TNAG-2468-FCO40-3592-Most-favoured-nation-status-for-China-Hong-Kong-interests-1992 — Page 164

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MDHIAN 6492

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SET CONDITIONS FOR FUTURE RENEWAL OF MFN. THE BILL WOULD WITHHOLD MFN FOR ALL EXPORTS FROM STATE OWNED CHINESE ENTERPRISES IF CHINA DID NOT MEET CERTAIN HUMAN RIGHTS/PROLIFERATION CONDITIONS. BUT CHINESE PRIVATE ENTERPRISES, AND CHINESE JOINT VENTURES WITH FOREIGN FIRMS, WOULD NOT BE AFFECTED. CONGRESSMAN PEASE SAID THAT THIS REFINEMENT WAS INTENDED TO ADDRESS THE CRITICISM THAT THE BLANKET WITHDRAWAL OF MFN WOULD HURT THOSE PEOPLE IN CHINA WHO WERE MOST INTERESTED IN PROMOTING POLITICAL AND ECONOMIC REFORM.

5.

OUR ADMINISTRATION AND CONGRESSIONAL CONTACTS ARE SCEPTICAL THAT THE DEMOCRATS NEW APPROACH IS WORKABLE. MANY THINK IT WOULD BE IMPOSSIBLE TO TARGET STATE OWNED COMPANIES EFFECTIVELY. SOLARZ'S OFFICE TOLD US THEY THOUGHT THE ONLY RESULT WOULD BE THAT CHINESE STATE OWNED COMPANIES WOULD SET UP FRONT OPERATIONS PROBABLY IN HONG KONG TO FORM JOINT VENTURES WITH FOREIGN COMPANIES. STAFFERS ON THE SENATE FOREIGN RELATIONS COMMITTEE PRIVATELY EXPRESSED SIMILAR SCEPTICISM. THEY DOUBT WHETHER THE NEW CONDITIONALITY BILL WILL FARE ANY BETTER THAN SIMILAR ATTEMPTS IN

THE PAST.

6.

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THE PROSPECTS, THEREFORE, ARE FOR A RE-RUN OF PREVIOUS YEARS' DEBATES (BOTH ON THE JOINT RESOLUTION OF DISAPPROVAL, AND ON THE LEGISLATION SETTING CONDITIONS FOR FUTURE RENEWALS). IT IS POSSIBLE THAT THE ADMINISTRATION'S SUPPORT IN THE SENATE MIGHT FALL: SENATOR BAUCUS (DEMOCRAT) WHO WAS INFLUENTIAL LAST YEAR IN KEEPING A SMALL BODY OF DEMOCRATS WITH THE ADMINISTRATION HAS SAID THAT HE IS UNSURE IF HE WILL CONTINUE TO BACK THE PRESIDENT, CLAIMING DIFFERENCES WITH THE WHITE HOUSE ON THE CANADA/MEXICO TRADE AGREEMENT, AND CRITICISING THE PRESIDENT FOR PLAYING POLITICS WITH TRADE. BUT, EVEN SO, OUR CONGRESSIONAL CONTACTS BELIEVE THAT, IN AN ELECTION YEAR, THE PRESIDENT OUGHT TO BE ABLE TO FIND 34 VOTES IN THE SENATE TO SUSTAIN HIS VETO OF CONGRESSIONAL ATTEMPTS TO TAMPER WITH MFN. THIS, HOWEVER, MIGHT CHANGE IF THE CHINESE WERE TO BLUNDER BADLY.

RENWICK

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