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B
attached).
5. Non retention would also damage US interests in Hong Kong, which has total investments of about US$6bn, covering some 900 US firms, including 147 factories.
6.
China's MFN status must be renewed each year by a
Presidential waiver before 3 June. Last year both the President and Congress still had Tiananmen fresh in their minds. The then Prime Minister wrote to the President
outlining the severe adverse impact on Hong Kong and on US interests in Hong Kong. Both our Embassy and the Hong Kong Government through its Economic and Trade offices also lobbied hard, as did the American Chamber of Commerce. the end the President agreed to renew China's MFN status, the Hong Kong factor had "weighed on his mind" and Congress could not muster sufficient votes to challenge his
decision.
In
C 7. The Prime Minister raised the MFN issue with President
Bush in Bermuda on 13 March outlining the damage any repeal
would do to Hong Kong. The President said this was a good argument to use with Congress and suggested that it would be helpful if Hong Kong were to send a Chamber of Commerce delegation to talk to Congress. It is likely that we shall need to fight Hong Kong's corner on MFN status again this year. Both Hong Kong and our Embassy in Washington are
considering the next steps.
8. The draft reply to Mr Tung confirms our full understanding of Hong Kong's position and assures Mr Tung of our help, should it be needed.
ARPanc
A R Paul
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