Subsequent to that conversation, I have been looking at the record of the last round of discussions and at the texts tabled so far. There is nothing in the record to suggest that the Hong Kong side accepted the concept of a round a world route in the Hong Kong/US ASA. On the contrary there are a number of points at which Mr Wakeling is quoted as saying Hong Kong were not interested in a round the world route.
So far as the formal position is concerned, we have already tabled a draft exchange of letters which would delete Hong Kong from the route in the UK/US agreement. The Americans have tabled a proposal that a similar route should appear in the US/Hong Kong agreement but with London deleted. Mrs Street confirmed to me that they would accept the alteration we have already tabled to the UK agreement if their proposal for the Hong Kong agreement was accepted.
We are starting from the premise that the rights already in Bermuda 2 should be interfered with as little as possible. It strikes me that neither the UK nor the US proposal do exactly that. The UK proposal allows a round the world route to continue from London but would remove the right to operate a round the world route through Hong Kong with traffic rights. The US proposal, on the other hand would allow a round the world route to be operated through both London and Hong Kong and would allow a daily frequency under each of the agreements, so the total capacity on round the world routes would be increased from the existing daily service to 2 services a day.
It might be worthwhile to consider whether there are any other alternatives which would be more neutral in their effect. However, I cannot at present see any.
OPTIONS
I have promised to get back to the Americans. I would ideally like to do this by mid- afternoon UK time on Tuesday 7 September since I will be then leaving for a meeting in Paris and communications will become much more difficult. It seems to me that our choices are as follows:
a)
b)
To make it clear that there is no question of our agreeing to the inclusion of a round the world route in the Hong Kong agreement. I suspect, though I cannot be certain, that this would lead to the Americans postponing or cancelling the talks on the grounds that there is no prospect of reaching
agreement.
Indicate a willingness to consider the inclusion of a round of world route, but making it clear that this would affect what was otherwise available (eg. in terms of fifth freedom rights). This would probably ensure that the talks went ahead and could lead to a successful outcome if you have genuine flexibility in this area. However, if you really have no intention of conceding any form of round of the world rights this could easily lead to an acrimonious breakdown of the talks amid accusations of bad faith. We would certainly not want to go into talks if that seemed the likely
outcome.
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