: Mo
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5.
Whether the US Congress would swallow such a dispensation is another matter. Some effort would be needed to persuade them to do so. But, if the Administration supported an approach on these lines, we would not rule out the possibility that Congress would go along with it. There would be several good arguments, which should carry weight here. The Administration would be able to argue that, because China would have to choose between diverting 30% of its exports through Hong Kong or lose MFN on them, there would still be an effective penalty. At the same time, this approach would protect Hong Kong and conceivably boost its economy, if more Chinese exports were to pass through the Colony. This in turn would help build confidence in Hong Kong and be yet another way of bringing home to the Chinese the perils of too confrontational an approach to the Territory.
6.
I am not suggesting that we float this now. But if it became clear that Clinton saw no alternative to some form of conditionality, there could well be merit in the idea. grateful for any further thoughts.
I should be
7. Finally, we have noted the Governor's strongly expressed views that we should resist any attempt to link Hong Kong to the renewal of MFN status (Hoare's letter to you of 10 December). We shall be on the alert to stamp out the Seitz heresy if and when it raises its head again. It is possible that some here, particularly in Congress, will be tempted in 1993 to make MFN conditional on, among other things, a more benevolent Chinese view of democratic development in Hong Kong. Some may even think that this approach would be helpful to the Governor. We will of course explain why this is not the case, making the point that while the economic linkage between China and Hong Kong is at the heart of our argument about MFN renewal, the other kind of linkage will hinder, not advance, Hong Kong's cause.
eve
Yours
Christabe
C JR Meyer
CC:
R Hoare Esq, Government House, Hong Kong
Sir Robin McLaren KCMG, Peking
S Day Esq, Senior British Trade Commissioner, Hong Kong
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