TNAG-0858-FCO40-1068-Proposed-UK-China-bilateral-shipping-agreement-1979 — Page 28

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CELEIVED IN VESTRY NO. 51

15 MAY 1979

15.6

UK/CHINA

INDEX.

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Me Steel o Mr Priston Ar Marinand Mr Pryor Br George

DEP SEC CRE #CO/MATH SP

(PEKING)

1. You reformed to me on Wednesday & call from Mr Shen Chao-Chi, First Secretary Haritime, at the Climeve Embassy, who was anxious for a meeting with Sir Leo Pliatzky vo talk about the proposed Maritime Agreement with Chine. I saw Mr Shon yesterday afternoon in company with Mr Morland of the FCO.

2. Proposals for a Maritime Agreement with China, which would give MPN treatment in operational matters, has been under consideration for some years following an initiative from the General Council of British Shipping, We submitted a draft agreement and our Embassy in Peking had two meeting with the Chinese in February 1977, but the negotiations then ran into the ground because of Chinese reluctance to accept that Hong Kong vessels and scamen should also benefit from the proposed agreement. China has maritime agreements with most of the West's major maritime nowers and has recently hoon negotiating one with the USA. When the Secretary of State (Industry) visited Peking in February this year he indicated on our behalf that we were prepared to discuss the resumption of negotiations.

3. Quite apart from the liaritime Agreement which deals with operational matters, we have been concerned to ensure that British shipowners should have reasonable participation in the carriage of our bilateral trade with China on remunerative terms. The Chinese export cif and buy fob so that they control the shipping and British shipowners have found it so unprofitable to operate in the Chinoce market with the low level of trade which has been available until recently, that they ceased to run regular services there. We took the opportunity of Mr Varley's vicit and of the proposals for an Economic Co-operation Agreement with Ching to propose an understand- ing on carriage sharing in the context of the FCA) Although shipping is explicitly mentioned in the Economic Co-operation Agreement willen was signed during Mr Varley's visit, we were unable to make progress with the understanding, partly because of the difficulty in finding a Chinese Ministry which was prepared to take responsibility for the subject.

•

4. It was against this background that Mr Shen came to see me yesterday afternoon. He had been commissioned to convey an invita- tion from the Minister of Communications to Sir Loo Plitely to visit China workaps in June, to negotiate a Maritime Agreemont. We under- stand this reflected an offer which Sir Leo made to the Minister at the Chinese Embassy last November that he would be prepared to go to Peking if this would help to bring the negotiations for the agreement to a sotisractory conclusion. (The Chinese had already invited Mr Clinton Davis to visit Chins for the conclusion of an agreement.)

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