The United States and China have reached agreement on the operation of the American Consulate after the handover.
After months of negotiations, a consular agreement covering the Special Administrative Region will be signed soon, possibly during Vice-President Al Gore's Beijing visit next week.
It will widen a special treaty allowing US consulates to operate in China and provide assistance to Americans in trouble.
The deal opens the way for other nations, which also have direct agreements governing their consulates in China, to reach agreement in the few months left before the handover.
Italy has been waiting for the Sino-American negotiations to be concluded so that it can press ahead with its own discussions to secure a treaty governing the operation of its consulate.
The American mission in Garden Road with more than 300 employees is the largest consulate in Hong Kong and the largest US consular post in the world.
The breakthrough is understood to have come after Chinese officials visited Washington last week and following Secretary of State Madeleine Albright's Beijing mission last month.
