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FM WASHINGTON
TO IMMEDIATE FCO
TELNO 1249
OF 03230OZ JUNE 92
INFO IMMEDIATE PEKING, HONG KONG, ACTOR
OUR TELNO 1028: US/CHINA RELATIONS: MFN
SUMMARY
1.
If Not
abrealy.
Bolb
PRESIDENT BUSH ANNOUNCES ANNUAL RENEWAL OF CHINA'S MFN STATUS. AS IN THE PAST, CONGRESS WILL SEEK TO OVERTURN IT. IN ADDITION, DEMOCRATS WILL INTRODUCE LEGISLATION TO WITHHOLD MEN IN FUTURE FROM CHINESE STATE OWNED COMPANIES, UNLESS CERTAIN CONDITIONS ARE MET. BUT THE ADMINISTRATION SHOULD HAVE JUST ENOUGH VOTES TO DEFEAT ANY ATTEMPTS TO TAMPER WITH MFN, UNLESS THE CHINESE MAKE A BAD BLUNDER.
DETAIL
2. AS FORECAST IN TUR, PRESIDENT BUSH ANNOUNCED ON 2 JUNE THAT HE WAS EXTENDING MFN FOR CHINA FOR ANOTHER YEAR. HIS STATEMENT SAID THAT MAINTAINING A CONSTRUCTIVE POLICY OF ENGAGEMENT WITH CHINA HAD SERVED US INTERESTS. THERE HAD BEEN SOME POSITIVE, IF LIMITED, DEVELOPMENTS IN THE US/CHINA HUMAN RIGHTS DIALOGUE, BUT THE US REMAINED DEEPLY DISAPPOINTED AT CHINA'S LIMITED ACTIONS WITH REGARD TO INTERNATIONALLY RECOGNISED HUMAN RIGHTS. THE PRESIDENT HAD MADE CLEAR TO THE CHINESE THAT PERFORMANCE IN THIS RESPECT WAS INSUFFICIENT. THE ADMINISTRATION HAD MADE PROGRESS WITH THE CHINESE ON TRADE, PRISON LABOUR, AND NON-PROLIFERATION. WITHDRAWAL OF MFN WOULD INFLICT SEVERE COSTS ON AMERICAN BUSINESS AND CONSUMERS. THE ADMINISTRATION INTENDED TO REMAIN ENGAGED WITH THE CHINESE IN ORDER TO PROTECT AMERICAN INTERESTS WHILE PROMOTING POSITIVE CHANGE IN CHINA.
3.
THE DECISION WAS IMMEDIATELY CRITICISED BY CONGRESSIONAL DEMOCRATS. THEY WILL INTRODUCE A JOINT RESOLUTION OF DISAPPROVAL TO OVERTURN IT. THE CONGRESS MUST VOTE ON THIS (SEE TUR) BEFORE 31 AUGUST.
4. IN ADDITION, AT A PRESS CONFERENCE ON 3 JUNE, KEY DEMOCRATIC LEADERS (INCLUDING SENATORS MITCHELL AND BIDEN, AND REPRESENTATIVES PEASE AND PELOSI) ANNOUNCED THAT THEY WERE INTRODUCING A BILL TO
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