TNAG-2244-FCO40-3225-Most-favoured-nation-status-for-China-impact-on-Hong-Kong-1991 — Page 55

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INFO ROUTINE OVERSEAS TRADE DIVISION DTI

INFO ROUTINE HONG KONG, B T C HONG KONG

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U S/CHINESE TRADE RELATIONS.

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1 ON 24 OCTOBER AT A LUNCH I ASKED THE US AMBASSADOR, ROY, WHETHER MASSEY, THE ASSISTANT TRADE REPRESENTATIVE, WAS MAKING PROGRESS IN HIS TALKS. SEPARATELY, SECOND SECRETARY ATTENDED THE AMERICAN CHAMBER OF COMMERCE LUNCH WHERE MASSEY BRIEFED THE US BUSINESS COMMUNITY.

INTELLECTUAL PROPERTY RIGHTS (IPRS).

2. MASSEY WAS CURRENTLY HOLDING THE FIFTH ROUND OF TALKS AIMED AT SOLVING THE PROBLEM OF IPRS. THE US ESTIMATED THAT IN 1990 THEY LOST REVENUE OF 418 MILLION DOLLARS BY COPYRIGHT ABUSES ALONE. UNDER THE SUPER 301 SPECIAL INVESTIGATION MODALITIES, THE CHINESE HAVE UNTIL 26 NOVEMBER TO MEET US CONCERNS. MASSEY WAS NOT CONFIDENT THEY WOULD DO SO: THE TALKS SO FAR HAD NOT BEEN CONSTRUCTIVE. MASSEY DESCRIBED THE TALKS AS ''LIKE WALKING IN A MAZE: CONTINUALLY GOING DOWN THE SAME DEAD-ENDS'' THE US WERE PREPARED TO INVITE THE CHINESE TO WASHINGTON FOR A FINAL ROUND. IF SUBSTANTIAL PROGRESS'' WAS MADE THE DEADLINE COULD BE EXTENDED TO 26 FEBRUARY, BUT THIS SEEMED UNLIKELY AT PRESENT.

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IF NO AGREEMENT WAS MADE THEN WITHIN ONE MONTH PUNITIVE TARIFFS WOULD BE APPLIED. THE TYPICAL TARIFF RATE WOULD BE 100 PER CENT. IN IDENTIFYING GOODS FOR TARIFFS THE US HAD A LIST OF 15 CRITERIA. THE MOST IMPORTANT WERE THAT THE TARIFFS SHOULD BE DIRECTED AT STATE ENTERPRISES WHICH COME UNDER THE MINISTRIES RESPONSIBLE FOR NOT ENFORCING IPRS: AND ON GOODS FOR WHICH AN ALTERNATIVE SUPPLY SOURCE WAS READILY AVAILABLE TO U S CONSUMERS. A ''CANDIDATE LIST'' WOULD BE DRAWN UP AND ALL INTERESTED PARTIES COULD COMMENT BEFORE THE FINAL LIST WAS DECIDED.

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