TNAG-1402-FCO40-1874-Future-of-Hong-Kong-continued-participation-in-the-General-A-1985 — Page 4

For all these reasons, Option 2 would appear to make Hong Kong hostage to those who might seek advantage at our expense. It should not, therefore, be pursued.

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Option 3 is less problematic and

and by far the most desirable and practical. It would:

(a) be indepdent of the question of China's

membership in the GATT;

(b) avoid having to involve Hong Kong in negotiating entry terms with the contracting parties;

(c) enable Hong Kong to acquire separate GATT status at any time mutually acceptable to China, the UK and Hong Kong through a declaration by the United Kingdom.

A further important point in favour of this course is that:

(d)

Hong Kong having become a separate contracting party under the GATT Article XXVI 5(c) procedure, and having regard to the arrangements proposed in Section VI of Annex I to the Joint Declaration, it could be maintained that

mere change of sovereignty in 1997 would not in itself have any effect upon Hong Kong's rights or status in the GATT.

the

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be

The observations in paragraphs 8 and 11(d) above are based on informal soundings which the United Kingdom mission in Geneva, including the Counsellor (Hong Kong) in Geneva, have taken of the legal section of the GATT secretariat. Their view is that if Hong Kong were

Kong were to become a contracting party under the Article XXVI 5(c) procedure, there would be no question of contracting party status ceasing solely by virtue of the change of sovereignty in 1997. Only if Hong Kong's autonomy in the conduct of its external commercial relations were to terminated would there be any question of a suspension or termination of such

of such status. The question of suspension had previously arisen when Southern Rhodesia issued its unilateral declaration of independence and the UK withdrew that territory's membership of the GATT. Even So it remained unclear whether Southern Rhodesia's GATT

Southern Rhodesia's GATT status had in fact been suspended. The GATT retained the name

of Southern Rhodesia in its documentation. It also continued to allocate papers which, although not despatched to Southern Rhodesia, were held in store in the GATT pending some resolution of the situation.