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PRIME MINISTER'S DINNER WITH SECRETARY BAKER, 22 MAY
HONG KONG/CHINA
MFN Status
1.
The President must decide before 3 June whether or not
to extend China's MFN status for another year from
July 1992. He is committed to doing so but opposition in the Senate and Congress is likely to be even stiffer than last year: the Senate was only 5 votes short of overturning the President's veto on their Bill earlier this year. Loss
of MFN status for China would have severe impact on Hong Kong because two thirds of China's exports to the US pass
through Hong Kong. Loss would cut Hong Kong's GDP growth by a third to a half and 44,000 to 60,000 jobs would be lost. In renewing MFN in the past the President has taken into account the adverse impact its loss would have on Hong Kong and has been supportive of Hong Kong on this issue. The Prime Minister might say:
-
Know that you will face even greater opposition over MFN renewal for China this year.
- Have been most grateful for your acknowledgement and support of Hong Kong's difficult position on this issue.
- We and the Hong Kong Government will be lobbying strongly on the Hill for MFN renewal again this year. Fully agree that the way to change China is not through punitive
economic measures.
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