TNAG-1401-FCO40-1873-Future-of-Hong-Kong-continued-participation-in-the-General-A-1985 — Page 103

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RESULT IN HONG KONG BEING 'DEEMED TO BEING A CONTRACTING PARTY' (B) WHILST WE CAN SEE SOME PRESENTATIONAL ADVANTAGES IN THE HONG KONG GOVERNMENT DEPOSITING A DECLARATION, WHICH REFERRED TO THE UK'S DECLARATION AND CONFIRMED THAT IT WISHED TO BE DEEMED A CONTRACTING PARTY IN ACCORDANCE WITH ARTICLE XXVI (5) (C), LEGAL ADVICE HERE IS THAT SUCH A DECLARATION IS NOT ESSENTIAL.

(C) GIVEN OUR VERY DIFFERENT VIEWS ON SOVEREIGNTY OVER HONG KONG, WE MIGHT FIND IT DIFFICULT TO GET THE PRC TO REFER EXPRESSLY TO THE TERMS OF OUR DECLARATION UNDER ARTICLE XXVI (5). (D) WE THEREFORE HAVE TO DRAFT IN LANGUAGE WHICH IS EFFECTIVE FOR GATT PURPOSES, CONSISTENT WITH THE LANGUAGE OF THE JOINT DECLARATION AND NEUTRAL ON THE SOVEREIGNTY ISSUE.

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THE DTI CAN SEE NO OBVIOUS DIFFICULTIES WITH THE DRAFT DECLARATIONS BUT WOULD LIKE UKMIS GENEVA TO COMMENT ON THEM. THE LIGHT OF THESE COMMENTS YOU MAY WISH TO PUT IN HAND AN EXCO PAPER ON THE GATT. WE THINK THAT YOU WOULD BE BETTER PLACED THAN US TO PREPARE A FIRST DRAFT, ON WHICH UKMIS GENEVA, THE DTI AND WE COULD COMMENT.

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LOOKING TO THE FUTURE, WE CANNOT RULE OUT THE POSSIBILITY THAT IN THE JLG THE CHINESE MIGHT OBJECT TO HONG KONG BECOMING A SEPARATE CONTRACTING PARTY TO THE GATT. WE SHALL THUS NEED TO CONSIDER HOW WE CAN COUNTER ANY SUCH OBJECTION. WE SHOULD NO DOUBT ARGUE THAT OPPOSITION TO SUCH A COURSE BY THE PRC WOULD GIVE THE IMPRESSION THAT SHE WAS TRYING TO LIMIT THE AUTONOMY IN COMMERCIAL RELATIONS WHICH THE AGREEMENT GRANTS TO HONG KONG, WITH CONSEQUENTIAL DAMAGE TO INVESTOR CONFIDENCE. CONVERSELY, PRC SUPPORT FOR OUR PROPOSAL WOULD GIVE A CLEAR INDICATION OF THEIR COMMITMENT TO THE ECONOMIC PROVOSIONS OF THE AGREEMENT AND WOULD ENCOURAGE INVESTORS. WE COULD ALSO SAY THAT AS MACHINERY EXISTS WHEREBY HONG KONG CAN BECOME A SEPARATE CONTRACTING PARTY TO GATT, IT WOULD MAKE MORE SENSE TO PURSUE THIS COURSE THAN TO HAVE, AFTER 1997, TWO TOTALLY DIFFERENT TRADING SYSTEMS REPRESENTED IN A SINGLE GATT DELEGATION.

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ANY MORE SPECIFIC DIFFICULTIES WHICH YOU OR UKMIS GENEVA COULD FORESEE IF HONG KONG WERE NOT TO BECOME A SEPARATE CONTRACTING PARTY TO GATT WOULD OF COURSE ADD TO OUR CASE AND WE SHOULD WELCOME YOUR VIEWS ON THESE.

HOWE

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