CONFIDENTIAL
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but there is no prospect of Chinese acquiescence in the Governor's proposals or anything like them. Encouraging
Congress to erect this into a new condition for MFN renewal
would therefore ensure that MFN was not renewed;
such a move could intensify Chinese determination to
oppose the Governor's proposals. They would interpret linkage
to the MFN issue as confirming their suspicions that the
democracy proposals were a UK/US plot to internationalise the
Hong Kong issue;
any boost to confidence in Hong Kong through a gesture of US support on these lines would be more than outweighed by
the blow to business confidence, and the economic damage which
removal of MFN would bring.
We are developing a strategy on the MFN issue in coordination
with the Governor and Sir Robin Renwick. We envisage two
parallel tracks:
intensive lobbying of the incoming Clinton team and the new Congress to ensure that they get the simple message that withdrawal of MFN would damage Hong Kong;
working up ideas privately on how the Administration could give itself maximum flexibility on the issue, given that President Clinton would be unlikely to veto legislation imposing conditions on MFN for China. Possibilities include amendments to minimise the damage to Hong Kong, or encouraging the
its Administration to use an Executive Order of the President
rather than legislation in Congress. When and how to deploy our thoughts with the new Administration would need careful
judgement.
In our campaign on MFN, the popularity of the Governor and his
mfn.SAkr
CONFIDENTIAL