TNAG-2356-FCO40-3427-Ministerial-visits-from-the-UK-to-Hong-Kong-1991 — Page 28

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43,000 places of the total 50,000 principal beneficiaries)

was 50% oversubscribed. The Hong Kong Government expects to take two years to issue all the passports in the first

tranche. Over 5000 successful applicants have already been registered as British citizens.

US/China Trade Issues

8.

President Bush announced his decision unconditionally to

renew China's Most Favoured Nation (MFN) status on 28 May

1991. In contacts with the Administration and Congress

(including the Prime Minister's personal involvement) we

have been explaining the severe impact which non-renewal

would have on Hong Kong. Despite efforts in Congress to

make renewal of MFN conditional on an improved Chinese human rights performance it now seems that China's MFN

status is probably assured at least until 1992.

9.

Some other US/China trade issues are also potentially

damaging to Hong Kong. The most pressing of these is

Intellectual Property: unless the Chinese reach 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, prohibitive import tariffs could be

imposed on 26 December. This action could have adverse effects on Hong Kong's economy, given the close economic links between Hong Kong and Southern China and the volume of

Chinese products re-exported through Hong Kong to the US.

It is likely however that the deadline of 26 November will be extended if the Chinese can show they are making

substantial progress in drafting and implementing measures

for adequate and effective protection of intellectual

property rights. There are reasonably encouraging signs

that the Chinese are moving towards satisfying some of the

US concerns.

POPALB/4

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