BRIT EMB WAS
CE
*
TUE 04 MAY 93 20:26
SISTRY
HKB
091/1
12 MAY 1993
DESHUFFICER
INDEX
PA
REGISTRY Action Taken
CONFIDENTIAL
PG.12
WHE.S
71
M
M Ң Ним
Mhe Fm, KED
Petlein Noto)
8
Confidential
pa
Copy
AMFN
fite pl....
GOVERNOR'S CALL ON LLOYD BENTSEN, SECRETARY OF THE TREASURY, ON 3 MAY, WASHINGTON, D.C.
2. M Mom;7/5
My Why 95 Ms Ranger Jame
The Governor referred to his call earlier in the day on the President. He said that he had talked to the President about his public agenda on MFN but made clear that he also appreciated the political realities faced by the Administration on this issue.
The Governor said he would be making a number of points in public. (i) Hong Kong's long-term stability and prospects depended primarily on good relations between the US and China, Hong Kong's two main trading partners. (ii) Growing economic reform in China would eventually and inevitably lead to opening-up in other areas. (iii) Hong Kong had been one of the main ingredients in China's economic growth and was now one of its principal beneficiaries. (iv) MFN renewal mattered enormously to Hong Kong. It was clear that restrictions on trade between the US and China would have a serious impact on Hong Kong's growth and jobs. (v) He understood US concerns about human rights, arms proliferation and trade issues. But he would argue that those matters should be taken forward in other fora and that MFN should not be used as a lever.
The Governor said that this would be his position in public. But privately he recognised that, for all sorts of reasons, the US was unlikely to renew MFN unconditionally. If so he would seek to make the case to the Administration in private that :
(i)
(ii)
(iii)
(iv)
any conditions should be Executive-driven rather than Congress-driven;
MFN should be renewed for a period, while China was given the opportunity to meet whatever conditions or expectations were laid down;
the conditions themselves should be framed in a way that China could realistically meet them; the more general the better; and
the overall package should recognise the impact on Hong Kong and generally be as Hong-Kong-friendly as possible.
Mr. Bentsen said that while the resolution of issues affecting Hong Kong was primarily a matter for the UK and China, the fate of Hong Kong would inevitably be a major consideration in US policy towards China. From the trade perspective, the most frustrating aspect was how to tackle the US's large and growing trade deficit with China. The deficit could not be ignored yet tampering with MFN did offend against the US's wish to pursue free trade policies as far as possible.
CONFIDENTIAL