TNAG-1491-FCO40-2049-Future-of-Hong-Kong-General-Agreement-on-Tariffs-and-Trade-(-1986 — Page 85

- 2 -

"The provisions of this Agreement shall apply to the metropolitan customs territories of the contracting parties and to any other customs territories in respect of which this Agreement has been accepted under Article XXVI or is being applied under Article XXXIII or pursuant to the Protocol of Provisional Application. Each such customs territory shall, exclusively for the purposes of the territorial application of this Agreement, be treated as though it were a contracting party; Provided that the provisions of this paragraph shall not be construed to create any rights or obligations as between two or more customs territories in respect of which this Agreement has been accepted under Article XXVI or is being applied under Article XXXIII or pursuant to the Protocol of Provisional Application by a single contracting party". (Emphasis added)

*****

There is unfortunately no drafting history which clarifies the meaning of this provision. The committees that made the drafting proposals did not explain the reasoning behind them (see for instance E/CONF.2/C.3/78). However judged by its wording the provision has in the case of the United Kingdom and Hong Kong the

following consequences:

1.

The General Agreement applies in Hong Kong

This follows from the first sentence of Article XXIV:1

and the UK declaration to apply the GATT to Hong Kong (cf. BISD,

16S/6). For the same reason:

2.

Third contracting parties must apply the General

Agreement to Hong Kong

3.

The General Agreement does not create rights or obligations between the United Kingdom and Hong Kong

This follows from the proviso according to which Article XXIV:1 does not "create any rights or obligations as between two or more customs territories". Hong Kong would thus have no defence