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as I understand it, China itself might well have participated in the most recent trade workshop in Hong Kong had they reconciled themselves to the terminology adopted by the OECD for Taiwan.) I do not recollect how exactly the Chinese were initially informed about Hong Kong's participation in the dialogue. You will no doubt have this on your files. My own advice would be, subject to your checking this position, that the most sensible way to proceed would be to use the same channel. The line to take would presumably be that the move to observership was a logical next step, aleady taken by Korea among the DAES, and with no implication for any more formalised arrangement in future. You could deploy all the good arguments about why Hong Kong's economy would benefit from being in on the ground floor in OECD consensus-making.
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Of course, Tony Galsworthy is right that even a low-key approach like this would not exclude the possibility that the Chinese would request or demand more formal consultation about the decision through the JLG machinery. But I think that it is worth trying the informal low-key approach first. It may work. If the Chinese subsequently demand consultation we should of course have to be ready to agree to it but this should not prevent Hong Kong proceeding with its application for an observership in the meantime. After all, if the worst came to the worst, the observership could in any case come under question in 1997. (The OECD membership itself is unlikely to be wholly attracted to the idea of what they might see post-1997 as a Chinese Trojan horse in their counsels.) For the time being therefore, in telling the Chinese informally about Hong Kong's intentions, I suggest that it would be sensible to say that the observership is being entered into on a provisional basis so that each party (ie the OECD and Hong Kong) can decide in future whether, after some experience of the operation, it should be proceeded with. This might sufficiently reassure the Chinese about the longer term implications. At the same time, the more reasonable among them, and those who recognise the trade policy advantages, might actually savour the prospect of having a Chinese toe in OECD's door post-1997.
6. During the recent Euro/East Asia Forum, I had the chance of a brief word with Gerhard Abel, the OECD's Trade Director. He confirmed what you had said to me, namely that there were still some doubts among certain OECD members about the wisdom of bringing in Hong Kong as an additional observer. But he himself was in favour and would be giving the proposal a fair wind. I am sure that the Deputy Secretary General, Taniguchi, whom I also saw on that occasion, will be equally supportive. If the Japanese are continuing to reserve their position, we should seek to use Taniguchi's influence to move them in the right direction. The Japanese Consul-General here, Orita, is also likely to be helpful.
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