TNAG-2243-FCO40-3224-Most-favoured-nation-status-for-China-impact-on-Hong-Kong-1991 — Page 52

132

CONFIDENTIAL

116573

MDHIAN 9769

CONFIDENTIAL

FM HONG KONG

TO IMMEDIATE FCO

TELNO 1803

OF 050957Z JUNE 91

INFO IMMEDIATE WASHINGTON, PEKING, UKREP JLG HONG KONG

MWB cada нив

RY

TOP COPY Q DIST?

1091

WASHINGTON PLEASE PASS TO HKETO

129

YRTELNO 1040 AND WASHINGTON TELNO 1495: CHINA/U.S. RELATIONS: MFN STATUS

•

1. WE WOULD NOT DESCRIBE AS 'CONDITIONS' THE MEASURES SET OUT IN PRESIDENT BUSH'S YALE SPEECH ON 28 MAY (PARA. 1 OF TUR). WE DRAW A DISTINCTION BETWEEN THE U.S. GOVERNMENT LAYING DOWN CONDITIONS WHICH CHINA MUST MEET (OR THE PRESIDENT MUST CERTIFY THAT CHINA HAS MET) BEFORE MFN IS RENEWED EACH YEAR AND THE SORT OF PARALLEL BUT SEPARATE ACTIONS WHICH THE U.S. ADMINISTRATION TAKES FROM TIME TO TIME TO ADDRESS VARIOUS U.S. CONCERNS, E.G. THE PRESIDENT MEETING THE DALAI LAMA, PUTTING CHINA ON THE SPECIAL 301 LIST, LIMITATING EXPORTS OF SATELLITE TECHNOLOGY ETC. IN HIS YALE SPEECH, THE PRESIDENT DESCRIBED VARIOUS ELEMENTS OF THE U.S. POLICY TOWARDS CHINA BUT UNDERLINED THE SEPARATENESS OF THE MFN ISSUE BY SAYING FOR EXAMPLE QUOTE IT IS THE ORDINARY BASIS OF

TRADE WORLD-WIDE UNQUOTE.

2. NOW THAT THE PRESIDENT HAS FORMALLY DECIDED TO EXTEND CHINA'S MFN STATUS WITHOUT CONDITIONS, WE AGREE WITH WASHINGTON'S VIEW THAT IT WOULD BE TACTICALLY UNWISE TO MAKE ANY CONCESSIONS TOWARDS THE POSSIBILITY OF CONDITIONALITY AT THIS STAGE. WE ALSO AGREE WITH WASHINGTON'S ASSESSMENT THAT, ALTHOUGH THERE IS GROWING SUPPORT ON THE HILL FOR SOME FORM OF CONDITIONALITY, THERE IS NO SIGN, YET, OF THE U.S. ADMINISTRATION'S WILLINGNESS TO ACCEPT CONDITIONS. THE IMPRESSION GAINED BY OUR SECRETARY FOR TRADE AND INDUSTRY DURING HIS RECENT DISCUSSIONS IN WASHINGTON

WITH U.S. ADMINISTRATION OFFICIALS IS THAT THE PRESIDENT IS STANDING FIRM ON UNCONDITIONAL MFN, EXPECTS A VERY DIFFICULT FIGHT WITH CONGRESS, BUT WILL NOT EASILY GIVE UP HIS POSITION. WE SHOULD THEREFORE GIVE THE PRESIDENT'S POSITION OUR FULL

SUPPORT AND NOT DO ANYTHING WHICH MAY UNDERMINE IT.

3. THE REAL PROBLEMS WITH MFN-LINKED CONDITIONS (PARA 3 OF TUR ARE:

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