TNAG-1401-FCO40-1873-Future-of-Hong-Kong-continued-participation-in-the-General-A-1985 — Page 28

CONFIDENTIAL

BACKGROUND AND ARGUMENT

3. In preparation for the first meeting of the Sino-British Joint

Liaison Group (JLG) (in London, in early July), we have been

considering how best to ensure the maintenance of Hong Kong's participation in the General Agreement on Tariffs and Trade (GATT)

to and in the Customs Cooperation Council. These will be matters for

人 early consideration by the JLG.

we thenect

*

4. In connection with our work on the GATT and the CCC (on which we

will need to submit separately) our Legal Advisers have focussed on the differences between the way in which in practice Hong Kong

governs its affairs and its somewhat old fashioned constitution. Although Hong Kong enjoys de facto autonomy in the conduct of its

external commercial relations, it does not have formal constitutional authority in such matters. Under the Letters Patent Hong Kong has no self-governing powers, no Ministerial system and no representative Legislature. At a separate level, there is no

instrument of entrustment to the Governor delegating authority to him to conduct Hong Kong's external commercial relations.

5. A possible solution to this difficulty would be to establish

some machinery of executive power in Hong Kong other than the

Governor. But this would take time and would raise important

constitutional questions. Given Chinese sensitivities to

constitutional development in Hong Kong, any radical change in this respect would be undesirable. Moreover, we would have to take

account of public reaction in Hong Kong to the Green Paper on "The

Further Development of Representative Government in Hong Kong"

published in July 1984. This underlined the importance of a gradual and progressive approach to constitutional change in Hong Kong.

6. Our Legal Advisers suggest that our problem might be resolved by building our case on Ministers' long established practice of granting effective full autonomy to Hong Kong. This is clearly

evident in the context of the GATT in which, Hong Kong has not been

CONFIDENTIAL