TNAG-1768-FCO40-2522-Hong-Kong-and-the-Multilateral-Investment-Guarantee-Agency-(-1988 — Page 141

CONFIDENTIAL

CONFIDENTIAL

FM HONG KONG

TO IMMEDIATE FCO

TELNO 179

OF 140745Z JANUARY 88

INFO IMMEDIATE PEKING

HKC 1021 TOP COPY

RECEIVED IN REGIST!

14 JAN 1988

Q DIST ?

MIPT

MIGA

DESK OFFICER

INDEX

PA

4

145011

MDHIAN 3438

THE DRAFT SPEAKING NOTE FOR PEKING IS AS FOLLOWS

1

THE MULTILATERAL INVESTMENT GUARANTEE AGENCY, WHICH IS PROPOSED TO BE SET UP UNDER THE AUSPICES OF THE INTERNATIONAL BANK FOR

RECONSTRUCTION AND DEVELOPMENT (THE ''WORLD BANK > AIMS AT

PROMOTING FOREIGN INVESTMENT IN DEVELOPING COUNTRIES. THE UNITED

KINGDOM BECAME A SIGNATORY TO THE CONVENTION ESTABLISHING THE

AGENCY ON 9 APRIL 1986 BUT HAS YET TO RATIFY. THE UNITED

KINGDOM EXPECTS TO RATIFY THE CONVENTION IN OR SHORTLY AFTER MARCH

1988. ARTICLE 66 OF THE CONVENTION PROVIDES THAT THE CONVENTION

SHALL APPLY TO ALL TERRITORIES UNDER THE JURISDICTION OF A MEMBER

INCLUDING TERRITORIES FOR WHOSE INTERNATIONAL RELATIONS A MEMBER

IS RESPONSIBLE, UNLESS EXCLUDED BY THE MEMBER IT IS THE BRITISH SIDE'S INTENTION TO APPLY THE CONVENTION TO HONG KONG, AND IN OUR VIEW IT WOULD BE APPROPRIATE FOR THE CONVENTION TO CONTINUE TO APPLY

TO THE SAR AFTER 1997.

2. THE APPLICATION OF THE CONVENTION TO HONG KONG WOULD ALLOW

INVESTMENTS BY HONG KONG INVESTORS IN DEVELOPING COUNTRIES TO BE GUARANTEED BY THE AGENCY. HONG KONG WOULD ALSO SEEK TO TAKE

ADVANTAGE OF SECTION 3. PARA 1.21 OF THE OPERATIONAL REGULATKONS

OF THE AGENCY. THIS PROIVDES THAT A DEPENDENT TERRITORY FOR WHOSE

INTERNATIONAL RELATIONS A MEMBER IS RESPONSIBLE MAY BE DESIGNATED

BY THE BOARD OF DIRECTORS AS A DEVELOPING MEMBER COUNTRY FOR THE

PURPOSES OF ARTICLE 14 OF THE CONVENTION IF THE MEMBER SO REQUESTS. ARTICLE 14 STATES THAT ONLY THOSE INVESTMENTS MADE IN THE TERRITORY

OF A DEVELOPING MEMBER COUNTRY CAN BE GUARANTEED UNDER CHAPTER

III OF THE CONVENTION. THE TERMS OF PARA 1.21 OF THE OPERATIONAL

REGULATIONS MAKE IT CLEAR THAT THE WORD COUNTRY! IS USED THERE IN A SPECIAL SENSE WHICH DOES NOT INDICATE A STATE. A DEPENDENT TERRITORY WOULD MERELY BE DESIGNATED UNDER THAT PARAGRAPH IN ORDER TO SATISFY ARTICLE 14, AND FOR NO OTHER PURPOSES. THE DESIGNATION WOULD ALLOW FOREIGN INVESTMENTS IN HONG KONG TO BE GUARANTEED UNDER

THE CONVENTION. THE CONFIDENCE OF FOREIGN INVESTORS IN HONG KONG

1

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CONFIDENTIAL