TNAG-0174-FCO40-210-Trade-with-Isle-of-ManChannel-Islands-1969 — Page 12

Our reference: CIM/67 170/11/5 Your reference: KKK 6/3

HOME OFFICE Whitehall, LONDON S.W.I Telex: 24986

Telephone: 01-930 8100, ext.

169

21

7th November 1968

Dear Murray

You wrote to me on 30th October to ask, in response to an enquiry from the Hong Kong Government Office, about the position of the Isle of Man vis-à-vis the United Kingdom, particularly in the field of commercial agreements.

To start with a general description, the Isle of Man is not a part of the United Kingdom but is a dependency of the Crown for whose international rela- tions the United Kingdom Government is responsible, and which is in practice autonomous in its domestic affairs. The monetary, economic and commercial relations between the Isle of Man and ourselves are broadly these: the Isle of Man uses sterling and is treated for Exchange Control purposes as if it were part of the United Kingdom; the Island Government controls its own finances and taxation, including Customs matters; and by virtue of a Customs Agreement between the Isle of Man and the United Kingdom, the Island's Customs are administered by H.M. Customs and Excise in common with those of the United Kingdom, and an agreed share of the total (based on the Island's fiscal popula- tion) is paid into the Isle of Man Exchequer.

As to the application to the Isle of Man of international commercial agree- ments entered into by H.M.G., the legal position is that the Island is a

European territory for whose international relations the United Kingdom is responsible. International agreements entered into by H.M.G. on behalf of the United Kingdom only (i.e. the metropolitan territory) do not therefore, merely for that reason, apply to the Isle of Man. A specific bilateral agreement between the United Kingdom and a third country is not therefore binding on the Isle of Man unless the agreement states, or contains the necessary implication, that it does so. H.M.G. could not enter into any such agreement binding the Isle of Man without first consulting with, and obtaining the concurrence of, the Isle of Man Government (since it is that Government which both through the medium of the Customs Agreement and otherwise would have to fulfil its obliga- tions assumed under such agreement). If any third territory wished to secure acceptance by the Isle of Man of a Commercial Agreement with the United Kingdom, an approach should be made through H.M.G. in the first instance. It would be

for the Home Office to consult with the Isle of Man Government as to the acceptability of whatever was proposed.

Clearly, the existence of the Customs Agreement implies a virtual absence of barriers to the flow of goods between the Isle of Man and the United Kingdom (subject to such exceptions as are brought about by animal and plant health regulations etc.) and for the purposes of the GATT the Isle of Man is, I under- stand, treated as part of the customs territory of the United kingdom. I hope this gives you enough information but I should perhaps add that for purposes of world trade the position of the Isle of Man is hardly more sharply defined than that of the Channel Islands about which I wrote to Glover in your Department on 26th August this year.

I. R. Murray Esq

Hong Kong Department

Foreign and Commonwealth Office

LONDON S.W.1

MACENED IN

CHIVES No.31

ласа

(J. W. CHIL(OT)

ONOV 1968

HKKG/ 549 //