7.
5
We have not yet had a response from the Chinese on this propositic but in the meantime the Chinese have produced a counter-draft of a FCA which so far as shipping is concerned differs in two important respects from the earlier UK draft. Firstly there are references to 'equality and mutual benefit' and to striving to keep our mutual economic benefits 'well-balanced' in the Preamble and Article 1. Secondly, shipping is now specified in Article 3 as one of the sectors in which the contracting parties agree 'to expand economic cooperation and exchanges'. The Embassy's view is that this form- ulation, which they appear to equate with that in the Sino-French ECA, is that the Chinese will accept no less and probably no more than that which they agreed with the French. In our view this is not good enough for two reasons. Firstly, the reference in the first sentence of Article 3 to 'expanding cooperation and exchange applics only to 'technology transfers, manufacturing equipment an products'. Although there is later an isolated reference to 'services', it is not easy to see how the provision of shipping services is included in this heading. Moreover the restrictio:
of cooperation to technology transfers etc is not in the Sino-Fren Agreement. Secondly, even if there were a clear reference to coop ration in shipping services this would be far too general and too open to a variety of interpretations for our purposes. For example it could be held to refer to port or infrastructure development. What we need is a specific understanding that British and Chinese ships should each share in the carriage of the greatly expanded bilateral trade which is envisaged, that the shares should be reasonable ones and that they should be on terms which are financi. ally worthwhile for both sides. We are not insisting that this should be written into the Agreement itself and would be content with an exchange of letters or some other appropriate instrument.
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