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3.
As regards specific ideas, Hong Kong have already pointed out the problems with trying to disentangle state and non-state enterprises. Another possibility we have looked at here is a provision that Chinese goods passing through Hong Kong should be stamped by the Hong Kong Government and treated by the US as if they were imports from Hong Kong. But we conclude that this is a non-starter. We think that Congress would be most unlikely to accept a measure which contained such obvious opportunities for diversion and undermining the intent of the legislation, even as a means of protecting Hong Kong. The figures show that up to 70% of Chinese exports to the US are already routed through Hong Kong. Such an approach would also run into problems over the GATT rules.
But we agree that the experts here and in Hong Kong should look carefully at any draft legislation that emerges in Congress to see whether amendments could be made.
4. On the question of trying to gain an extra year before implementation of legislation, we see force in the point in Hong Kong telno 2720. If the legislation sets conditions which the Chinese are in practice most unlikely to meet, it would be little better than immediate imposition of conditions. But is it realistic to think that Congress might set the bar low enough for China to jump over? We will be interested to see your comments on the idea of an Executive Order as an alternative.
5.
There is also the idea of encouraging the new Administration to look again at the Baucus proposal for a US/China Human Rights Commission. We are sceptical that anything can come out of this. But I suppose Chinese views on this may change if it became part of the price for watering down legislation into something like tokenism. Again, we will be interested to see your comments.
6. All in all, this looks like being an active dossier in 1993. Ministers here and the Governor attach importance to lobbying the Americans effectively on this subject. I know that the Embassy will continue to give this priority.
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Your ever
John Cole.
Sir John Coles