TNAG-1176-FCO40-1478-Air-services-between-the-UK--China-and-Hong-Kong-1982 — Page 142

SECRET

ник

18411

Reg.

Mr Donald

No

саб

29/4 R2918

UK/CHINA AIR SERVICES

PROBLEM

1.

amended poros

This has been misatul pas

amended.

2614

J23.4.82.

See(in)

Whether to serve CAAC notice of termination of the

Regional Confidential Memorandum of Understanding dealing with

air-services between Hong Kong and China. ́

RECOMMENDATION

2.

Subject to the provisos in para 15 below, I recommend that (a)

the Embassy in Peking should warn CAAC and the MFA that we are

contemplating serving notice of termination, and (b) that unless

the response of CAAC and the MFA within the next month gives us

good reason to expect substantial progress at the next review of

air services, we should duly serve one year's notice.

HM Ambassador, Peking, the Department of Trade, MAED and HKGD

agree. The Governor of Hong Kong has reservations.

BACKGROUND

3.

After long and difficult negotiations the UK/China Air

Services Agreement was signed in 1979. At the same time we

agreed to Confidential Memoranda of Understanding (CMU) dealing

with trunk routes London-Peking and the regional routes Hong Kong-

China. Implementation has been partial and acrimonious. A

'Hong Kong-based airline' was given rights to operate, Hong Kong- Shanghai services as some balance to Civil Aviation Administration

of China (CAAC) flights between Peking, Shanghai, any 4 other

cities and Hong Kong. But CAAC refused designation to Cathay

Pacific Airways (CPA) ar a CPA subsidiary to operate the route when CPA/secured London-Hong Kong rights, because the text of the

CMU said that the service should be operated by a Hong Kong-based airline not also serving London. Later they agreed to allow CPA

to operate the service on a temporary basis, on payment of a

royalty and in exchange for CAAC rights from 3 more points in

China. CAAC have used these additional rights to evade agreed

restrictions on the number of their flights from Hong Kong to

Peking and Shanghai by same plane connecting services through Tientsin and Nanking.

SECRET

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