TNAG-1036-FCO40-1286-Future-of-Hong-Kong-1981 — Page 104

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DSR 11C

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The case of Macao provides only a partial analogy. The

Treaty of 1887 did not formally cede that Territory to

Portugal. It placed it under 'perpetual occupation and

government by Portugal, as any other Portuguese possession'

but by an additional Article Portugal undertook 'never

to alienate Macao without previous agreement with China'.

This clearly implied a limitation on absolute Portuguese

sovereignty and probably facilitated a confidential

understanding believed to have been concluded between

the Chinese and the Portuguese Governments when the establish-

ment of diplomatic relations was negotiated in 1978 and 1979.

By this, Lisbon is believed to have conceded Chinese

ultimate sovereignty over Macao.

11. It would be theoretically possible for HMG to

make a unilateral move by Order in Council to amend

that of 1898 and thus extend the period of British

administration over the New Territories.

But a

unilateral declaration on Chinese sovereignty would still

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