TNAG-0243-FCO40-279-Conduct-of-Hong-Kong-commercial-relations-1973 — Page 89

The. Kimer they for information.

ti

P.pl 12/01/20

Mr. Edwards (Legal Adviser)

Hong Kong:

GATT

75

Your minute of, 29 July to Mr. Heath. I have traced a record of a meeting held on 24 October, 1967 which was attended by representatives of the Hong Kong Government, the C.R.O., the Treasury and at which Mr. Muir is reported as stating:-

"As regards the GATT provisions for retaliation where GATT rights were infringed Mr. Muir confirmed that the only permitted sanction against the infringement of Hong Kong's rights was retaliation by Hong Kong. There could be no question of retaliation by Britain on Hong Kong's behalf. This had always been the case Mr. Cowperthwaite (Financial Secretary Hong Kong) confirmed that it was his understanding too that Britain could not retaliate in GATT on Hong Kong's behalf."

Since discovering this I have looked at a number of files and so have officials in the Board of Trade, but we have been unable to find any record of a Foreign and/or Commonwealth Office Legal Adviser confirming this. The Board of Trade tell me that one member of their staff positively recalls seeing a letter from either the Foreign Office or the C.R.O. recording this legal opinion but it has proved to be untraceable. From what I could gather from my recent discussions with Board of Trade officials, it seems quite possible that when Mr. Muir made the statement referred to above he did so out of either his own knowledge of the GATT or on the heresay evidence that we had given the legal opinion already referred to.

2.

I have also found a copy of a Board of Trade proposed submission to Ministers which contains the following statement:

"It will be necessary, if we are to carry

conviction, to tell the Canadians that in the event of a mutually satisfactory solution not being arrived at under Article XIX we shall have to retaliate against Canada on behalf of Hong Kong.

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This statement was made in May 1967, when the C.R.O. were considering the effect on Hong Kong's trade of restraints on Hong Kong imports imposed by Canada. One could assume, therefore, that the "opinion" was given between May and October 1967, but even this narrowing of the timescale has not helped our researches.

3.

I think, therefore, that there is no alternative to asking you to look at this question afresh. It

CONFIDERITAT.

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