2

As you know, we have in the past month taken some important steps forward in the JLG. First we reached agreement on the Court of Final Appeal: and then on 30 June, just before our departure for London, we resolved the two Financial Support Agreements for the Airport and Airport Railway and signed an agreed minute on the Air Cargo franchises. There have also been other encouraging signs of improved Sino- British relations over Hong Kong; as you know, the Chinese Foreign Minister, Qian Qichen, has accepted an invitation to visit Britain in October. Also, last week the Chief Secretary, Anson Chan, met Mr Qian Qichen and Director Lu Ping in Peking.

These developments have certainly provided a constructive background for our JLG work. There is, I think, an improved atmosphere and a desire on both sides to make the most of the limited time available to us before the reversion of Hong Kong to Chinese sovereignty on 1 July 1997.

At this meeting we have achieved a modest crop of agreements. For example, we have agreed on the localisation of UK legislation on biological weapons and, aircraft security. We have endorsed one further Investment Promotion and Protection Agreement. And we have signed an agreed minute on the China Motor Bus franchise.

On the other hand, I have no particular progress to report on major outstanding issues such as CT9, Right of Abode, Visa Abolition and adaptation of laws. But on these, both sides have expressed their determination to find ways to break the deadlock, and we will be pursuing these and other matters at expert level on our return to Hong Kong.

I do not want to give you the impression that the Joint Liaison Group is on the

verge

of a new dawn. The fact is that we are dealing with many very difficult and complex subjects and our discussions remain stuck in a number of key areas. But I am nevertheless hopeful that we can build on our recent achievements. A number of expert meetings will take place in the next four weeks and we for our part will certainly do our best to maintain the momentum. We have a formidable agenda in front of us and will be tackling it with a renewed determination in the months to come.

End/Friday, July 7, 1995

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