TNAG-0546-FCO40-641-Strength-of-garrison-in-Hong-Kong-1975 — Page 59

CONFIDENTIAL

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3.

This Agreement will run from 1st April 1976 for a period

of 7 years in the first instance and will be renewed on the same

terms for further periods of 5 years thereafter, unless either

Government gives notice a year before the end of any period that

it wishes to vary the terms.

4. The cost of the garrison is based on price levels at September

1975. The Hong Kong Government contribution, as provided for in

paragraph 2, will, after setting off the United Kingdom Government

share of expenditure on works services in the manner described

in paragraph 6, be paid by quarterly instalments on the last day

of each quarter of the financial year, with adjustments for

changes in the price levels ruling in Hong Kong and the United Kingdom

being made as follows. Before each quarterly payment becomes due,

a calculation will be agreed between the Hong Kong and United

Kingdom Governments of the changes necessary to adjust each of

the separate components of the cost of the garrison (other than

works services) listed in Annex B to the price levels ruling at

the beginning of that quarter. The indices or other measures

to be used in calculating these adjustments are set out in

Annex B, and the adjustments will be calculated by reference to

the movements in the indices or other measures. The instalment

to be paid at the end of June 1976 will include the adjustments

so calculated up to 1st April 1976. Subsequent instalments will

include the adjustments in relation to both the quarter of payment

and the immediately preceding quarter. After the end of the

Agreement, a calculation will be made of any further adjustments

needed and a final settlement will take place.

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CONFIDENTIAL