GRS 700
RESTRICTED
FM WASHINGTON
TELELETTER FCO
ELELETTER
OF 03160OZ FEBRUARY 86
COPIES TO UKMIS GENEVA, DTI, PEKING, HONG KONG
FROM:
TO:
COPIES TO:
D J PLUMBLY, COMMERCIAL SECTION A GALSWORTHY, FED has seen.
D WARREN, ECD(E), FCO
A DELL, UKMIS GENEVA
48
нии 04012
RECEIVED IN REGISTRY
E-
6FEB 1986
VA
REGISTRY
Achon Taken
DESK OFFICER
INDEX
R MADELIN, ITP, DTI
E HOSKER, OT2, DTI
CHANCERY, PEKING
POLITICAL ADVISER TO HONG KONG GOVERNMENT
HONG KONG AGREEMENT: GATT
1. YOU SPOKE TO PETER RICKETTS SOME DAYS AGO IN RESPONSE TO
OUR TELNO 16, IN WHICH WE SAID THAT WE WOULD NEED ADDITIONAL
BACKGROUND BEFORE APPROACHING USTR ON HONG KONG AS SUGGESTED IN
UKMIS GENEVA TELNO 1 (PARA 9) OF 6 JANUARY. YOU REFERRED
RICKETTS TO FCO TELNO 1950, WHICH SEEMS NOT TO HAVE BEEN SEEN
BY THE TRADE POLICY SECTION HERE. 312 Hnn 040/42 (1985)
IN THE LIGHT OF THE LACK OF CONCERN SHOWN EARLIER BY THE DESK OFFICER AT USTR (CECILIA KLEIN) MY TELELETTER OF
3 JANUARY - WE DECIDED TO KEEP THINGS AS LOW KEY AS POSSIBLE, BUT TO GIVE THEM AN OPPORTUNITY TO TALK THE ISSUE THROUGH IF THEY HAD ANY LURKING RESERVATIONS. ACCORDINGLY, I LEFT A MESSAGE
IN USTR LAST WEEK THAT IF MIKE SMITH WOULD LIKE TO DISCUSS THE
ISSUE, BRIAN CROWE WOULD BE HAPPY TO HAVE A WORD WITH HIM.
SLIGHTLY TO MY SURPRISE, CECILIA KLEIN HAS SINCE GOT BACK TO ME WITH A LIST OF CONCERNS, NONE OF WHICH HAD EMERGED AT OUR EARLIER MEETING. IN THE FIRST PLACE SHE SAID THAT THERE WAS NO
-
PRECEDENT FOR SEPARATE CONTRACTING PARTY STATUS FOR A TERRITORY
WHICH WAS NOT FULLY INDEPENDENT. IF THE UK AND CHINA ACQUIRED
SUCH STATUS FOR HONG KONG OTHER - EG FEDERAL STATES MIGHT FOLLOW. THE CHINESE MIGHT EXPLOIT HONG KONG'S POSITION WITHIN THE GATT AFTER 1997, AND POSSIBLY USE ITS SEPARATE GATT STATUS TO FACILITATE CHINESE EXPORTS. FINALLY, SHE SAID THAT IT WAS NORMAL PRACTICE WHEN TERRITORIES ACQUIRED CONTRACTING PARTY STATUS FOR OTHER CONTRACTING PARTIES TO EXAMINE THE TERRITORY'S TRADING COMMITMENTS CLOSELY AND EG SEEK CONCESSIONS ON BOUND TARIFFS. WHERE A TRADING ENTITY AS IMPORTANT AS HONG KONG WAS
INVOLVED SHE WONDERED WHETHER THIS PROCESS COULD BE AVOIDED.
3. Į ARGUED THAT NONE OF THESE CONSIDERATIONS SEEMED SO
SUBSTANTIAL AS TO OUTWEIGH THE POLITICAL ARGUMENTS FOR PROCEEDING
QUICKLY AND QUIETLY WITH THE ESTABLISHMENT OF HONG KONG'S
SEPARATE STATUS IN THE GATT. THE PROPOSAL WAS NOT COMPLETELY WITHOUT PRECEDENT (VIZ SOUTHERN RHODESIA). HONG KONG WAS ALREADY THE WORLD'S MOST OPEN MARKET AND OUR CONCERN WAS TO KEEP IT THAT WAY AND TO SUSTAIN THE CAPITALIST SYSTEM THERE. MS KLEIN DID NOT DEMUR, BUT STILL THOUGHT A FULLER DISCUSSION WOULD BE ADVISABLE. SHE SAID THAT AT FIRST IT SHOULD BE WITH DOUG NEWKIRK (ASSISTANT US TRADE REPRESENTATIVE FOR GATT AFFAIRS) RATHER THAN MIKE SMITH.
4.
I SUSPECT THAT MS KLEIN'S CHANGE OF TUNE REFLECTS SOME INPUT FROM NEWKIRK FOLLOWING OUR EARLIER CONVERSATION. I DOUBT WHETHER RESERVATIONS HE MIGHT HAVE WOULD WEIGH VERY HEAVILY IF THE STATE DEPARTMENT AND OTHERS WERE TO PULL IN THE OPPOSITE DIRECTION. BUT IT SEEMS SENSIBLE TO TRY TO TALK THINGS THROUGH. WE HAVE MOST OF THE ARGUMENTS, BUT WOULD BE GRATEFUL IF YOU (OR ITP, DTI) COULD LET US HAVE ANY POINTS YOU WOULD PARTICULARLY LIKE US TO MAKE, NOT LEAST IN RELATION TO THE CONCERNS MS KLEIN HAS ALREADY RAISED.
SIGNED D J PLUMBLY