activities, and have suggested there is a legal basis for such indemnity. The purpose of an indemnity would be that the Hong Kong financial authorities rather than the Treasury would foot the bill if anything went wrong.
4.
They acknowledge our interest in ensuring that Hong Kong has an effective licensing regime and recognise the undertaking to let us see to this, given at the time of the 1990 order. They are keen to set up a local regime before the issue of futher licences and want to start work on the arrangements at once. The next two satellites in the pipeline are Epstar (?) 1 in mid 1994 and Asiasat 2 in early 1995.
5. There is also a separate issue of "localising" the 1990 Order. This is the process of re-enacting in Hong Kong UK legislation applicable to Hong Kong, for incorporation into the body of legislation which will, with the agreement of the Beijing authorities, apply to Hong Kong after 1997. HKG takes the view that localisation can be dealt with separately, although its effectiveness depends on establishing an autonomous licensing regime. Indeed, to judge by the way it was presented to me, they consider localisation a purely domestic issue; I have not so far contested this view.
6. The argument for their proposal is reasonable, if convoluted. HKG is anxious to secure Hong Kong's role as a leading regional telecommunications centre. They are afraid that excessive Beijing involvement in telecoms regulation will hinder this, as Beijing regulation is reckoned to be bureaucratic, slow and not market-oriented. They hope that if they can demonstrate to Beijing that they have an existing, locally-administered satellite licensing regime at hand-over, they will be able to carry on administering it without Beijing involvement. On the other hand, they fear that if Beijing sees that London is directly involved in its administration, Beijing will wish to take over London's role.
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7. HKG understand the point that Beijing will assume the liability for Hong Kong space activities under international agreements, that currently rests with HMG, and that it will be up to Beijing to decide what to do about it after 1997. reason that Beijing has not yet focused on the problem, because there is no private sector Chinese involvement in space, but that this will change after 1997 once the nature and level of proposed activity in Hong Kong is more clearly understood. They wish to be able to propose their own up-and- running solution to Beijing's liability which results from Hong Kong activities, rather than have Beijing impose its own, probably more burdensome one. Clearly current legislation would have to be substantially altered to accommodate the circumstances after 1997, but not the main elements of the licensing regime. Beijing will only buy this if there is already a well-established regime prior to hand-over and if it is genuinely autonomous of London. Therefore HKG does not want simply to let licensing lapse and wait to see what Beijing does after 1997. Nor do they want to start negotiating with Beijing from scratch; they want to present a solution based on the present satisfactory system.
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