MAR 091/2
Hong Kong Government offe
6 Grafton Street London W1X 3LB
ns. MFN
香港政府駐英辦事處 42
пя
Background Briefing Paper
THE CURRENT STATE OF US TRADE RELATIONS WITH CHINA
There are three principal outstanding trade issues between the US and China (with direct implications for Hong Kong trade). In order of importance, they are:
(a) China's MFN status,
(b) Section 301 action, and
(c) Export of Chinese goods made in prisons.
In all the three cases, Hong Kong's re-exports of products of China origin to USA could be affected.
2.
As previously noted, the Special 301 action issue relating to intellectual property was satisfactorily settled in January
1992.
China's MFN's Status with the US Background
3.
Under US legislation, the granting of Most Favoured Nation (MFN) import duties to non-market economies, including China, is dependent on the US President certifying and informing Congress on an annual basis that the country concerned does not practise a restrictive emigration policy. China's MFN status expires on 3 July each year.
4. In recent years, the US Congress, on being informed of the President's certification, has sought to introduce new legislation imposing additional conditions, including improvements in human rights, as a precondition for the renewal of China's MFN status. Such a 'conditionality' Bill was passed by the Congress in early 1992, but was vetoed by President Bush. The House of Representatives voted to override the veto by a wide margin, but the vote in the Senate fell just short, by 60 to 38 votes, of the two-thirds majority required to override the President's veto.
Present Position
5. On 2 June 1992, President Bush transmitted to Congress his formal decision to extend China's MFN status without conditions for another year (1992/93). On 3 June 1992, bills attaching conditions to MFN renewal for 1993 were introduced into both the Senate and the House of Representatives. These bills would deny MFN treatment for exports from China's state-owned enterprises should China fail to meet a number of conditions relating to improvements in human rights, trade practices, weapon non- proliferation and others. The bills are currently in the early stages of the legislative process in Congress, but are being opposed by the Administration.
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