846G.79693/1–2048: Telegram
The Ambassador in China (Stuart) to the Secretary of State
[Received January 21—2:23 p.m.]
131. ReEmbtels 98 and 99, January 15. Civil Air Attaché discussed with Tai, director of CCAA, threatened interference Chinese [Page 784] Government with PAA movement Shanghai–Hong Kong passengers with particular reference situation which developed January 14 as reported Shanghai’s telegram 102, January 15. While CCAA officials directly involved, Tai sought escape responsibility CCAA this action, mentioning customs officials would not accept manifests from PAA but only from CNAC. It was pointed out to him that PAA quite competent present its own manifests and not understandable customs officials would not accept them directly from PAA.
When matter of threatened interference police officials raised, Tai endeavored brush this off lightly, stating that for CCAA he was prepared to give assurances that PAA would not be interfered with by CCAA in its operations Shanghai–Hong Kong until such time as bilateral consultation concluded. At this point, Air Attaché informed him US Government desired receive definite assurances that no department or agency of Chinese Government would interfere with PAA operations, and that Chinese Government would abide by terms bilateral agreement. Tai then stated that while he was prepared to admit that English text of agreement stated no shuttle service, etc., and since conversations were held in English this language appeared controlling, nevertheless his opinion understanding between Lin and Powell [does] provide US carriers would not move Shanghai–Hong Kong traffic. Tai went on to say US Government must give full consideration difficult position Chinese Government now vis-à-vis Dutch and Siamese and must afford relief.
Tai said that confirmation of fact no Chinese Government agencies would interfere with PAA movement Shanghai–Hong Kong traffic would have to come from Dr. Lin, director of International Relations Department, Ministry of Commerce [Communications]. At close discussion with Tai, Civil Air Attaché queried him as to whether any PAA officials had indicated to Chinese Government that PAA had little inte rest in carrying Shanghai–Hong Kong traffic. Tai said that he had hold conversations last November with Mr. Bond of PAA who, at that time, said he would see what he could do when he returned to the US in clarifying question PAA carriage Shanghai–Hong Kong traffic.
Emphasis again placed on fact PAA or any other US carrier cannot waive rights which accrued to the US as result of bilateral agreement and that any discussions concerning these rights must be confined to the two Governments.
Later in discussion with Lin, same subject, he was informed US desired obtain firm assurances PAA operations Shanghai–Hong Kong would not be interfered with by any instrument of Chinese Government pending outcome consultation under terms bilateral. Lin stated, paradoxically, Tai had worked until 2 a.m. night of January 14 to as [Page 785] sure PAA operations would not be interfered with, while at same time asserting no instructions had been issued from Nanking directing any action against PAA. Lin, following lengthy discussion with Tai, then said he could give assurances for Chinese Government that there would be no further interference with PAA movement Shanghai–Hong Kong traffic pending outcome consultation. He said that he was, however, of opinion CCAA had right to direct Chinese carrier, as business matter, not to sell Shanghai–Hong Kong tickets for account of PAA. As Department aware, general agency agreement between PAA and CNAC has expired, and CNAC now acting as PAA’s agent on informal basis and not under legal contract. (ConGentel Shanghai 65, January 13.)19
Chinese Government has recently promulgated regulation requiring foreign air carriers doing business here procure foreign air carrier permit, form of regulation copied from US CAB20 procedures. From present attitude Chinese Government officials vis-à-vis PAA, possible further difficulties may develop in connection this regulation. Jose, PAA, informed [that] PAA should endeavor meet Chinese requirements this regard promptly. He said PAA will comply. Civil Air Attaché has seen copies material submitted by Hong Kong Airways in compliance this regulation. Application appears simple to prepare and prompt action on part PAA in submitting this data desirable.
For Department’s information, Jose, PAA, stated PAA has taken following action here concerning subject PAA’s movement Shanghai–Hong Kong traffic. He has recommended to company that PAA discontinue two flights Shanghai–Hong Kong due disruption schedules now occurring on account adverse weather conditions generally prevailing Hong Kong which are further aggravated due conditions under which US carriers must operate into this airport. This causes upset PAA schedules. Jose states that prior making this recommendation, he inquired of CNAC as to whether CNAC would be able to accommodate PAA passengers who would debark Shanghai for Hong Kong. Jose states to his knowledge this is extent PAA’s action vis-à-vis PAA’s carriage Shanghai–Hong Kong traffic and he also emphasized this action taken solely for technical reasons and not related to question at issue with Chinese Government. Chinese have apparently interpreted perhaps deliberately this action Jose to mean PanAm not interested carriage Shanghai–Hong Kong traffic, which would account for statements made to Embassy, Embtel 99, just subsequent to directive re ticket sales whose objective admittedly was attempt terminate PanAm Shanghai-Hong Kong operation.
[Page 786]Lin requested following statement by him be conveyed informally to Department: if US Government desires to adhere to its present policy regarding fifth freedom traffic, it could view Hong Kong question as unique and unusual, and make concessions on this question. Kowloon, area in which Kaitak located, is sovereign Chinese territory under lease to British and US could, if it so wished, view movement traffic on this route as cabotage. As Department aware, Lin played leading role for Chinese negotiation this agreement and apparently now being held responsible Chinese Government for present difficulties. Obvious, due pressures, he is frantically searching for some means extricate himself from present trying position.
All Chinese arguments thus far advanced are being forwarded Department as they arise in belief helpful in Department’s consideration this subject.
Sent Washington 131; repeated Shanghai 55, January 20, 7 p.m.