the criteria of Article XXIV and in particular to ensure that the "general incidents of the duties and regulations" were "not on the whole higher" than before. So far as I can tell this problem was never resolved. Jackson says of it:
"In the opinion of this author, the Article XXIV paragraph 8(a), provision that a customs union shall be understood to mean "the substitution of a single customs territory for two or more customs territories" is relevant. Since Article XXIV. paragraph 1, provides that the GATT shall apply to a customs territory and that "[e]ach such customs territory shall, exclusively for the purposes of the territorial application of this Agreement be treated as though it were a contracting party," it can be argued that once a customs union is instituted the provisions of GATT apply to that customs union as a whole. Thus the customs union as an entity is entitled to exceptions in GATT, such as balance-of-payments exceptions or escape clause exceptions."
4. I fear that I have not answered Mr Williams' question, but instead have raised rather more fundamental issues of considerable complexity. We must remember that the GATT is interpreted as much from an economic stand point as from a legal one. Its role is primarily to govern the relationship between the various "customs territories" in the world, and as Article XXIV:1 shows, the "customs territory" is the essential economic unit rather than the Contracting Party. The Agreement only makes sense in relation to a customs union if one regards that customs union as a unit for GATT purposes. From the economic point of view, one would expect Hong Kong to have rights against the customs union as such. This really does amount to recognising the EEC as the possessor of rights and obligations under the GATT as distinct from its Member States.
I do not know whether anyone has gone quite this far yet.
In any case said earlier, the fact that we shall be in a transitional period may make a signifi- cant difference.
29 September 1972
M.C. Good
M C Wood Legal Advisers K157 MA 260
M