BRITAIN SAYS HONG KONG AGREEMENT HAS NECESSARY ASSURANCES BY GRAHAM EARNSHAW

HONG KONG, SEPT 26, REUTER - A LONG-AWAITED AGREEMENT BETWEEN BRITAIN AND CHINA RETURNING HONG KONG TO CHINESE RULE BUT GUARANTEEING THE TERRITORY'S CAPITALIST SYSTEM FOR 50 YEARS WAS MADE PUBLIC TODAY AFTER BEING INITIALLED IN PEKING.

A BRITISH PREAMBLE TO THE DOCUMENT SAID BRITAIN WAS "CONFIDENT THE AGREEMENT PROVIDES THE NECESSARY ASSURANCES ABOUT HONG KONG'S FUTURE TO ALLOW THE TERRITORY TO CONTINUE TO FLOURISH, AND TO MAINTAIN ITS UNIQUE ROLE IN THE WORLD AS A MAJOR TRADING AND FINANCIAL CENTRE."

BRITAIN HAS CALLED ON THE PEOPLE OF HONG KONG TO EXPRESS THEIR OPINIONS ON THE ACCORD, CALLED A JOINT DECLARATION, BUT THE PREAMBLE MADE IT CLEAR THERE WAS LITTLE POINT IN THEM OBJECTING.

IT SAID THAT IN THE VIEW OF THE BRITISH GOVERNMENT "THERE IS NO POSSIBILITY OF AN AMENDED AGREEMENT."

THE AGREEMENT WAS RELEASED SIMULTANEOUSLY IN PEKING, HONG KONG AND LONDON.

IN THE ACCORD, BRITAIN AGREED TO HAND HONG KONG BACK TO CHINA ON JULY 1, 1997, AND CHINA GUARANTEED TO MAINTAIN HONG KONG'S CAPITALIST SYSTEM AND THE FREEDOMS NOW ENJOYED BY ITS 5.3 MILLION PEOPLE FOR 50 YEARS AFTER THAT DATE.

INTRODUCING THE AGREEMENT TO HONG KONG'S LEGISLATIVE COUNCIL, THE COLONY'S GOVERNOR, SIR EDWARD YOUDE, SAID: "IT MAY NOT BE REGARDED AS COMPLETELY SATISFACTORY BY ALL WHOM IT AFFECTS AT ALL POINTS."

"NO AGREEMENT COULD ACHIEVE THAT," YOUDE ADDED. HE SAID THE VIEWS OF HONG KONG'S PEOPLE HAD BEEN CAREFULLY HEEDED THROUGHOUT THE TWO YEARS OF SECRET TALKS "AND TAKEN FULLY INTO ACCOUNT."

THE BRITISH PREAMBLE TO THE AGREEMENT REVEALED THAT WHEN THE TALKS OPENED IN PEKING IN SEPTEMBER 1982, BRITISH PRIME MINISTER MARGARET THATCHER ASKED THE CHINESE TO ALLOW LONDON TO RETAIN CONTROL OVER HONG KONG TO ENSURE ITS PROSPERITY.

THE CHINESE INSISTED THAT BRITAIN'S POLITICAL HOLD ON HONG KONG, DATING BACK TO 1842, SHOULD BE SEVERED.

THE KEY PROVISION IN THE AGREEMENT WAS THE PARAGRAPH SAYING BOTH GOVERNMENTS "AGREE TO IMPLEMENT" ITS PROVISIONS, THEREBY MAKING IT LEGALLY BINDING IN INTERNATIONAL LAW ON BOTH GOVERNMENTS.

BRITAIN AND CHINA HOPE THE AGREEMENT WILL ALLAY FEARS IN HONG KONG AND AMONG FOREIGN INVESTORS ABOUT THE FUTURE OF THE TERRITORY WHEN IT COMES UNDER THE ULTIMATE AUTHORITY OF CHINA'S COMMUNIST PARTY.

UNDER THE AGREEMENT'S PROVISIONS ON POST-1997 HONG KONG:

-- HONG KONG BECOMES A SPECIAL ADMINISTRATIVE REGION (SAR) OF THE PEOPLE'S REPUBLIC OF CHINA BUT WILL "ENJOY A HIGH DEGREE OF AUTONOMY, EXCEPT IN FOREIGN AND DEFENCE AFFAIRS".

-- HONG KONG WILL RETAIN ITS PRESENT LEGAL SYSTEM.

-- THE GOVERNMENT OF HONG KONG WILL BE COMPOSED OF LOCAL PEOPLE. THE SAR'S CHIEF EXECUTIVE WILL BE CHOSEN BY PEKING AFTER ELECTIONS OR CONSULTATIONS HELD IN HONG KONG.

-- THE EXISTING SOCIAL AND ECONOMIC SYSTEM WILL REMAIN UNCHANGED. FREEDOM OF SPEECH, THE PRESS, ASSEMBLY, STRIKE, RELIGION WILL BE PROTECTED BY LAW.

-- PRIVATE PROPERTY RIGHTS WILL BE PROTECTED AND THE HONG KONG DOLLAR WILL REMAIN FREELY CONVERTIBLE.

-- THE TERRITORY WILL BE ABLE TO RETAIN ITS ECONOMIC AND CULTURAL RELATIONS WITH OTHER COUNTRIES UNDER THE NAME "HONG KONG, CHINA". THE SAR GOVERNMENT WILL ISSUE TRAVEL DOCUMENTS. REUTER PNE TB