TNAG-1402-FCO40-1874-Future-of-Hong-Kong-continued-participation-in-the-General-A-1985 — Page 139

CONFIDENTIAL

Government could nevertheless exercise

a similar responsibility provided that

they did so within established parameters.

The development of the deliberate policy of successive

British Governments that Hong Kong should conduct its own

external commercial affairs, even to the extent of

inconsistency with HMG's policies is demonstrated by the

adoption by Hong Kong of positions opposed or inconsistent

with that of the EC (para 4 above). Such a practice and

policy, coupled with an appropriate entrustment of the

power to negotiate and conclude trade agreements (see Annex

below) which the Secretary of State would be minded to

issue, is, it is believed, sufficient to establish the

competence of Hong Kong "in the conduct of its external

commercial relations and of the other matters provided

for in" the GATT.

*

Competence and autonomy

7.

The proposition which the metropolitan state is

required to establish for the purposes of Article XXVI 5 (c)

of the GATT is that the territory possesses "full autonomy"

in the relevant field. Two sets of questions may fall

for consideration here, namely the interpretation of the GATT

and the relevance of the constitutional relationship

between the metropolitan state and the dependent territory

concerned.

18.

* Footnote: "the other matters provided for in the" GATT would appear

to be those restrictions or permitted actions which operate internally in respect of imports or exports eg the requirement for national treatment on internal taxation or regulation; provisions relating to anti-dumping; publication of trade regulations; subsidies. Hong Kong in practice has freedom of action in this sphere as well as in external commercial relations.

6