TNAG-1401-FCO40-1873-Future-of-Hong-Kong-continued-participation-in-the-General-A-1985 — Page 104

A J Lane Esq

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(47)

Y. Zhang r. Pell Foreign and Ms Last M1⁄2 30%+

Foreign and Commonwealth Office

International Trade Policy Division Department of Trade & Industry

1 Victoria Street

London

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London SW1A 2AH

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I think pena 7 of the letter condhane been beefed up a bit. Homever penas 6-9 and The conclusions.

revised crays paper clearly spellowsour 29 April 1985 thoughts on the

tik dimension.

Dean Tony,

CHINA AND THE GATT

HKK040/24

1. Robin Renwick has asked me to reply to your letter to him of 27 March. I have taken some time to do so, as the detail of the subject is new to me and I wanted to study previous papers and consult others here.

2. Discussion now dates back a couple of years, and although there is no evidence that the Chinese will act soon, I suspect that we should now get ourselves an agreed view without further delay. Your paper is a timely contribution and helps to fill the need, identified in the conclusions of the paper enclosed with Brian Crowe's letter of 26 November last, for more work on the trade implications of Chinese accession to the GATT, as well as on the action that might be taken to limit the undesirable ones.

3.

Reading these papers for the first time I am struck most of all by the general acceptance that a formal Chinese application to join the GATT is probably inevitable. Your own paper acknowledges that China could not, even in the face of manifest Western opposition, ultimately be prevented from applying.

4.

Your paper also makes very clear that you consider that, in economic and GATT terms, Chinese membership of the Agreement would have more disadvantages than advantages. I do not dispute the judgement, but I find it hard to evaluate the potential difficulties from your paper where they seem to be expressed rather in terms of speculation and assertion; if supporting factual or analytical argument has been omitted in the interests of brevity, it would be helpful if we could see it. The potential negative effects are stressed without explanation as to why they are more probable than the positive effects. "China is a huge economy, whose exports are growing rapidly in sensitive sectors" might be balanced, or at least qualified, by the argument that China is a huge market, whose imports of new technology and equipment in infrastructural fields such as energy, transport, telecommunications, electronics, defence and agriculture, as well as in the modernisation of light industry, are also likely to increase though inevitably constrained to an extent by the

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