XN000022-1992-07-08 — Page 3

WEDNESDAY, JULY 8, 1992

1

STI'S SPEECH ON MEN STATUS FOR CHINA DEBATE

ON MOST

THE FOLLOWING IS THE FULL TEXT OF THE SPEECH BY THE SECRETARY FOR TRADE AND INDUSTRY, MR T.H. CHAU, IN THE MOTION DEBATE FAVOURED NATION STATUS FOR CHINA IN THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY):

MR DEPUTY PRESIDENT,

MEMBERS WHO HAVE SPOKEN IN THIS DEBATE HAVE ALL RECOGNISED THAT THE RENEWAL OF MOST FAVOURED NATION TRADING STATUS FOR CHINA BY THE UNITED STATES IS OF CRUCIAL IMPORTANCE TO HONG KONG, THE DAMAGE THAT WOULD BE DONE TO HONG KONG'S ECONOMY AS A RESULT OF THE LOSS OF CHINA'S MFN STATUS HAS BEEN SPELT OUT IN DETAIL RY MANY MEMBERS. SEVERAL MEMBERS HAVE QUOTED VERY PRECISE FIGURES. SO THERE IS NO NEED FOR ME TO REPEAT THEM.

BUT I WOULD LIKE TO EMPHASISE A FEW POINTS. IF, AS A RESULT OF LOSS OF MFN STATUS, CHINA WAS TO CUT BACK ON ITS IMPORTS FROM THE US EITHER IN RETALIATION OR BECAUSE OF A REDUCED ABILITY TO EARN FOREIGN EXCHANGE, THERE WOULD BE FURTHER TRADE CONTRACTION, WHICH WOULD RESULT IN FURTHER LOSS IN JOBS AND INCOME FOR HONG KONG. IN ADDITION, THERE WOULD BE

A SIGNIFICANT ADVERSE EFFECT ON MANUFACTURING INVESTMENT VENTURES AND OTHER PRODUCTION ARRANGEMENTS BY HONG KONG AND FOREIGN COMPANIES IN CHINA. HONG KONG'S ROLE AS THE GATEWAY TO CHINA WOULD LIKELY BE UNDERMINED CONSIDERABLY, THUS AFFECTING LONGER-TERM GROWTH POTENTIAL AND BUSINESS CONFIDENCE IN HONG KONG. ALL THESE WOULD DAMAGE HONG KONG AT AN IMPORTANT TIME IN OUR HISTORY.

IN SPITE OF THE CONSENSUS THAT HAS EMERGED FROM THIS DEBATE ON THE IMPORTANCE OF MEN RENEWAL, SOME MEMBERS HAVE QUESTIONED OUR SUPPORT FOR UNCONDITIONAL RENEWAL. IN ORDER TO AVOID REPETITION, I WILL DEAL WITH THIS POINT LATER ON WHEN I ADDRESS THE AMENDMENT THAT HAS BEEN PROPOSED TO THE MOTION.

ALTHOUGH PRESIDENT BUSH HAS APPROVED THE EXTENSION OF UNCONDITIONAL RENEWAL OF MPN TRADING STATUS FOR CHINA FOR THE CURRENT YEAR ENDING 3 JULY 1993, THIS HAS NOT GONF UNCHALLENGED. A JOINT RESOLUTION OF DISAPPROVAL, INTRODUCED IN THE HOUSE OF

INTRODUCED IN THE HOUSE OF REPRESENTATIVES

REVOKE THE PRESIDENT'S DECISION, IS NOW WAITING TO BE PUT TO THE HOUSE FOR A VOTE. IF APPROVED BY BOTH THE HOUSE AND THE SENATE, CHINA WOULD BE DENIED MFN STATUS WITHIN 60 DAYS OF PASSAGE OF THE JOINT RESOLUTION UNLESS THE PRESIDENT EXERCISES HIS VETO AND IS ABLE TO SUSTAINS IT IN ANY VETO-OVERRIDE ATTEMPT.

IN ADDITION TO THE ATTEMPT TO DENY MEN TRADING STATUS FOR CHINA THIS YEAR, TWO BILLS ATTACHING CONDITIONS TO MEN RENEWAL FOR NEXT YEAR HAVE BEEN INTRODUCED RESPECTIVELY IN THE SENATE AND THE HOUSE OF REPRESENTATIVES. IN BRIEF, BOTH BILLS WOULD DENY MEN TREATMENT FOR EXPORTS FROM PREDOMINATELY STATE-OWNED ENTERPRISES SHOULD CHINA FAIL ΤΟ MEET A NUMBER OF CONDITIONS RELATING TO IMPROVEMENTS IN HUMAN RIGHTS, TRADE PRACTICES, WEAPONS NON-PROLIFERATION AND OTHERS.

/THIS APPROACH