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The Ambassador in China spent his
22
Christmas day having further discussions with the Minister for Foreign Affairs on the terms of the extra-territoriality Treaty which is due to be signed on New Years day.
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As a result of their discussions they have pied agreements upto the following points (a) the acceptance by H.M.G. of the omission from Article 6 of the Treaty of the grant of national treatment in respect of the carrying on of commerce, (b) the acceptance by both parties of a suggestion that the clause about overseas shipping in the Annexe to the Chinese note should be subject to an agreed minute reserving on behalf of both parties the right to close any port to overseas merchant shipping for reasons of national security, (c) the agreement of the Chinese government to a clause in the Annexe about real property to the effect that nationals of each high contracting party will enjoy the right to acquire and hold the real property throughout the territories of the other "in accordance with conditions and requirements prescribed in the laws and regulations of that high contracting party.' This is the formula which the East Department were prepared to accept and the Chihese are thought likely to accept this as quid pro quo for our dropping off the carrying on of commerce from Article 6, (see (a) above,) though they resisted the negion inclusion
of real property at all in the Annexe strongly, (a) the acceptance by H.. G. of adition to the exchange of notes making it clear that the notes and their Annexe shall be considered as an integral. part of the treaty and considered effective upon the date of entrance into force of the treaty, (e) the question of Kowloon: the Ambassador received his instructions at 201 to seek a solution on the lines of the compromise originally suggested by Lr.Han Li-wu, i.e. that the Chinese Authorities should address a communication to H.M.G. stating that while recognizing that the question of the New Territories was not concerned with the question of extra- territoriality they desired to raise it later
a more appropriate time. The Ambassador was informed that reply H....G. to this communication would be to the effect that the future of the New Territories is outside the scope of the present agreement and H.L.G. cannot discuss it now; but if the Chinese Government desire that the terms of the lease of these territories should be reconsidered that is a matter
which