TNAG-2468-FCO40-3592-Most-favoured-nation-status-for-China-Hong-Kong-interests-1992 — Page 128

RESTRICTED

RESTRICTED

FM WASHINGTON

TO TELELETTER FCO

TELELETTER NFR

OF 042243Z AUGUST 92

AND TO TELELETTER HONG KONG, PEKING

FROM: S D PATTISON, WASHINGTON

46

100437

MDTTAN 4152

Copier to PR

NC

AM

5/8

Миз

Madis 091/2

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Mc CANE

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TO:

M STONE ESQ., HONG KONG DEPT, FCO CC: S BRADLEY ESQ., HONG KONG

CHANCERY PEKING

865

US/CHINA: MFN

1. I HAVE RECENTLY RETURNED FROM LEAVE AND THOUGHT YOU MIGHT WELCOME AN UPDATE ON WHERE THE MFN DEBATE NOW STANDS.

2. AS YOU KNOW, CONGRESS HAS CHOSEN TO CHALLENGE THE PRESIDENT'S POLICY ON MFN IN TWO WAYS: FIRST, BY INTRODUCING A JOINT RESOLUTION OF DISAPPROVAL WHICH WOULD OVERTURN THE PRESIDENT'S DECISION TO GRANT CHINA MFN FOR ANOTHER YEAR (UNTIL JUNE 1993). SECOND, BOTH HOUSE AND SENATE ARE CONSIDERING BILLS WHICH WOULD ALLOW CHINA TO ENJOY MFN UNTIL JUNE 1993, BUT THEREAFTER WOULD REVOKE MFN FOR ALL ARTICLES PRODUCED BY CHINESE STATE-OWNED ENTERPRISES, UNLESS THE CHINESE GOVERNMENT ADDRESS HUMAN RIGHTS AND MISSILE/TECHNOLOGY EXPORT CONCERNS, AND CEASE UNFAIR TRADE PRACTICES AGAINST THE US.

3. THE JOINT RESOLUTION OF DISAPPROVAL IS IN TROUBLE. ALTHOUGH THE HOUSE APPROVED IT ON 21 JULY, THE VOTE FELL SHORT OF THE TWO THIRDS MAJORITY NEEDED TO OVERRIDE A PRESIDENTIAL VETO (OUR TELNO 1632). THIS SEEMS TO REFLECT WEARINESS OF THE MFN DEBATE, A WISH BY REPUBLICANS TO STAND BY THEIR PRESIDENT IN AN ELECTION YEAR, AND A FEELING THAT CONGRESSMEN CAN HAVE IT BOTH WAYS BY VOTING ONE WAY ON THE JOINT RESOLUTION, AND ANOTHER ON THE CONDITIONALITY BILL. THE JOINT RESOLUTION HAS YET TO BE TAKEN UP BY THE SENATE. BUT THERE IS LITTLE ENTHUSIASM FOR IT, AND IT SEEMS THAT MEN FOR 1992/93 IS VIRTUALLY ASSURED.

4 =

THE FOCUS IS THEREFORE ON THE 1993 CONDITIONALITY BILL. THIS PASSED IN THE HOUSE ON 21 JULY BY 339-62 (I.E. WELL ABOVE THE TWO THIRDS MAJORITY REQUIRED TO OVERRIDE A PRESIDENTIAL VETO), AND ON 4

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