CONFIDENTIAL

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Better to wait and see what final text looks like in

Congress before deciding how to react. Danger that

overreaction by China could strengthen opposition in Congress to MFN renewal.

EUROPEAN PARLIAMENT REPORT ON HONG KONG/EC RELATIONS

Points to make

:{

- the report is a private initiative by a Labour MEP which does not reflect HMG's or ČC's policy and will not lead to

any action.

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if the resolution were passed there would be no need for

member governments to express a view.

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it is natural and welcome that those with an economic

stake in Hong Kong should take an interest in the situation

there. That is not interference.

There are many resolutions in the European Parliament which criticise us or with which we disagree. China should not take the resolution too seriously.

FILM CENSORSHIP: COMPASSION IN EXILE (IF RAISED)

- Aware of Chinese complaint about film on the life of Dalai

Lama showing in Hong Kong International Film Festival.

But understand that film does not advocate Tibetan

independence nor does it draw any comparison with Hong Kong. Hong Kong Government gave permission for its showing and it is not now possible under the law to withdraw that permission.

JH2ACN/4

CONFIDENTIAL

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