TNAG-1402-FCO40-1874-Future-of-Hong-Kong-continued-participation-in-the-General-A-1985 — Page 117

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ARRANGEMENTS), SUCH AS THE GATT AND ARRANGEMENTS REGARDING INTERNATIONAL TRADE IN TEXTILES.

4. PARAGRAPH 4 OF ANNEX II TO THE JOINT DECLARATION STATES THAT MATTERS FOR CONSIDERATION DURING THE FIRST HALF OF THE PERIOD BETWEEN THE ESTABLISHMENT OF THE JOINT LIAISON GROUP AND 1 JULY 1997 SHALL INCLUDE ACTION TO BE TAKEN BY THE TWO GOVERNMENTS

(A) TO ENABLE THE HONG KONG SAR TO MAINTAIN ITS ECONOMIC RELATIONS AS A SEPARATE CUSTOMS TERRITORY, AND IN PARTICULAR TO ENSURE THE MAINTENANCE OF HONG KONG'S PARTICIPATION IN THE GATT, THE MFA AND OTHER INTERNATIONAL ARRANGEMENTS:

(B) TO ENSURE THE CONTINUED APPLICATION OF INTERNATIONAL RIGHTS AND OBLIGATIONS AFFECTING HONG KONG.

5. THE BRITISH SIDE BELIEVE THAT EARLY RESOLUTION OF THE QUESTION OF HONG KONG'S CONTINUING PARTICIPATION IN THE GATT WOULD DO MUCH TO REASSURE HONG KONG AND ITS TRADING PARTNERS THAT THE BASIS FOR HONG KONG'S FLOURISHING FREE MARKET ECONOMY WILL BE ABLE TO CONTINUE. THEY ALSO BELIEVE THAT IT WOULD DO MUCH TO

SHOW THAT THE JOINT LIAISON GROUP HAD COMMENCED ITS WORK

EFFECTIVELY.

6. HONG KONG CURRENTLY DERIVES ITS GATT RIGHTS AND OBLIGATIONS FROM THE UNITED KINGDOM, WHICH HAS ACCEPTED THE GATT ALSO IN RESPECT OF OTHER TERRITORIES FOR WHICH IT HAS INTERNATIONAL

RESPONSIBILITY. IT WOULD HOWEVER BE CONSISTENT WITH THE DEGREE OF AUTONOMY WHICH HONG KONG CURRENTLY ENJOYS IN THE EXERCISE OF

ITS EXTERNAL COMMERCIAL RELATIONS, AND WHICH IS PRESCRIBED FOR THE FUTURE SAR IN SECTIONS VI AND XI OF ANNEX ITO THE JOINT

DECLARATION, IF HONG KONG WERE NOW TO BECOME A SEPARATE

CONTRACTING PARTY TO THE GATT. THE BRITISH SIDE BELIEVE THAT

SUCH A COURSE WOULD ENABLE THE SAR AUTOMATICALLY TO RETAIN HONG

KONG'S STATUS WITHIN THE GATT AS A FULL CONTRACTING PARTY AS FROM 1 JULY 1997. HONG KONG'S LONG TERM POSITION IN THE GATT COULD

THUS BE MADE CLEAR AT AN EARLY STAGE, SO PROMOTING CONFIDENCE

IN THE ECONOMY.

7. FOR THE ABOVE REASONS, THE BRITISH SIDE PROPOSE THAT THEY AND THE CHINESE SIDE SHOULD AGREE THAT APPROPRIATE STEPS BE TAKEN, AS SOON AS POSSIBLE, TO SECURE SEPARATE CONTRACTING PARTY STATUS FOR

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