CONFIDENTIAL

(i)

Methods of work. We would adopt a flexible

approach on frequency of meetings and

establishment of sub-groups, but in general seek

a gradual start to the work of the Group.

This

(ii) We might solicit a progress report by the

Chinese on the drafting of the Basic Law.

would have to be carefully prepared in informal

contacts beforehand. We might in return offer a

briefing on progress in implementing the Whte

Paper on Constitutional Development.

(iii) The Hong Kong SAR as a separate customs

territory and the GATT. A general exchange of

statements.

(iv) International rights and obligations affecting

Hong Kong. We might propose the establishment

of a sub-group.

(v) Other subjects?

15. The existence of the Group will not remove the need for

consultation through normal channels in between meetings so long as

the Group remains peripatetic. After 1988 such discussion will

presumably be conducted in informal meetings in Hong Kong between resident members of the Group. Where contact in Peking is

concerned, general experience is that this is likely to be smoother

if wherever possible we deal with the Hong Kong and Macao Office (HKMO) rather than the MFA. The HKMO is likely to be in charge of the Chinese side of the Group. This suggests that except where high

Level intervention might be necessary contact should be between a member of the Embassy, who should be associated with the JLG, and

the HKMO.

(b)

Location of Meetings.

CONFIDENTIAL

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