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2.
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Mr Toms (CRE: 2)
o.c. Mr Hughes
Mr Sanders Mr Heath
Mr Gregory
SEC) For information CRE:2) (F.C.O.)
MinTech:)
Mr Harding MinTech:
HONG KONG
Further to Mr Dunnett's minute of 11th September, the recipients might wish to see the further letter attained from Sir Eugene Melville. This deals in part with aspects which go beyond the present content of the proposed Despatch which the P.C.0.wish to send to the Governor, Hong Kong. In his absence, Mr Dunnett has asked me to say that broadly speaking we accept Sir E Melville's views.
What the exchange concerning the meaning of GATT Article XXVI:5(o) amounts to is this. Hong Kong could become a contracting party to the GATT if it acquired "full autonomy in the conduct of its external commercial relations" whilst remaining dependent in other senses. Both the wording of the Article and relevant precedents support this interpretation. But such a course appears to be ruled out for political reasons.
As we said in F.C.0. telegram 384, there would be similar, but presumably lesser political objections to the course of Hong Kong seeking separate representation on the Cotton Textiles Committee. We also thought that there might be technical objections raised to this on the grounds that Hong Kong was not a separate contracting party. The point I should now like to stress in connection with Sir E Melville's letter is that in CRE:1 we would not see any objec- tion to such an arrangement if others did not.
If this suggestion is to be pursued, the next step would seem to be to authorise Sir E Melville to carry out such informal soundings in Geneva as he felt necessary to see how the GATT Secretariat and major delegations would react. Thereafter it might be thought necessary to consult Hong Kong, although I note there has been no reaction from the Governor to the references to Sir E Kelville's
61) suggestion in Jeneva telegram No.616 and F.7.0. telegram 384.
5.
Such an arrangement would of course require different wording in para.4 of the draft Despatch.
J Woodhead
CRE:1
16 September 1970
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