2. THERE IS NO CLEAR GATT PRECEDENT FOR ESTABLISHING A TERRITORY
IN HONG KONG'S POSITION AS A FULL DE JURE (UNDERLINED) GATT
CONTRACTING PARTY (CP). BUT THE MACHINERY FOR DOING SO CLEARLY
EXISTS IN ARTICLE XXVI 5(C).
3. IF NO ACTION IS TAKEN BY THE UK PRIOR TO 1997, THE SUBSEQUENT LEGAL POSITION WILL DEPEND ENTIRELY ON WHETHER OR NOT CHINA IS
THEN A CP. IF CHINA HAS BECOME A CP, THE DE JURE (UNDERLINED)
(BUT NOT NECESSARILY DE FACTO (UNDERLINED)) POSITION WOULD BE EQUIVALENT TO THAT CURRENTLY EXISTING IN RESPECT OF THE UK AND
HONG KONG., IF CHINA IS NOT A CP, HONG KONG WOULD LOSE ALL.
ITS GATT RIGHTS AND OBLIGATIONS.
4. PROVIDED, HOWEVER, THE UK TAKES EARLY ACTION UNDER ARTICLE XXVI 5(C) TO ESTABLISH HONG KONG'S AUTONOMOUS STATUS, THE MERE
CHANGE OF SOVEREIGNITY IN 1997 WOULD NOT IN ITSELF HAVE ANY
EFFECT UPON HONG KONG'S GATT RIGHTS OR UPON ITS DE FACTO/DE JURE (UNDERLINED) STATUS IN GATT. THIS WOULD NOT, OF COURSE, PREVENT
CHINA SUBSEQUENTLY TAKING DE FACTO (UNDERLINED) OR DE JURE
(UNDERLINED) ACTION WHICH WOULD ALTER HONG KONG'S AUTONOMOUS
SITUATION: SEE PARAGRAPH 8 BELOW.
5. IN THE VIEW OF THE GATT'S LEGAL ADVISER, WITH WHOM WE HAVE
CAUTIOUSLY DISCUSSED THE HYPOTHETICAL CIRCUMSTANCES, IT WOULD
BE SIMPLEST AND SAFEST TO ADOPT THE FOLLOWING PROCEDURE, WITH
WHICH IT WOULD BE POSSIBLE TO ASSOCIATE CHINA FORMALLY, THUS
ANTICIPATING THE POSITION THAT WILL ARISE AFTER 1997. THE PROPOSED
PROCEDURE WOULD INVOLVE:
A) A UK DECLARATION UNDER ARTICLE XXVI 5(C) TO THE GATT STATING
THAT HONG KONG POSSESSED FULL AUTONOMY IN THE CONDUCT OF ITS
EXTERNAL COMMERCIAL RELATIONS ETC AND SHOULD BE DEEMED TO BE
A FULL CP. (WE NORMALLY WRITE TO THE GATT ROUTINELY ON THESE
LINES AS DEPENDENT TERRITORIES ACHIEVE INDEPENDENCE: THE SAME
PROCEDURE WOULD BE APPROPRIATE FOR A TERRITORY ENJOYING AUTONOMY
INTERNALLY AND IN RESPECT OF CERTAIN ASPECTS OF ITS EXTERNAL
RELATIONS.) AT THIS STAGE HONG KONG WOULD ACHIEVE DE FACTO
(UNDERLINED) CP STATUS.
B) A STATEMENT FROM HONG KONG TO THE GATT SAYING IT WISHED TO
BECOME A DE JURE CP.
C) A STATEMENT FROM CHINA TO THE GATT REFERRING TO BOTH A) AND B) ABOVE, TOGETHER WITH THE UK/CHINA TREATY, CONFIRMING THAT HONG KONG WOULD CONTINUE TO EXERCISE AUTONOMY IN ITS EXTERNAL COMMERCIAL
RELATIONS AFTER 1997. THIS DECLARATION WOULD NOT (UNDERLINED) REFER
TO ANY PARTICULAR GATT ARTICLE. THIS COULD BE PRESENTED TO THE
CHINESE AS A RE-AFFIRMATION OF SECTION XI OF ANNEX I TO THE
SINO-BRITISH AGREEMENT. THIS PROCEDURE COULD BE TELESCOPED INTO
THE SAME DAY IF DESIRED.