Apr 26, 1986


GENEVE, APRIL 24 (IFDA/CHAKRAVARTHI RAGHAVAN) – Hong Kong, a British crown colony, has become a Contracting Party to the General Agreement on Tariffs and Trade, the GATT Secretariat announced Thursday in a press communiqué.

Since 1984, GATT rules have been applied to Hong Kong as a British colony, and Hong Kong’s interests represented in GATT from within the U.K. delegation.

By an agreement between the governments of U.K. and the People’s Republic of China (PRC), Hong Kong is to be restored to China effective July 1, 1997.

The agreement provides that from that dates the PRC will begin to exercise sovereignty over Hong Kong, with the latter becoming a special administrative region of the PRC.

A GATT spokesman said Thursday that Hong Kong had become the 91st Contracting Party under article XXVI: 5 (C), by virtue of declarations of Britain and China, under what he described as "automatic procedures" requiring no approval or action by the GATT CPS themselves.

The spokesman said that one of the CPS, whom he would not identify, had raised some questions over the procedure followed, but the GATT Secretariat had consulted legal opinion and looked at precedents, and was satisfied that this was an automatic procedure.

The spokesman himself was unable to cite a precedent similar to that of Hong Kong now, but referred to past instances where colonies became independent and became independent Contracting Parties.

GATT, he added, does not require a territory to have sovereign independence to become a CP, only that it have full control over its own trade policy.

Other GATT sources however said that several of the CPS had some doubts about the procedure being followed, and the way the issue was being handled without any "consultations" with other CPS, but merely on the basis of declarations of U.K. and the PRC to the GATT Secretariat, and even without the formality of the GATT Council taking note of the declarations.

They were also reported to be concerned over the way the GATT Secretariat was "rushing" into things and making pronouncements, but had not yet decided whether this should be raised formally in the GATT Council or elsewhere.

By virtue of Article XXVI, GATT rules have been applied in respect of Hong Kong since 1948, when the British government accepted the general agreement.

Under clause 5 (A) of that article a government accepting the GATT did so in respect of its metropolitan territory, and of other territories for which it had international responsibility, excepting for separate customs territories which the metropolitan power wanted to except from application of GATT.

Under clause 5 (C) of that article if any of the customs territories, in respect of which a metropolitan power had accepted the agreement, "possesses or acquire full autonomy" in the conduct of its external commercial relations and of the other matters provided for in the general agreement, "such territory shall, upon sponsoring through a declaration by the responsible Contracting Party establishing the above-mentioned fact, be deemed to be a Contracting Party".

On April 23, the U.K. sent a declaration to the GATT Secretariat notifying that Hong Kong had full autonomy over its external commercial relations and with effect from April 23 should be deemed to be a CP to the general agreement.

A separate communication from the People’s Republic of China, referred to the joint declaration with U.K. on the future of Hong Kong, and declared that from July 1, 1997 (when Hong Kong is to be restored to China), the Hong Kong special administrative region "will meet the requirements for a customs territory to be deemed to be a Contracting Party" under article XXVI, and by using the name "Hong Kong, China" would continue to be deemed to be a Contracting Party to GATT.

However several CPS are reportedly having some questions over the procedure followed and implications.

They note that the provisions in clause 5 (C) of Article XXVI were written into the general agreement, keeping in mind the prospect of several colonies of European metropolitan powers becoming independent soon, as in South Asia then, and to cover their cases.

Hong Kong is not going to become "independent", but is going to be "restored" to the People’s Republic of China.

This would mean that till July 1997 the U.K. would continue to have sovereignty over Hong Kong and the PRC after that.

If Hong Kong however is now an independent CP, who would exercise judgement on behalf of Hong Kong in "security" matters, and issue that could arise in respect of security exceptions to GATT under Article XXI?

The PRC, they noted, is itself not at present a GATT Contracting Party, and the declaration provided to the GATT Secretariat raised questions as to how China could act in this matter within the terms of article XXVI either.

Also, if by July 1997, People’s Republic of China does not become a GATT CP, it would then raise a strange situation of GATT rules, and the obligations and "rights" flowing from GATT, being applicable to a portion of the territory of the People’s Republic of China, but not to all.

Some GATT sources said that the question might well be aired at the next meeting of the GATT council in may, or even earlier in some GATT Committee, like the Committee on Tariff Concessions, which is meeting next week and where Hong Kong could participate.