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Copy of Fraeresión agreed

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CONFIDENTIAL

SECRETARY OF STATE'S VISIT TO PORTUGAL,

24 26 JUNE: MACAO

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POINTS TO MAKE

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Present status vis-à-vis Portugal and China

1.

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When Mr Atkins saw Dr Gonçalvez Pereira in Lisbon last

November, Macao was mentioned. Given our relations with China

over Hong Kong, helpful to know more about Macao's status.

In

particular whether anything has been agreed with Chinese, orally

or in writing, especially on China's role there. Have Chinese ever pressed for public acknowledgement that Macao is Chinese

territory?

Possible relationship with EC

2.

Macao has not been raised in the Accession negotiations,

pending clarification of Portuguese intentions. Again in Hong

Kong context, grateful to know Portuguese Government thinking.

No doubt they envisage Macao's relationship with the Community

as being the same as Hong Kong's (i.e. it remains outside the

Treaty of Rome altogether).

3. We could not envisage Macao receiving better treatment than

Hong Kong (and doubt very much whether such a request would

receive any support from other member states) because of trade

(especially textiles), student fees, right of work and abode etc.

Could also make any negotiations we might have with Chinese over

Hong Kong's future more difficult. That in turn could diminish

confidence in Macao and even prejudice its future.

[Defensive use]

4.

While true that Macao may not be comparable to Hong Kong in

terms of GNP or development of financial sector, now less true in

terms of standard of living and industrial development.

CONFIDENTIAL

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