TNAG-1401-FCO40-1873-Future-of-Hong-Kong-continued-participation-in-the-General-A-1985 — Page 10

CONFIDENTIAL

21932 1

A

GATT ARTICLE XXVI 5(C) THAT HONG KONG POSSESSES FULL AUTONOMY IN

THE CONDUCT OF ITS EXTERNAL COMMERCIAL RELATIONS WHEREUPON HONG

KONG WOULD BE DEEMED TO BE A CONTRACTING (IE FULL) PARTY.

(SEE ALSO PARAGRAPH 15 BELOW).

ASSESSMENT

7. OPTION 1 COULD NOT BE EXERCISED UNTIL THE CHANGE OF

SOVEREIGNTY HAD TAKEN PLACE IN 1997. IT WOULD ALSO DEPEND ON

WHETHER CHINA HAD BY THEN BECOME A MEMBER OF THE GATT. AT THE

PRESENT TIME IT IS IMPOSSIBLE TO SAY WITH CERTAINTY THAT SHE WILL

HAVE DONE SO.

8.

AS FOR OPTION 2, GATT ARTICLE XXXIII IN THEORY PERMITS EITHER

THE UK ACTING BEFORE 30 JUNE 1997 OR CHINA THEREAFTER TO ACCEDE

AFRESH TO THE GATT ON HONG KONG'S BEHALF. HOWEVER, LEGAL EXPERTS

IN THE GATT SECRETARIAT HAVE ADVISED THAT RECOURSE TO ARTICLE

XXXIII IN PRACTICE REFLECTS A PROCEDURE NORMALLY USED BY

INDEPENDENT SOVEREIGN STATES WHICH HAVE HAD NO PREVIOUS

CONNECTION WITH THE GATT. ARTICLE XXXIII HAS ONLY ONCE BEEN USED

BY A DEPENDENT TERRITORY ATTAINING INDEPENDENCE. THIS WAS

TUNISIA IN WHOSE FAVOUR FRANCE HAD ALREADY MADE A DECLARATION

UNDER ARTICLE XXVI 5(C). TUNISIA IGNORED THIS AND PROCEEDED

INSTEAD UNDER ARTICLE XXXIII APPARENTLY BECAUSE THE TUNISIAN

GOVERNMENT DID NOT WISH TO CONTINUE WITH THE TARIFF CONCESSIONS

WHICH FRANCE HAD PREVIOUSLY NEGOTIATED ON ITS BEHALF. NO SUCH

CONSIDERATIONS WOULD APPLY IN HONG KONG'S CASE, AND, UNLESS THERE

WERE OTHER GOOD REASONS FOR DOING SO IT WOULD SEEM POINTLESS TO

PUT THE VIEWS OF THE GATT LEGAL EXPERTS TO THE TEST.

9. A FURTHER CONSIDERATION RELEVANT TO OPTION 2 IS THAT A

TWO-THIRDS MAJORITY OF THE CONTRACTING PARTIES IS NEEDED FOR

ACCESSION TO THE GATT UNDER ARTICLE XXXIII. EVEN ASSUMING THAT

GENERAL SYMPATHY TOWARDS HONG KONG WOULD SECURE SUCH A MAJORITY

(AND THERE MUST BE DOUBTS ABOUT THIS), THE NECESSARY NEGOTIATIONS

WOULD TAKE TIME AND MIGHT NOT SECURE THE DESIRED RESULT. THIS

COULD UNDERMINE CONFIDENCE IN HONG KONG'S FUTURE. FURTHERMORE, IF HONG KONG WERE TO EMBARK ON ACTION UNDER ARTICLE XXXIII, AND THE NECESSARY TWO-THIRDS MAJORITY WERE NOT FORTHCOMING, IT MIGHT BE DIFFICULT TO REVERT TO THE ARTICLE XXVI 5(C) ROUTE. THIS IS

3

CONFIDENTIAL