CONFIDENTIAL
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160312 MDLIAN 7534
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Mr Stone.
CONFIDENTIAL
FM HONG KONG
TO PRIORITY FCO
TELNO 1328
OF 01114OZ MAY 91
INFO PRIORITY WASHINGTON, PEKING
MY SECOND IPT: CALL BY UNDER-SECRETARY KIMMITT: MFN.
·
1 KIMMITT SAID THAT CONGRESS WAS ONLY NOW BEGINNING TO FOCUS
PROPERLY ON THE MFN ISSUE. THE GENERAL ASSESSMENT WAS THAT THE ADMINISTRATION SHOULD BE ABLE TO OVERRIDE A VETO IN THE SENATE.
BUT THE PRESIDENT WOULD PREFER TO AVOID A PUBLIC BATTLE WITH CONGRESS IF AT ALL POSSIBLE. TWO WAYS OF AVOIDING THIS WOULD BE
TO ENCOURAGE FORWARD MOVEMENT BY THE CHINESE OR TO ACCEPT A CONDITIONAL RENEWAL. HE WAS AWARE THAT THE CHINESE DID NOT LIKE MAKING CONCESSIONS UNDER PRESSURE, SO HE HOPED THEY WOULD BE WILLING TO INTRODUCE HELPFUL IMPROVEMENTS ON THEIR OWN ACCOUNT. THIS WOULD HELP IN CONGRESS.
2. KIMMITT SAID THAT THE CHINESE ALREADY SEEMED CONSCIOUS OF THE NEED TO RECTIFY THEIR TRADE SURPLUS WITH THE US AND WERE SENDING A BUYING MISSION TO THE U S. HE ACCEPTED THAT IT WOULD BE DIFFICULT FOR THEM TO MOVE SUBSTANTIALLY ON HUMAN RIGHTS, BUT HE HOPED THAT THEY WOULD BE WILLING TO MAKE SOME SMALL CONCESSIONS SUCH AS RELEASING CATHOLIC PRIESTS OR HIGH-PROFILE INDIVIDUALS. A THIRD ISSUE, THAT WAS OF PARTICULAR CONCERN TO THE PRESIDENT, WAS PROLIFERATION OF WEAPONS. HE THOUGHT THAT THIS WOULD BE EASIER IN POLITICAL TERMS FOR THE CHINESE TO REMEDY, AND WOULD TRY TO SUGGEST TO THEM STEPS THAT MIGHT BE HELPFUL, SUCH AS AGREEING TO PARTICIPATE IN A MIDDLE EAST NON-PROLIFERATION AGREEMENT.
3. I SAID THAT, AS KIMMITT WAS AWARE, THIS ISSUE AFFECTED HONG KONG GREATLY. OUR EXPERTS SAID THAT IF MFN WAS WITHDRAWN, WE WOULD LOSE 1.5 PER CENT OFF OUR GDP GROWTH. THAT WOULD MEAN HALVING OUR GDP GROWTH: SOMETHING WHICH CARRIED IMPLICATIONS FOR SOCIAL ORDER AT A TIME OF ALREADY EXISTING POLITICAL UNCERTAINTY. THERE WOULD ALSO BE A MORE GENERAL EFFECT ON BUSINESS CONFIDENCE. KIMMITT SAID THAT THE HKG AND AMCHAM HAD DONE A GOOD JOB IN BRINGING THE HONG KONG ANGLE TO THE ATTENTION OF THE ADMINISTRATION AND CONGRESS LAST YEAR. IT WOULD BE IMPORTANT TO GET THE MESSAGE OVER AGAIN THIS TIME. I SAID THAT I WAS PREPARED TO WRITE TO SELECTED MEMBERS OF CONGRESS IF THAT HELPED. AMCHAM
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