1
GRS 700
CONFIDENTIAL
FM WASHINGTON
TO PRIORITY FCO
TELNO 446
Confidential
HUD 385/
RECEIVEU
OF 272341Z FEBRUARY 27
C
AND TO PRIORITY HONG KONG, NEW YORKNE
NEW YORK FOR HONG KONG GOVERNMENT OFFICE
WHGISTRY
27 FEB 1987
OFFICER
PA
TOP COPY Q DIST ?
un taken
Amek
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FCO TELNO 421 TO HONG KONG : NEW US DRUGS LEGISLATION
1. THE US CONSULATE -GENERAL APPEAR TO HAVE GOT SOME OF THEIR
FACTS WRONG. THERE WAS NO LIST OF MAJOR DRUG PRODUCING OR
TRANSIT COUNTRIES IN THE OMNIBUS US DRUG BILL OF OCTOBER 1985.
BUT THE BILL DID MAKE SEVERAL AMENDMENTS TO SECTION 481 OF THE
FOREIGN ASSISTANCE ACT OF 1961, WHICH INCLUDED A LIST OF QUOTE
MAJOR ILLICIT DRUG PRODUCING AND DRUG TRANSIT COUNTRIES UNGUOTE.
HONG KONG WAS ON THAT LIST. THE AMENDMENTS IN THE 1936 ACT DO
NOT REFER SPECIFICALLY TO HONG KONG : THEY ARE GENERAL PROVISIONS
REINFORCING US POWERS TO COMBAT DRUG TRAFFICKING AND COVERING
REPORTS BY THE PRESIDENT TO CONGRESS ON FAILURE OF ANY OF THE
LISTED COUNTRIES TO COOPERATE WITH US NARCOTICS CONTROL EFFORTS,
AND WITHHOLDING OF US ASSISTANCE TO SUCH COUNTRIES.
2. THE IMPORTANT POINT ABOUT THE 1986 LEGISLATION IS THAT IT
CREATES NEW AUTHORITY FOR THE ADMINISTRATION TO TAKE TRADE ACTION
AS OF 1 MARCH EACH YEAR AGAINST UNCOOPERATIVE MAJOR DRUG-
PRODUCING OR DRUG-TRANSIT COUNTRIES. FOR EACH SUCH COUNTRY THE
PRESIDENT IS REQUIRED TO DENY TO ANY OR ALL OF ITS PRODUCTS
GSP (OR CBI) PREFERENTIAL TARIFF TREATMENT, TO RAISE OR IMPOSE
DUTIES OF UP TO 50 PER CENT 4D VALOREM ON ANY OR ALL EXPORTS, OR
TO TAKE ANY COMBINATION OF THESE ACTIONS UNLESS HE DETERMINES
AND CERTIFIES TO CONGRESS, WHEN SUBMITTING THE ANNUAL REPORT
REQUIRED BY SECTION 481 OF THE FOREIGN ASSISTANCE ACT,
THAT THE COUNTRY HAS COOPERATED FULLY WITH THE US OR HAS TAKEN
ADEQUATE STEPS ON ITS OWN TO PREVENT ILLEGAL DRUGS FROM BEING SOLD
TO US GOVERNMENT PERSONNEL OR SENT TO THE USA, AND TO PREVENT
LAUNDERING OF DRUG-RELATED PROFITS. CONGRESS MAY DISAPPROVE THE
PRESIDENT'S DETERMINATION THROUGH A JOINT RESOLUTION WITHIN
30 LEGISLATIVE DAYS.
3. WE WILL AWAIT THE COMPREHENSIVE BRIEF HONG KONG PROMISE BEFORE
WE OFFER ADVICE ON WHETHER/HOW TO RAISE THIS ISSUE WITH THE
ADMINISTRATION. BUT IT WILL BE IMPORTANT TO BEAR IN MIND THAT HONG
KONG HAS BEEN ON THE LIST SINCE 1961, AND ALSO THAT WE RAISED NO OBJECTION TO THE SECTION ON HONG KONG IN THE STATE DEPARTMENT'S INTERNATIONAL NARCOTICS. CONTROL STRATEGY REPORT OF 1986 TO THE
SENATE COMMITTEE ON FOREIGN RELATIONS AND THE HOUSE COMMITTEE ON FOREIGN AFFAIRS (EMBLETON'S LETTER OF 13 MARCH TO MS ROBCON, UND, COPIED TO HONG KONG). THAT REPORT CONSIDERED HONG KONG TO BE QUOTE A MAJOR TRANSIT POINT FOR NARCOTICS FROM SOUTH EAST ASIA UNQUOTE AS WELL AS QUOTE ONE OF THE WORLD'S MAJOR BANKING CENTRES, WHOSE LACK OF CURRENCY CONTROLS AND BANKING SECRECY LAWS MAKE IT ATTRACTIVE TO NARCOTICS TRAFFICKERS UNQUOTE. THE 1987 REPORT IS DUE TO ISSUE
NEXT WEEK: IT WOULD MAKE SENSE TO SEE ITS TERMS BEFORE DECIDING OUR TACTICS.
Confidential
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