Gos
120620
MDLIAN 9611
aoke
UNCLASSIFIED
FM WASHINGTON
TO ROUTINE FCO
TELNO 2327
OF 132131Z SEPTEMBER 91
UNCLASSIFIED
Rar pls
(MEN Alle.)
COP
Q DIST?
INFO ROUTINE PEKING, HONG KONG, BTC HONG KONG, DTI,CTOR
US-CHINA: TRADE ISSUES
SUMMARY
1. TRADE DISPUTES REMAIN DIFFICULT AND COULD LEAD TO US ACTION AGAINST CHINESE IMPORTS AT THE END OF 1991. POTENTIAL FOR DAMAGE TO HONG KONG'S INTERESTS.
DETAIL
2. STATE DEPARTMENT AND USTR CONTACTS HAVE GIVEN US THE FOLLOWING PICTURE OF US-CHINA TRADE ISSUES, LEAVING ASIDE MFN (MY TELNO 2282), FOLLOWING TALKS BETWEEN OFFICIALS IN WASHINGTON IN LATE AUGUST. AS A GENERAL COMMENT ON WHAT FOLLOWS, USTR SAID THAT CONCERNS ABOUT HUMAN RIGHTS AND NON-PROLIFERATION HAD TENDED (EG IN THE MFN DEBATE) TO OBSCURE THE REAL TRADE POLICY PROBLEMS. CHINA ACCOUNTED FOR THE SECOND LARGEST BILATERAL DEFICIT, AFTER JAPAN, AND WAS THE ONLY MAJOR MARKET WHERE US EXPORTS HAD DECLINED (BY 1 BILLION, OUT OF 5.8 BILLION) IN 1990.
3. THE MOST PRESSING PRESENT ISSUE WAS INTELLECTUAL PROPERTY, IN VIEW OF THE SPECIAL 301 CASE IN PROGRESS. UNLESS THE CHINESE REACHED AGREEMENT WITH THE US BY 26 NOVEMBER ON SPECIFIC STEPS AND A TIMETABLE TO PUT RIGHT DEFECTS IN THEIR PRESENT LAWS, PARTICULARLY ON SOFTWARE COPYRIGHT, USTR WOULD GIVE ONE MONTH'S NOTICE, LEADING TO THE IMPOSITION OF PROHIBITIVE IMPORT TARIFFS ON 26 DECEMBER. THE ADMINISTRATION WAS ALREADY PREPARING ESTIMATES OF THE DAMAGE TO US BUSINESSES FROM CHINESE IP FAILINGS, AND LISTS OF PROPOSED PRODUCTS TO BE TARGETTED. IT WAS TOO EARLY TO SAY HOW THESE PROPOSALS WOULD COME OUT, BUT THEY WOULD BE AVAILABLE FOR PUBLIC COMMENT FROM MID-OCTOBER.
WE URGED THAT RETALIATION, IF ANY CAND IT REMAINS TO BE SEEN WHETHER THE PRESIDENT, WHO IS HIS OWN CHINA DESK OFFICER, WILL AGREE) BE LIMITED TO PRODUCTS IN WHICH HONG KONG'S TRADING
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