TNAG-2752-FCO40-3967-Organisation-for-Economic-Co-operation-and-Development-(OECD-1994 — Page 37

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MY DELEGATION, WHICH PAVED THE WAY FOR THE FORMAL APPLICATION. LONGER THE APPLICATION STAYS ON ICE THE MORE DIFFICULT IT WILL BE TO QUELL THE IDEA THAT PEKING IS CALLING THE SHOTS. THIS ALONE COULD BE SUFFICIENT TO MARK THE END OF HONG KONG'S ASPIRATIONS WHATEVER ULTIMATELY EMERGED FROM THE EXCHANGE WITH CHINA.

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IF, ON THE OTHER HAND, THE HONG KONG AUTHORITIES WERE TO HAVE THE ITEM REINSTATED ON THE NEXT AVAILABLE COUNCIL AGENDA (PROBABLY 16 DECEMBER OR, IF THAT DOES NOT TAKE PLACE, 14 JANUARY 1994) SOME OF MY COLLEAGUES WOULD SEE THIS AS CONFIRMATION OF HONG KONG'S AUTONOMY. IN ADDITION WE SHOULD HAVE BOUGHT A BREATHING SPACE UNTIL THE ISSUE GOES TO THE TRADE COMMITTEE ON 16 FEBRUARY WHERE CONSIDERATION WILL REVOLVE AROUND TECHNICAL ''TRADE'' POINTS (WHICH ARE RELATIVELY STRAIGHTFORWARD AS UNDERLINED IN NEWTON'S 24 NOVEMBER LETTER TO NAYLOR, DTI - NOT TO ALL). THE POLITICAL ISSUE WILL NOT COME BACK TO THE FORE UNTIL A SUBSEQUENT COUNCIL MEETING (PROBABLY THE ONE DUE ON 10 MARCH). IF NECESSARY THE APPLICATION COULD ALWAYS BE STALLED AGAIN IN DUE COURSE, ALBEIT NOT WITHOUT FURTHER DAMAGE TO HONG KONG'S CHANCES.

6. THAT IS NOT TO SUGGEST THAT IT WOULD THEN BE PLAIN SAILING IF THE APPLICATION WERE REINSTATED IMMEDIATELY. IN PARTICULAR I AGREE THAT REACTIONS HERE WOULD PROBABLY BE MIXED IF THE CHINESE WERE TO RESORT TO PUBLIC CRITICISM OR CONDEMNATION OF THE APPLICATION. BUT WE COULD HOPE TO COUNTER THIS BY REMINDING DOUBTERS OF THE TERMS OF THE JOINT DECLARATION AND OF HONG KONG'S PARTICIPATION IN GATT, IMO, ICAO ETC.

7. AS FOR THE IDEA OF SEEKING OBSERVER STATUS ONLY UNTIL 1997 THIS WOULD PROBABLY NOT BE WELL RECEIVED HERE. AS IT IS SOME DELEGATIONS ARE ALREADY DOUBTFUL ABOUT THE GENERAL INCREASE IN OBSERVERS AND, ALTHOUGH THERE IS NOTHING WRITTEN DOWN TO THIS EFFECT, COMMITTEE OBSERVER STATUS IS IN ANY CASE WIDELY SEEN AS THE FIRST STEP TOWARDS ULTIMATE FULL MEMBERSHIP OF OECD. CLEARLY FOR HONG KONG THAT IS NOT APPLICABLE AND I HAVE GONE TO SOME LENGTHS TO CONVINCE COLLEAGUES WHY HONG KONG SHOULD BE REGARDED AS AN EXCEPTION TO THAT GENERAL RULE. THE IDEA OF OBSERVER STATUS FOR JUST THREE YEARS WOULD BE UNPRECEDENTED AND WOULD REOPEN THAT DEBATE. IT IS THEORETICALLY OPEN TO OECD COUNCIL TO WITHDRAW OBSERVER STATUS, EITHER AT THE REQUEST OF THE PARTY CONCERNED OR AT THE COUNCIL'S OWN WISH AS IN EFFECT IT DID WITH YUGOSLAVIA'S SPECIAL STATUS. SO ALL CONCERNED CAN BE ASSURED THAT THERE IS NOTHING ETERNAL ABOUT OBSERVER STATUS.

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IN SHORT, MY ADVICE FOR HANDLING THE MATTER WOULD BE TO RELAUNCH APPLICATION AS EARLY AS POSSIBLE. TO HAVE THE BEST EFFECT THIS

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