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by Hong Kong exceeds the value of her exports Hong Kong runs a surplus or visiblo trade with the United Kingdan. The surplus in 1966 was between £10 million and £15.gillion. Hong Kong imports goods of substantial value from China. în dealingE with the UK Hong Kong also has a surplus on invisible account. Hong Kong receipts include the local costs of UK forces, interest on the sterling balances and new investment by UK residents in Hong Kong. These items exceed the intereut, profits and dividends remitted to the United Kingdom.
18. At the end of 1966 Hong Kong's sterling balances were about £320 million. These loans are, of course, of value to the UK. Nevertheless, they are probably, in the main, held in liquid form and capable of withdrawal at short notice. They are most likely to be withdrawn at times when storling is under pressure.
Evidence of the use of Hong Kong as a gateway for the export of sterling in 1957 was given to the "Bank rate tribunal". This occurred many years ago and may be of little relevance now but presumably the opportunities still exist.J
19. Insofar as CPA does make a contribution to the UK economy, this is further reason, if reasons were needed, for the careful attention which' HMG has devoted to CPA.
CPA Contribution to Hong Kong
20. Section Q; Para.10.
That CPA bbenfits Hong Kong's economy is not contested. large part of CPA's contribution to the sterling area evidently goes into Hong Kong itself. The question is, though, what it is worth sacrificing for this benefit (a) by way of other British aviation (and other material) interests (b) by way of sacrifice made by Hong Kong itself, if defending CPA's interests abroad brings repercussions. (To take only the simplest example by cutting down other airlines' traffic from there, through restricting regional rights, which could even react ; against the tourism interests in Para.10(v)). Since CPA is based in Hong Kong, it is not surprising that it carries a large proportion of Hong Kong visitors; what is not established is that, in its absence these visitors would not come by other airlines or how many of them would thereby be lost or that their carriage depends on CPA having particular rights which, in bargaining abroad for British air interests overall, it might not be feasible to got.
Basic UK Policy in Negotiating Traffic Rights
21. As touched on above, the essential feature of the UK's position is that Hong Kong's interests in international aviation dealings are part of the UK's interests as a whole in that field. The Board of Trade, as the UK qeronautical authority, regard it as their duty to treat any Hong Kong (or other colonial) interests on the same basis and by the same criteria as any other UK civil aviation interests. Kong Kong's interests are fiven their full weight, on their merits, and are in no way treated as generically inferior to the other constituents of the ensemble of UK interests. Reguengkaxintýrantzxarıxgixuxxixixxfuibwaghiyxax This is the long- established policy of the UK and the policy has been consistently applied in practice. The policy is, of course, applied by the UK aeronautical authority in close consulta- tion with the Commonwealth Office which has a special concern for Hong Kong's interests. Close consultation is maintained between the two Departments on any aspect of civil aviation in which Hong Kong has an interest at stake. Mic consultation is maintained from day to day at need, and at all levels the Air Service Agreements with Malaysia/Singapore were considered by Ministers in both Departments in the light of Hong Kong's views before any UK commitment was made. (Consultation with Hong Kong itself is dealt with in the next section of this paper.)
22. FMG has thus supported efforts to obtain traffic rights for CPA, whore these can be obtained on acceptable terms, in the same way as it does for any other -British airline in like case. Naturally, there can be conflict in priorities between Eritish airlines whose interests are affected by negotiations, though such conflict is by no means a standard factor in negotiations. The general guide for 17 and its negotiators in such circumstances is to seek the optimum result obtainable for British interests as a whole. In the last resort, decisions as to what those interests are and where they lie must fall to be taken by Ministers in London who arco collectively responsible for HiG's actions. This is what happened in the USA and in the Singapore Malaysia negotiations.
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