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

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the report is a private initiative by a Labour MEP which

does not reflect HMG's or CC'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.

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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