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Which City Charter was Established by Treaty in 1984?

+ Paul Romer

Photo by: iiKaz
Photo by: iiKaz

Bob Haywood is the former head of the World Economic Processing Zones Association and the current executive director of the One Earth Future foundation. He wrote in with an interesting example: a recent treaty between two countries that specified the charter for a city.

In 1984, China and the UK signed a treaty called the Sino-British Joint Declaration. It specified the charter under which Hong Kong would operate for 50 years after the handover to China in 1997. The Declaration, together with the Basic Law passed by the Chinese to implement its provisions, specified in great detail what the existing rules were in Hong Kong and how they would be maintained.

Here’s a quick summary of the situation at the time of the negotiations in 1984. Britain had a perpetual lease on part of the land under Hong Kong (Hong Kong Island and Kowloon) but a 99-year lease on the New Territories that was set to expire in 1997. By 1984, uncertainty about the legal status of privately held leases on land in the New Territories began to depress real estate values and forced the two sides to reach an agreement specifying what the law would be there after 1997.

By 1984, the rest of Hong Kong depended on critical bits of infrastructure (such as reservoirs, power stations, and the airport) located in the New Territories. Any agreement to stick with the terms of the existing treaties and partition the city by giving the New Territories back to China would have created a dangerous bargaining situation between the British and Chinese controlled sides of the city. The resulting uncertainty could have been very harmful to the economy. To avoid this outcome, the two sides negotiated an agreement that dramatically reduced the uncertainty about the future of the city.

In the Joint Declaration, the British gave up their perpetual lease and the Chinese agreed to maintain Hong Kong’s prevailing political, legal, and economic systems for another 50 years.

This particular charter applied to an existing group of people, the residents of Hong Kong (represented throughout the negotiations by the Governor and Executive Council of Hong Kong in consultations with Prime Minister Thatcher). The declaration also ratified arrangements that already prevailed. In this sense, it served a very different function from a charter that helps bring a new city into existence. Nevertheless, it demonstrates how a treaty between two countries can specify the charter for a city.

The Joint Declaration could be a model for a Build-Operate-Transfer agreement in which a host country gives up administrative control over a small territory for only a brief period of time. The country or group of countries that take temporary control could establish critical legal and administrative institutions. As part of the treaty between the host and partner countries, the host could commit that it would preserve those institutions for many decades after it recovered official control. The critical issue, of course, is how such a treaty is monitored and enforced.

More details about the Joint Declaration and the Basic Law are available here.

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