TNAG-1401-FCO40-1873-Future-of-Hong-Kong-continued-participation-in-the-General-A-1985 — Page 93

ASSESSMENT

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OPTION 1 CANNOT BE EXERCISED UNTIL THE CHANGE OF SOVEREIGNTY HAS TAKEN PLACE IN 1997. IT WILL ALSO HAVE TO DEPEND ON CHINA'S MEMBERSHIP IN THE GATT WHICH AS ASSESSED AT THIS POINT IN TIME IS, AT BEST, UNCERTAIN.

3. AS REGARDS OPTION 2, IN THEORY, THE WORDING OF GATT ARTICLE XXXIII PERMITS EITHER THE UK ACTING BEFORE 30 JUNE 1997 OR CHINA AFTER THAT DATE, TO ACCEDE AFRESH TO THE GATT ON BEHALF OF HONG KONG. HOWEVER, THE ADVICE OF THE LEGAL EXPERTS IN THE GATT SECRETARIAT IS THAT, IN PRACTICE, THIS PARTICULAR ARTICLE REPRESENTS A PROCEDURE NORMALLY USED BY INDEPENDENT SOVEREIGN STATES THAT HAVE HAD NO PREVIOUS CONNECTION WITH THE GATT. IT HAS ONLY ONCE BEEN USED BY A DEPENDENT TERRITORY ATTAINING INDEPENDENCE. THIS WAS THE CASE OF TUNISIA IN WHOSE FAVOUR FRANCE HAD ALREADY MADE AN ARTICLE XXVI 5(C) DECLARATION WHICH TUNISIA IGNORED AND PROCEEDED INSTEAD UNDER ARTICLE XXXIII APPARENTLY BECAUSE THE TUNISIAN GOVERNMENT DID NOT WISH TO CONTINUE WITH THE TARIFF CONCESSIONS PREVIOUSLY NEGOTIATED ON ITS BEHALF BY FRANCE. NO SUCH CONSIDERATIONS APPLY IN HONG KONG'S CASE, AND UNLESS THERE WERE OTHER GOOD REASONS IT WOULD SEEM POINTLESS TO PUT THE VIEWS OF THE GATT LEGAL EXPERTS TO THE TEST.

9. OF COURSE, IT COULD BE ARGUED THAT ARTICLE XXXIII ACCESSION WOULD SECURE FOR HONG KONG ''FULL'' CONTRACTING PARTY STATUS IN THE GATT IN ITS OWN RIGHT, WHEREAS UNDER THE ARTICLE XXVI 5(C) ROUTE HONG KONG WOULD ONLY BE ''DEEMED TO BE A CONTRACTING PARTY, IN TERMS OF GATT PRIVILEGES, THIS DIFFERENCE IN STATUS HAS NO SIGNIFICANCE FOR HONG KONG WHICH ONLY DESIRES TO ENSURE, IN ESSENCE, THAT IT CONTINUES TO ENJOY MOST-FAVOURED-NATION TREATMENT FOR ITS TRADE. FURTHERMORE, ''FULL CONTRACTING PARTY STATUS MAY PUT HONG KONG JUST THAT BIT FURTHER AWAY FROM THE UK THAN IS ABSOLUTELY NECESSARY IN THE INTERVENING PERIOD TO 1997.

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10. AGAIN, A TWO-THIRDS MAJORITY OF THE CONTRACTING PARTIES IS NEEDED FOR ACCESSION UNDER ARTICLE XXXIII. EVEN ASSUMING THAT GENERAL SYMPATHY TOWARDS HONG KONG AND CHINA WOULD SECURE THIS (AND THERE MUST BE DOUBTS ABOUT IT), SUCH NEGOTIATIONS WOULD TAKE TIME AND THE OUTCOME MIGHT NOT BE AS FORTHCOMING AS HONG KONG (OR CHINA) WOULD WISH. THIS WOULD THEN MILITATE AGAINST CONFIDENCE IN HONG KONG'S FUTURE. MOREOVER, ONCE HONG KONG EMBARKED ON ARTICLE XXXIII ACTION, AND SOMEHOW A TWO-THIRDS MAJORITY DID NOT MATERIALISE AS ENVISAGED, IT MIGHT BE DIFFICULT TO REVERT TO THE ARTICLE XXVI 5(C) ROUTE, AS HONG KONG WOULD BE SEEN TO BE TRYING TO GAIN ENTRY THROUGH THE BACK DOOR HAVING FAILED TO GET IN THROUGH THE FRONT. EVEN IF A BELATED ARTICLE XXVI 5(C) DECLARATION IN HONG KONG'S FAVOUR COULD NOT BE ESTOPPED, ITS EVENTUAL STATUS IN GATT WOULD HAVE BEEN SERIOUSLY UNDERMINED.

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CONFIDEN HAL

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