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A Management Contract
16.
There is no purely legal or constitutional reason
why the arrangements embodied in a management contract
should not preserve the essential features of the present
administration of Hong Kong with HMG as a caretaker, with
UK having responsibility for the internal government and the
conduct of external affairs for an agreed term, or for
an indefinite period subject to termination by due notice.
17.
Such an arrangement could involve the incorporation
of Hong Kong into the PRC as a Special Administrative Region
either from the outset or at a later stage. This would be
without modern precedent, but from the UK point of view,
there would be no legal impediment provided that the Chinese
did not impose any unacceptable conditions.
18. Such a management contract would require changes to
present arrangements, and the PRC might demand some substantial
ones. Whatever arrangements were eventually agreed could be
made legally effective by an appropriate British constitutional
instrument, eg Order in Council. The areas which would
require consideration include:
(a)
The Constitution:
HMG's aim would be to retain
effective control and to ensure that the PRC had
no authority in Hong Kong. It might be that
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