TNAG-2280-FCO40-3280-Anglo-Hong-Kong-Trust-1991 — Page 13

CONFIDENTIAL

CONFIDENTIAL

FM HONG KONG

TO PRIORITY FCO

TELNO

1062

OF 101037Z APRIL 91

AND TO PRIORITY WASHINGTON, PEKING

Annex B

070406 MDLIAN 2177

WASHINGTON PLEASE PASS TO HKETO

MY TELNO 915: CHINA/U.S. RELATIONS: MFN STATUS

SUMMARY

1. WE ASSES THE SITUATION THIS YEAR TO BE MORE DIFFICULT THAN LAST YEAR. OUR STRATEGY IS TO CONTINUE TO USE THE MESSAGE THAT WITHDRAWAL OF CHINA'S MFN STATUS WOULD DAMAGE HONG KONG AND TO EXTEND OUR LOBBYING TARGETS TO SECURE BROADER BASED SUPPORT FROM WITHIN THE U.S.

DETAIL

ASSESSMENT

2. WE FOUGHT A HARD BATTLE IN THE U.S. LAST YEAR OVER THE RENEWAL OF CHINA'S MFN STATUS. WE FORESEE AN EVEN MORE DIFFICULT BATTLE THIS YEAR BECAUSE OF THE CHANGING POLITICAL CLIMATE WHICH SOURS CHINA/U.S. RELATIONS, FOR EXAMPLE, THE GROWING U.S. TRADE DEFICIT WITH CHINA, ALLEGED ORIGIN FRAUD INVOLVING SHIPMENTS OF CHINESE TEXTILES TO THE U.S., AND U.S. FRUSTRATION OVER INADEQUATE INTELLECTUAL PROPERTY RIGHTS PROTECTION IN CHINA. WE ALSO EXPECT THE PROPONENTS OF CONDITIONAL RENEWAL OF CHINA'S MFN STATUS TO BE MORE PREPARED THIS YEAR AND THE CHANCE OF OVERRIDING A PRESIDENTIAL VETO TO THEREFORE BE HIGHER.

3. LAST YEAR, OUR LOBBYING THEME EMPHASISED THE DAMAGE THAT WITHDRAWAL OF CHINA'S MFN STATUS WOULD DO TO HONG KONG. THIS MESSAGE WAS WELL RECEIVED IN THE U.S. BECAUSE THERE WAS CONSIDERABLE SYMPATHY FOR HONG KONG FOLLOWING THE JUNE 1989 EVENTS IN CHINA. HOWEVER, THE IMPACT OF THIS MESSAGE IS NOW LESS. WE ENVISAGE THAT THIS YEAR'S DEBATE WITHIN THE U.S. WOULD FOCUS FAR MORE ON SINO-U.S. RELATIONS AND DIRECT U.S. INTERESTS, WITH LESS ATTENTION TO HONG KONG.

STRATEGY

4. AGAINST THIS BACKGROUND, OUR STRATEGY THIS YEAR WILL CONSIST OF THE FOLLOWING ELEMENTS:

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