regard this as simply a question of the relative

financial advantages to Cathay Pacific and British Airways.

When Ambassadors were exchanged between the Chinese People's

Republic and the UK in March 1972 the then Foreign Secretary made

a statement in which he referred to Taiwan as follows:

"The Government of the United Kingdom, acknowledging the position of the Chinese Government that Taiwan is a province of the People's Republic of China, have decided to remove their official representation in Taiwan on 13 March 1972.

The Government of the United Kingdom recognise the Government of the People's Republic of China as the sole legal Government of China."

Given the fact that we have now enjoyed full diplomatic relations

with the Chinese People's Republic for over six years, and given

the importance of that country both to the UK and to Hong Kong, it

is an anomaly that we still have no formal air services agreement

and no direct air links. This is an anomaly which, as I am sure

you will recognise, cannot continue much longer. The position