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FROM: A Vinall
hope.
DATE: 25 September 1992.
cc: Minister (TP)
SECTION 301 ACTION AGAINST CHINA: HONG KONG
Mr Leung, HK Trade
Office
Ms Life
1. I called on Ira Wolf (Assistant USTR for Japan and China) yesterday to convey HMG's concern over the implications for Hong Kong of the proposed retaliatory action against Chinese exports to the US under the current Section 301 procedure.
2. I went through the points already made by the Hong Kong Economic and Trade Office as set out in the attached speaking note, a copy of which I left.
3. Wolf said that following his visit to Beijing with Moskow last week, the US awaited a response from the Chinese. They expeted this by 1 October, when they would next meet.
It was not clear whether there would be anything serious to negotiate
on.
4.
Wolf said that the decision on F-16s to Taiwan had clearly not helped the negotiations. Moskow's calls on everyone other than MOFERT officials had been cancelled. It was quite possible that the Chinese would take a hard line and let the US go ahead with retaliation, even though it was in their long-term interest to carry out the liberalising reforms the US wanted to see in order to improve its access to the market. These were of course highly political issues in China and Wolf professed to have no particular insight into how decisions might go..
5. Formally the position is that the US must announce by 10 October whether the dispute is settled or not. If it was not, they had 30 days in which to announce their retaliation, but it would not need to be put into effect for another 180 days. Wolf stressed, however, that these were purely theoretical time-tables and that there would be swift retaliation if negotiations got nowhere.
6. Public hearings on retaliation are now taking place (100 witnesses will be called, there are some 480 written submissions). No decisions had been taken on the eventual size or scope of tariff increases, nor were there yet any decisions on how the list should be drawn up. But the Administration was well aware of the implications for Hong Kong and would do what it could to minimise any impact on Hong Kong's economy. This would not of course be easy given the high proportion of Chinese exports which passed through the territory. Wolf commented that it was a pity that the UK could not do more on Hong Kong's behalf to pressure the Chinese to come to an agreement but he well understood our political inhibitions. The Hong Kong government was similarly
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