TNAG-2352-FCO40-3422-Visits-by-Lord-Caithness--Minister-of-State-for-Foreign-and--1991 — Page 105

CONFIDENTIAL

Agreement over airport and proposed visit to China by Prime Minister should enable improvement to continue.

Hope

we can now reestablish cooperative basis for relations over

Hong Kong.

ASAS

-

Understand that talks in early July did not make much progress on Hong Kong/Philippines separated Air Services Agreement. Conclusion of agreement would demonstrate

confidence in arrangements for Hong Kong's future air

services. Would give carriers of both Hong Kong and Philippines solid long-term framework. Separation process has Chinese blessing: 7 agreements already signed;

HK/Malaysia ASA signed in March.

Airport

-

Understanding on airport a good one, which will give Hong Kong Government the certainty it needs to proceed with

project.

Should also provide major boost to investor confidence.

-

Agreement with China on this issue, which has been a bone

of contention since 1989, should open up a new phase of more fruitful cooperation over Hong Kong.

MOU initialled by Sir P Cradock and Lu Ping on 30 June. Will enter into force when signed by Prime Ministers

John Major and Li Peng. Prime Minister plans an early visit to Peking to sign MOU.

TEDAEF/2

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