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its human rights record by placing conditions on its renewal.
MFN was last renewed by President Bush on 2 June 1992, who
exercised his right of veto on an MFN conditionality bill sponsored by Congresswoman Pelosi.
12. During the election campaign, Mr Clinton was very critical of President Bush's policy on China. There is expectation, particularly within Congress, that he will be prepared to use
MFN as a lever on China. On the other hand, there is
considerable pressure from domestic business interests not to
cancel China's MFN status. We do not know the President's
thinking but one option open to him, and which would probably find favour with Congress, would be to renew MFN in 1993 with
conditions attached for further renewal in 1994.
13.
Our policy, strongly endorsed by the Governor, is a two
track one. In public and in contacts with the Clinton team and
the new Congress we are arguing for unconditional MFN renewal to
ensure that they understand that anything less would severely
damage Hong Kong's economy. But the Administration are making
clear that they are not prepared to renew unconditionally.
China now has an $18 billion trade surplus with the US and
Clinton is determined to try to use the leverage that provides.
In private we are therefore maintaining a discreet contact with
some members of the Clinton Administration on what sort of token
conditions would best protect Hong Kong.
US/China Trade
14. The US trade deficit with China as increased from $3
billion in 1987 to $16 billion in 1992 (year to October)
than one sixth of the total US trade deficit. By contrast
during 1987-1992 the total US trade deficit fell
billion to $90 billion.
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from $160
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