CONFIDENTIAL
Hope both House and Senate will give their support to the President on this issue;
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Prime Minister will make a statement in the Rouse of Commons probably this week copies will be passed to key Senators;
More than two-thirds of Chinese exports to the US are routed through Rong Kong. Non-renewal of MFN could result in loss of 43,000 Fong Kong jobs, a drop of up to half in Hong Kong's current GDP growth, and a loss of US$9-12 billion in trade;
US interests/investment in Hong Kong could also be damaged US$6 billion in investment with 900 US companies including 140 factories;
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Conditional renewal could also be bad for Hong Kong. Would introduce uncertainty which would be a major disincentive to investment.
South Africa
5.
When Mr Hemans was in Washington on 28 June, he found a consensus that the President would this month lift CAAA sanctions (mostly economic), once the few remaining problems on political prisoners were dealt with. But the State Department and White House were not agreed on the Gramm Amendment (which blocks South African access to the IFIs). State Department (Cohen) did not think that the ending of the CAAA measures should be followed within weeks by the lifting of the Gramm Amendment. Any movement should await Congress' decision on IMF replenishment (ie. until October at the earliest). Cohen had earlier told Congress that Gramm should be kept as "leverage" on the South African Government. The White House (Frasure) stressed the President's wish to move ahead quickly to help the South Africans: he hoped that Gramm could be "outflanked" within 5-6 weeks.
6.
1
The PUS may wish to:
ask for the latest news on the process of issuing an executive order rescinding the CAAA sanctions
remind Kimmitt that we want a passage on South Africa in the G7 Political Declaration which stresses South
POIAAJ
CONFIDENTIAL