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5.
The United Democrats led by the lawyer Martin Lee, who advocate more radical policies such as a faster pace of democratisation, did well in the direct elections, winning 45% of the vote. The turnout rate at 39% was lower than expected. Together with other 'Liberal' allies, the United Democrats will now hold 22 of the 39 elected seats, and for the first time in its history LegCo will have a majority of elected seats, 39 out of 60.
US China/Trade Issues
China's Most Favoured Nation Station
6. President Bush formally announced his decision unconditionally to renew China's MFN status on 28 May 1991. He had acknowledged in earlier discussions with the Prime Minister the severe impact non-renewal would have on Hong Kong. On 26 and 27 June the House Ways and Means Committee and the Senate Finance Committee both proposed draft legislation which would impose conditions on renewal in 1991. Both bills broadly sought to impose on China a number of measures relating to human rights, forced labour produced exports and arms sales. On 10 July the House voted to adopt a bill renewing MFN until 1992, subject to these measures. The Senate vote on 23 July and the Mitchell Bill (proposing conditions for 1992) was adopted by 55 votes to 44. This was
a better result than the Administration had been expecting as the President needs to be sure of 34 votes in the Senate to be able to sustain a Presidential veto if and when the House and Senate can reconcile their two bills. There is likely to be a further congressional debate this Autumn although US contacts do not see any immediate change in the Administrations support on the Hill. It would seem that China's MFN status is probably assured at least until 1992.
7. Apart from MFN there are other US/China trade issues which are potentially damaging to Hong Kong, the most pressing of which is Intellectual Property. Unless the Chinese reach agreement with the US by 26 November on specific steps and a timetable to put right defects in their present laws, particularly on software copyright, prohibitive impart tariffs could be imposed on 26 December, as is the case with non-renewal of MFN. This action could have adverse effects on Hong Kong's economy given the close economic links between Hong Kong and Southern China and the volume of Chinese products re-exported through Hong Kong to the US.
Nationality
8.
The first tranche of the British Nationality (Hong Kong) Selection Scheme (about 43,000 places of the total 50,000 principal beneficiaries) was 50% oversubscribed. The Hong Kong Government expects to take two years to issue the passports in the first tranche. Some 2094 successful
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