CONFIDENTIAL

the issue somewhat with a "best endeavours" assurance: ie:

(a) in briefing the Chinese on our HMOCS arrangements we should tell them that the HMOCS officers had made a strong case for the traditional right of early retirement; Hong Kong's pensions legislation already permitted this in certain cases but in our view to go beyond this and say that the SARG would allow all HMOCS officers to retire at any time after 1997 at the time of their choosing would be a

change of civil service conditions of service and a new

obligation to the SARG on which the British side would first

wish to consult the Chinese side: however we think it would

be better for the two sides to discuss this question in due

course in the context of a broader discussion of civil

service issues: we are not yet ready for such discussions, so will meanwhile be telling HMOCS officers that we can

offer them no assurance that early retirement will be permitted other than in accordance with existing Hong Kong legislation but that we shall hope to discuss this and other

civil service issues with the HKG and the Chinese Government

in due course and will use our best endeavours to ensure

that mutally satisfactory arrangements are made.

(b) subject to Chinese reactions we would tell the HMOCS Association that although in principle we accepted the strength of their case for a right of early retirement, we

were not at present in a position to make any commitment in this regard: however HMG would use their best endeavours in discussion with HKG and, if necessary with the Chinese

Government, to ensure that HMOCS officers who wish to retire

before 30 June 1997 could do so in accordance with certain

conditions to be notified by HKG; HMG would also use their

best endeavours in discussion with HKG, the Chinese

Government and, as appropriate the SARG, to ensure that

satisfactory arrangements in this regard were made after 1

July 1997.

NC1ACQ/4

CONFIDENTIAL

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