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SECRETARY OF STATE'S BILATERAL WITH SECRETARY BAKER, 14 JULY

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MFN AND POLICY TOWARDS CHINA

(MEMORY JOGGER)

MFN

Current Position

House floor debate expected on 10 July: Senate debate

shortly thereafter. Final vote in Senate is likely to be before 24 July. Depending on outcome, final resolution could be deferred until September.

Prime Minister's Statement

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Prime Minister answered a written PQ (attached) in the

House of Commons on 9 July, intended primarily for

consumption by key Senators.

to them by HMA Washington.

Text of statement being passed

Effects on Hong Kong of non-renewal

Damage to economy: loss of 43,000 Hong Kong jobs, halving

of current GDP growth, loss of US$9-12 billion trade.

Two thirds of China's exports through Hong Kong are to the

US.

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Damage to US interests in Hong Kong: US one of Hong Kong largest investors US$6 billion, 900 US companies

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(including 140 factories).

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