CONFIDENTIAL
Hong Kong still wish to see BA withdraw from the London-Hong Kong Peking route, but it is possible that they would drop this demand if they felt they were adequately compensated.
6.
Since the initial review meeting took place, the planned BA/BCal merger has become another factor. It is clearly premature to assess how this might affect the UK/Hong Kong relationship before the Monopolies and Mergers Commission has made a recommendation. But if the merger took place, it could quite conceivably re-inforce the Hong Kong Government in their belief that arrangements on the Hong Kong-London route are unfairly weighted in favour of UK
carriers.
Separate Hong Kong Air Service Agreements
7.
At
The Joint Declaration provides that the SAR may, under authority from the Central People's Government, negotiate and conclude its own ASAS for services which do not touch the mainland. It also provides that ASAS previously in force may be renewed. present, all scheduled air services to Hong Kong are governed by UK
To ensure that a ASAS, which of course cannot continue beyond 1997. self-standing set of ASAs is in place before 1997, capable of continuing beyond that date, we have embarked, with Chinese consent and understanding, on a programme of negotiation to separate the elements affecting Hong Kong from existing UK ASAS (24 of which affect Hong Kong). The first separate Hong Kong ASA was concluded with the Netherlands on 17 September 1986, once the Chinese were content that nothing in its text was inconsistent with Hong Kong's status. It came into force on 26 June.
8.
We have undertaken to show the Chinese the text of each Hong Kong ASA before we are committed to it and to take account of any comments they may have. A second separate Hong Kong ASA (with
The Chinese have Switzerland) was negotiated earlier this year. identified some problems with the text. More seriously, they have also renewed their request to see the associated Confidential Memoranda of Understanding to reassure themselves that China's own aviation interests are not affected. We have assured them this is
CONFIDENTIAL
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