The European Parliament's Committee on Foreign Affairs, Human Rights, Common Security & Defence Policy discussed its report on Hong Kong yesterday, in which it observed that in economic and trade terms, Hong Kong is ideally suited as a strategic link between Europe and Asia.

In response, the Government welcomed the call on the European Commission to explore possible areas for co-operation between the European Union and Hong Kong and to provide the necessary resources to facilitate this.

The report contains comments and observations on a range of issues, including Article 23 of the Basic Law, the accountability system, constitutional development, rule of law, human rights, and Closer Economic Partnership Arrangement with the Mainland.

* Responding to the report's comments on the implementation of Article 23 of the Basic Law, the Government said that relevant proposals have been drawn up having regard to common law principles and national security laws in other jurisdictions. The proposals are fully in line with the provisions of the International Covenant on Civil and Political Rights.

* In response to comments on the accountability system, the Government said the powers and functions of the Chief Executive are clearly set out in the Basic Law, and have not been increased or reduced as a result of the system's implementation.

* There is now a clearly identified political leadership at the top supported by a meritocratic and politically neutral civil service. Civil servants will remain in service irrespective of any change of political leadership at the top.

* As regards constitutional development post-2007, the Government points out that the Basic Law provides that the ultimate aim is the election of the Chief Executive and of all LegCo members by universal suffrage.

* The rule of law is well and alive in Hong Kong. The HKSAR courts exercise judicial power independently, free from any interference. The power of final adjudication is vested in the Court of Final Appeal. The power of interpreting the Basic Law, as stipulated in the Basic Law, is vested in the Standing Committee of the National People's Congress.

* Prominent and highly respected judges from other common law jurisdictions continue to sit on the Court of Final Appeal. This testifies to international confidence in the continuation of judicial independence in Hong Kong.

* On the right of abode court cases, the Government acted strictly in accordance with the law. Several thousand claimants have been allowed to benefit from the decision of the Court of Final Appeal in January 1999.

* On the Closer Economic Partnership Arrangement with Mainland China, relevant arrangements would be compatible with WTO rules.