TNAG-1492-FCO40-2050-Future-of-Hong-Kong-General-Agreement-on-Tariffs-and-Trade-(-1986 — Page 14

2. DE FONBLANQUE REPEATEDLY EMPHASISED THE CRUCIAL IMPORTANCE

OF THE MAINTENANCE OF CONFIDENCE AND HENCE PROSPERITY IN HONG

KONG OF HONG KONG'S CONTRACTING PARTY STATUS AND THE AVOIDANCE OF CONTROVERSY ABOUT IT IN THE GATT. ABHYANKAR TOOK NOTE.

3. WHILE INDIAN REFLECTION ON THIS SUBJECT CLEARLY IS STILL AT AN EARLY STAGE, THERE WAS NO INDICATION OF A WILLINGNESS TO BE HELPFUL. IT WOULD NOT BE SURPRISING IF THEY DECIDE

TO MAKE THE MOST OF THEIR WORRIES BOTH ABOUT THE CORRECTNESS OF

THE PROCEDURE FOLLOWED AND ABOUT THE SUBSTANTIVE POSITION POST

1997. THIS WILL NO DOUBT DEPEND ON THE ADVICE THEY GET FROM GENEVA ABOUT THE PROCEDURAL POSITION. SUBJECT TO YOUR VIEWS, WE

SHOULD SEE ADVANTAGE IN PUTTING THE RECORD STRAIGHT WITH THE

INDIANS ON THE POINTS MADE BY ABHYANKAR IN RELATION TO THE

SITUATION AFTER 1997. THE OBVIOUS POINTS WHICH OCCUR TO US ARE

THAT:-

(A) THE CHINESE DECLARATION IN RELATION TO THE GATT STATUS OF

HONG KONG AFTER 1997 TAKES AS ITS STARTING POINT THE ASSUMPTION

THAT THE PROVISIONS OF THE JOINT DECLARATION IN RELATION TO THE

HONG KONG SAR WILL BE IMPLEMENTED IN GOOD FAITH BY ALL CONCERNED:

(B) THE PROPOSED ARRANGEMENTS POST 1997 THUS DO NO MORE THAN

MAINTAIN THE STATUS QUO ARISING FROM HONG KONG'S BECOMING A

SEPARATE CONTRACTING PARTY IN ITS OWN RIGHT TO WHICH THE INDIANS

APPEAR TO HAVE NO OBJECTION:

(C) THERE IS NO REASON WHATEVER TO ANTICIPATE ANY ABUSE OF HONG

KONG'S SEPARATE GATT STATUS AFTER 1997. THE NORMAL GATT RULES

SHOULD IN ANY CASE PROVIDE ADEQUATE SAFEGUARDS FOR THE INTERESTS

OF OTHER CONTRACTING PARTIES #F THEY HAVE REASON TO SUPPOSE THAT

ABUSE IN OCCURRING:

(D) NOBODY, THEREFORE, IS ASKING ANY CONTRACTING PARTY TO SIGN

AWAY ANY OF ITS NORMAL GATT RIGHTS IN RELATION TO HONG KONG FOR

THE PERIOD AFTER 1997.

(E) WHETHER OR NOT CHINA BECOMES A CONTRACTING PARTY IS IRRELEVANT,

AS THE HONG KONG SAR IS NOT PART OF CHINAS' CUSTOMS TERRITORY.

4. WE HAVE ALREADY MADE THESE POINTS ORALLY TO THE INDIANS, BUT

WE BELIEVE THAT THERE WOULD BE MERIT IN PUTTING THEM ON PAPER FOR

THE RECORD, TOGETHER WITH ANY OTHER (OR BETTER) ARGUMENTS YOU MAY

BE ABLE TO LET US HAVE.

WADE-GERY

HONG KONG AGREEMENT : RESTRICTED

LIMITED

HD/HKD

HD/FED

RESEARCH D (FE)

DEP/HD PUSD

PS/MR RENTCN MR WILSON

2

COPIES TO:

MR FIFOOT, LEGAL ADVISERS MR WOOD LEGAL ADVISERS

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