TNAG-1493-FCO40-2051-Future-of-Hong-Kong-General-Agreement-on-Tariffs-and-Trade-(-1986 — Page 82

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5. Japan thought timing would be very important, especially since + Chinese economy was undergoing such rapid changes. Negotiations wld have to realise that the economy might change dramatically even in the course of the negotiations themselves. The Japanese also thought that there was much more uncertainty about Chinese desires over participation in the New Round than para 88 of the Secretariat paper suggested. (I proposed that the Australians might give as a clearer picture, in view of the insight into Chinese thinking their "technical assistance" no doubt gave them (see para 3(a) above). The Australian however made no reply beyond an uncomfortable grimace).

6. As briefed by telephone, I also raised doubts over para 81 (enabling clause from the Tokyo Round given too much standing supported); para 91 (too naive acceptance of Chinese assertions that exports were unlikely to grow given the size of the domestic market).

6. My efforts to stimulate discussion of more specific issues (safeguard provisions, compensation, selectivity etc) met with no response. Delegations were clearly not ready or willing to get into such detail- although I suspect the US could have done had they thought it worthwhile or politic in the circumstances.

At one stage they referred to a set of questions they proposed to circulate, highlighting key points for any negotiations with the Chinese. they kept quiet about this until the end.

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FRG

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7. The chair (Loen, Netherlands) gave a characteristically low-key summing up, without any particular substance. He originally proposed that all that was required now was a fairly leisurely Secretariat analysis of different OECD members trade régimes with China for consideration in the autumn. I however pressed for the US questions list to be circulated to delegations in time for it to be seen in capitals before next week's Trade Committee, when discussion should continue on the basis of Loen's oral report of the meeting.

This was agreed. Copy of US list attached.

8. The US told me afterwards that they had been surprised at how much general agreement there had in fact been. They had expected to find little or no support for their own firm view that a rigorous approach, based on recognition that China's economy was centrally planned and not market-oriented, was necessary.