SECRET
THESE ESSENTIAL REQUIREMENTS ARE CLEARLY PROVIDED FOR IN THIS SECTION OF THE ANNEX, READ IN CONJUNCTION WITH THE APPROPRIATE PARAGRAPHS OF THE SECTION ON RIGHTS AND FREEDOMS. THE RIGHT OF THE FUTURE HONG KONG SAR TO DECIDE ITS OWN ECONOMIC POLICIES IS AN ESSENTIAL PART OF THE ONE COUNTRY TWO SYSTEMS' CONCEPT.
3. HONG KONG'S SUCCESS AS AN EXPORTER IS FOUNDED ON ITS PARTICIPATION IN THE GENERAL AGREEMENT ON TARIFFS AND TRADE, THROUGH WHICH IT ENJOYS MOST FAVOURED NATION TREATMENT IN ITS MAJOR MARKETS. EVEN IN TEXTILES AND CLOTHING, WHERE THE FREE TRADE PRINCIPLES OF THE GATT HAVE BEEN MODIFIED BY THE MULTI-FIBRE ARRANGEMENTS (MFA) WHICH IS A NEGOTIATED DEROGATION FROM THE NORMAL GATT RULES, HONG KONG IS ABLE TO DEVELOP ITS TRADE WITHIN THE MFA AND THE BILATERAL AGREEMENTS NEGOTIATED UNDER ITS POSITIONS. WHAT IS EVEN MORE IMPORTANT, HONG KONG PLAYS AN ACTIVE ROLE IN THE GATT AND THE MFA. THE RETENTION OF HONG KONG'S POSITION IN THE GATT AND THE MFA (IF THE LATTER IS EXTENDED BYEOND ITS CURRENT EXPIRY IN 1986) IS, THEREFORE, OF PRIME IMPORTANCE: AND THAT TOO IS PROVIDED FOR IN THE AGREEMENT. THERE WILL BE TECHNICAL PROBLEMS RESULTING FROM THE AGREEMENT THAT HONG KONG BECOMES A SPECIAL ADMINISTRATIVE REGION UNDER CHINESE SOVEREIGNTY. THESE WILL HAVE TO BE SOLVED, IN COLSULTATION WITH HONG KONG'S GATT PARTNERS. BUT THERE IS EVERY REASON TO SUPPOSE THAT THESE TECHNICAL PROBLEMS WILL BE SOLVED WITHOUT DIFFICULTY. ALL HONG KONG'S TRADING PARTNERS HAVE AN INTEREST IN ENSURING THAT HONG KONG CONTINUES TO THRIVE.
ENDS.
YOUDE
LIMITED
HD/HKD HD/FED MR BOYD
SECRET
COPIES TO:
SIR P CRADOCK (2)
MR BICKFORD, LEGAL ADVISERS
MR FITFOOT,
SIR E YOUDE, K195A
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