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4.
We doubted that some of the subjects contained in JD 134 (eg tourism, culture and sport) would need a bilateral UK/SARG agreement. In some areas, we thought that bilateral agreements would not strictly be necessary (eg
telecommunications and shipping), as they are covered by multilateral agreements. On trade (see JD 134), the issue is complicated by the considerations of Community competence. In the absence of an EC/SARG agreement(s) covering trade it would be possible to have UK/SARG agreement. But the negotiation of a UK/SARG agreement in this field might itself stimulate interest among other Member States in an EC/SARG agreement. If there were provisions on trade in an EC agreement with Hong Kong, these would replace a separate UK/SARG trade agreement because the community has exclusive competence in the field of trade. There is the further complication that EC Trade Agreements with third countries now often cover other areas as well, eg human rights.
5. Our conclusion was that we should be rigorous in deciding what areas must be covered by bilateral UK/SARG agreement, and which could be covered in other ways. Did the further consideration of this issue referred to in your para 2 yield any further thoughts?
Mechanisms
6. Your second point was what mechanism needs to be in place in order to achieve our objectives. Neither of the obvious options is very appealing:
a) the UK negotiates with the PRC as a proxy for the SARG. This is politically unattractive for us, though the most likely scenario the Chinese would go for;
b) the UK negotiates with the HKG as with third-party agreements. Initialled agreements are then put to the Chinese side. The Chinese are unlikely to accept this as they would consider that the HKG could not represent the future HKSARG.
7. We noted the lack of provisions in the JD for entrustment although given the interest the Chinese have taken in our entrustment, it may be that they will require authorisations. JD 139 (which corresponds to Article 153 of the Basic Law) is the only provision in the JD which appears to touch on entrustments but it is curiously phrased and appears to relate only to international agreements which already exist and multilateral ones at that. Articles 137 and 138 of the JD cover international agreements to which the PRC is or becomes a party or is not a party but which are implemented in Hong Kong.
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CONFIDENTIAL