TNAG-1402-FCO40-1874-Future-of-Hong-Kong-continued-participation-in-the-General-A-1985 — Page 35

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(SAR) TO BE A SEPARATE CUSTOMS TERRITORY. IT ALSO PROVIDES FOR THE SAR TO PARTICIPATE IN RELEVANT INTERNATIONAL ORGANISATIONS AND INTERNATIONAL TRADE AGREEMENTS (INCLUDING PREFERENTIAL TRADE ARRANGEMENTS), SUCH AS THE GATT AND ARRANGEMENTS REGARDING INTERNATIONAL TRADE IN TEXTILES.

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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 TO 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

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