711.9327/9–2546: Telegram

The Acting Secretary of State to the Ambassador in China ( Stuart )39

801. For Powell from Norton. Dept appreciates your position outlined Urtel 1538 Sep 25 but in view obligation incurred by US as result discussions with UK Govt it is necessary attempt include Bermuda principles by addition final section C in Annex reading as follows:

“In the operation of the air services authorized under this agreement, both contracting parties agree to the following principles and objectives: [Page 1248]

1.
Fair and equal opportunity for the airlines of each Contracting Party to operate air services on international routes, and the creation of machinery to obviate unfair competition by unjustifiable increases of frequencies or capacity;
2.
The elimination of formulae for the predetermination of frequencies or capacity or of any arbitrary division of air traffic between countries and their national airlines;
3.
The adjustment of Fifth Freedom traffic with regard to:
(a)
traffic requirements between the country of origin and the countries of destination;
(b)
the requirements of through airline operation, and
(c)
the traffic requirements of the area through which the airline passes after taking account of local and regional services.”

Dept cannot defend failure make effort obtain inclusion above language on basis personal embarrassment of negotiators. Therefore since agreement not already signed you must approach Chinese with request for inclusion this additional section. Such approach should be justified on basis instructions received from US Govt based upon further developments its policy of seeking a uniform type bilateral air transport agreement acceptable to all countries. While this Govt does not consider agreement as negotiated by you is inconsistent with Bermuda principles, it is extremely anxious foster approach toward uniform agreements and as evidence its good faith in adhering Bermuda principles, now wishes incorporate suggested language in Chinese agreement.

Depts press release Sep 19 should not be withheld from distribution since such action may be interpreted as effort on part US withhold information which would make conclusion of agreement more favorable to Chinese Govt possible.

Dept should be advised by telegram reaction Chinese to suggestion that language quoted above be included. If Chinese strongly opposed Dept will reconsider position. [Norton.]

Clayton
  1. Repeated to the Consul General at Shanghai (Davis) as telegram No. 1743. October 2, 1 p.m.