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TERRITORY TO CONTINUE TO PARTICIPATE FULLY IN THE COMMERCE OF THE

FREE WORLD. GATT WAS A VITAL PART OF THIS.

3. WE AND THE GATT LEGAL EXPERTS WERE CONFIDENT THAT THERE WOULD

BE NO QUESTION OF HONG KONG'S CP STATUS CEASING SOLELY BY VIRTUE

OF THE CHANGE OF SOVEREIGNTY IN 1997. THE JAPANESE KESERVATION,

IF IT BECAME PUBLIC KNOWLEDGE, COULD HAVE THE MOST UNFORTUNATE

CONSEQUENCES BOTH FOR HONG KONG'S CURRENT STABILITY AND FUTURE

PROSPERITY. WE THEREFORE HOPED THE JAPANESE GOVERNMENT WOULD

NOT TAKE ANY ACTION WHICH MIGHT UNDERMINE HONG KONG'S GATT STATUS

AFTER 1997.

4.

WATANABE, WHO WAS PRESSED FOR TIME, PROFESSED IGNORANCE OF THE

DEMARCHE. HE PROMISED TO LOOK INTO IT AND SAID THAT JAPAN STRONGLY

SUPPORTED HONG KONG'S POSITION IN THE GATT.

5. ERIC HO MADE THE SAME POINTS TO HAYASHI OF THE MINISTRY OF

FOREIGN AFFAIRS AT THE DINNER THEY GAVE US ON 26 MAY. ONCE AGAIN,

THE INITIAL REACTION WAS ONE OF TOTAL IGNORANCE, BUT IT LATER

BECAME CLEAR THAT THEY HAD EXCHANGED NOTES WITH THE US AND THAT

THEY KNEW THE INITIAL USTR LINE. HO STRESSED THAT WITH STATE

DEPARTMENT SUPPORT FOR US THE US POSITION HAD CHANGED.

6. HO HANDED A COPY OF OUR SPEAKING NOTE TO THE JAPANESE CONSUL

GENERAL WHO HAD ACCOMPANIED US TO TOKYO. THE C.G. SAID HE WOULD

PURSUE IT THERE. TEXT IN MIFT.

HOWEE

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