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REGIONAL AIR SERVICES
10.
Sino-British Air Services Agreement signed in November 1979
provided for one designated British airline (British Airways) to
operate UK/China trunk route. Regional links between Hong Kong and
Chinese cities were also planned.
11. Disagreement has arisen over Cathay Pacific operating a
Hong Kong/Shanghai service. The Chinese Civil Aviation Authority
(CAAC) argues that the permit granted to Cathay Pacific to fly
London/Hong Kong in effect gives Cathay a London/Shanghai trunk route,
which would contravene the Air Services Agreement. CAAC are using
this argument to press for rights for additional trunk-routes through
Hong Kong.
12. HMG has consistently rejected this Chinese argument, and for a
period in 1980 all Hong Kong/Shanghai services were stopped. Talks
held in Peking in January have resulted in a temporary resumption
of scheduled service until 31 October. There will be further talks
to find a permanent solution, and to consider the wider Chinese
requests. The Department of Trade will not be ready for these before
the summer.
DEFENCE COSTS AGREEMENT (DCA)
13.
New DCA concluded in October 1980 to come into force from 1 April.
Hong Kong Government will pay 75% of substantially increased costs
of garrison. Unofficials have not objected to Hong Kong's increased
contribution. They see HMG's defence contribution as important part
of our overall commitment to future of territory.
MACLENNAN AFFAIR
14.
Police Inspector MacLennan was to have been arrested in January
1980 on charges relating to homosexual acts (which are illegal in
Hong Kong). The arresting party found MacLennan locked in his
bedroom dead from five pistol wounds.
Despite overwhelming evidence
/that
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