UNCLASSIFIED
120650
MDLIAN
INTERESTS WOULD NOT BE DAMAGED. USTR AGREED THAT RETALIATION WOULD BE FOCUSSED SO FAR AS POSSIBLE ON THOSE IN CHINA WHO WERE MAKING DIFFICULTIES OVER INTELLECTUAL PROPERTY, BUT SOME COLLATERAL DAMAGE TO HONG KONG WAS INEVITABLE. USTR ADDED THAT HMG AND THE HKG WERE VERY WELCOME TO PUT FORWARD VIEWS, WHICH WOULD BE CAREFULLY CONSIDERED, WHEN THE LISTS WERE AVAILABLE.
5. ON THE BROADER MARKET ACCESS PROBLEMS, WHICH HAVE MUSHROOMED SINCE 1989, THE US HAVE ASKED CHINA TO AGREE BY 30 SEPTEMBER TO AN ORGANISED SERIES OF DISCUSSIONS WITH THE OBJECTIVE OF AGREEING BY CERTAIN DATES ON CHANGES IN CHINESE PRACTICES. USTR THINK THE CHINESE WILL AGREE TO SUCH DISCUSSIONS. IF NOT, USTR WILL INITIATE A SECTION 301 CASE. SUCH A CASE COULD WELL LEAD TO RETALIATION, BUT THAT WOULD FOLLOW AN INVESTIGATION LASTING UP TO A YEAR, SO THE PROSPECT OF US ACTION IS A MORE DISTANT ONE THAN OVER IP.
COMMENT
6. OUR CONCERN, WHICH WE HAVE ALREADY PUT TO USTR WITH THE RESULT DESCRIBED ABOVE, IS THAT PROHIBITIVE TARIFF INCREASES ON PARTICULAR GOODS IMPORTED FROM CHINA COULD BE JUST AS DAMAGING TO HONG KONG AS SMALLER INCREASES ON A WIDER RANGE OF GOODS RESULTING FROM WITHDRAWAL OF MEN. SELECTIONS OF THE ITEMS TO BE TARGETED IS THUS OF GREAT IMPORTANCE.
RENWICK
YYYY
DISTRIBUTION
68
ΜΑΙΝ
68
LIMITED
NEWS DEPT
HKD
FED
NAD
PS
PS/LORD CAITHNESS
PS/PUS
ERD
SIR J COLES
JOINT DIRECTORATE
MR BAYNE
EAPD/ODA
MR MILES
ESED
MR BURNS
RAD
~~~~
PAGE 2 UNCLASSIFIED
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