TNAG-2566-FCO40-3751-Agreements-between-the-Hong-Kong-Special-Administrative-Regi-1992 — Page 23

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8. We therefore seem to face a choice between accepting that the PRC can speak in loco parentis for the future SARG before 1997 even in areas of the SARG's autonomy; or making

arrangements with HKG and running the risk that they will not be recognised by the future SARG.

9.

Our Legal Advisers came up with four possible ways around this problem:

a) Existing bilateral agreements made with the PRC could be extended to the Hong Kong SARG eg the UK/PRC IPPA. But, as the PRC deliberately excluded Hong Kong from the IPPA, this is unlikely to get us very far. Indeed, bilateral agreements with the PRC are unlikely to be suitable in content for application between UK/SARG.

It also goes against all that we have been doing with third countries;

b) we could negotiate with HKG Memoranda of Understanding which, once the SARG is constituted, could be translated into Agreements. However, there is no guarantee that the SARG would agree to translate the MOUS, or that the PRC would let them. On the other hand, identical MOUS concluded with the SARG after 1997 could continue without the need for authorisations except in the case of Air Services (JD 121);

c) Parallel legislation.

Probably only suitable for Reciprocal Enforcement of Judgements, and perhaps Mutual Legal Assistance;

d) Legislation to be enacted by Hong Kong which would give protection to UK and other investors. Parallel legislation would not be needed in the UK. (This may be a political non-starter in Hong Kong.)

10. A further suggestion was that we could in some cases agree to apply the Model Agreements which we have already negotiated with the Chinese (eg IPPAs). This would make it difficult for the Chinese to claim that we were exploiting our sovereign power position but only if the "intialled" agreement did not divert from the Model Agreement. Even then, the Chinese would be suspicious. We would not want to "taint" the whole process of Model Agreements. Nevertheless, as a first step, we will copy the Model Agreements we have already to other Government Departments to discover whether or not they would be a satisfactory basis for UK/SARG agreements. I have already referred to the problem with the Extradition Model Agreement.

Timing

Your third point was when we should raise this with the Chinese side. This will to a large extent depend on how we resolve the second point. We ought to have a pretty clear idea of how we intend to proceed and with what subjects

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