TNAG-2468-FCO40-3592-Most-favoured-nation-status-for-China-Hong-Kong-interests-1992 — Page 206

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FM WASHINGTON

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TELNO 1071

OF 14223OZ MAY 92

INFO PRIORITY PEKING, HONG KONG, ACTOR

MIPT: US/CHINA: MFN

SUMMARY

1. MIXED VIEWS ON PROSPECTS. SOLOMON (STATE) GLOOMY. BUT NSC CAND CONGRESSMAN SOLARZ) BOTH THINK THE ADMINISTRATION WILL (JUST) SECURE MFN FOR ANOTHER YEAR. BOTH STATE AND NSC THINK IT COULD BE USEFUL FOR THE GOVERNOR-DESIGNATE HONG KONG TO VISIT WASHINGTON IN, PERHAPS, SEPTEMBER TO PUT HONG KONG'S CASE ON THE HILL.

DETAIL

2. SOLOMON (STATE) TOLD COLES THAT MFN RENEWAL COULD BE VERY DIFFICULT THIS TIME ROUND. THE ADMINISTRATION HAD ONLY SUCCEEDED BY FIVE VOTES LAST TIME. THIS YEAR IT COULD BE AN ELECTION ISSUE, AND CLINTON HAD STATED HIS OPPOSITION TO RENEWAL. THE CHINESE WERE ALWAYS LIABLE TO COMPLICATE THE ISSUE (E.G. THEIR RECENT REFUSAL TO TWO SENATORS WHO WISHED TO VISIT). THE BEST ARGUMENTS AVAILABLE TO THE ADMINISTRATION WERE STILL THOSE RELATING TO THE DAMAGE WHICH WOULD BE DONE TO HONG KONG AND TAIWAN BY NON-RENEWAL.

3. PAAL (NSC) WAS MORE OPTIMISTIC. HE THOUGHT THE ADMINISTRATION SHOULD BE ABLE TO GET THE BARE MINIMUM REQUIRED TO SUSTAIN THE PRESIDENT'S VETO OF ANY LEGISLATION TO WITHDRAW MFN, OR SET CONDITIONS FOR RENEWAL. MANY IN CONGRESS WERE FED UP WITH THE ISSUE. IN AN ELECTION YEAR, SENATE REPUBLICANS OUGHT TO STICK BY THEIR PRESIDENT. THE FACT THAT THE US/CHINA TRADE TALKS ON MARKET ACCESS HAD BEEN POSTPONED UNTIL 16 OCTOBER WOULD HELP. BUT CHINA'S PROLIFERATION ACTIVITIES WERE A MAJOR CAUSE FOR CONCERN. ONE LEAK ABOUT CHINESE VIOLATION OF NPT OR MTCR COMMITMENTS WOULD RUIN THE ADMINISTRATION'S CHANCES. THE HONG KONG ARGUMENTS WERE WELL UNDERSTOOD, AND WERE AN IMPORTANT FACTOR FOR A FEW CONGRESSMEN.

4.

CONGRESSMAN SOLARZ THOUGHT THE MFN DEBATE WOULD GO THE SAME WAY AS IN THE PAST: THERE WOULD BE ATTEMPTS TO CHALLENGE IT, BUT THE PRESIDENT'S VETO WOULD BE SUSTAINED. CONGRESSMEN WERE LOSING INTEREST AND IT WAS EVEN POSSIBLE THAT THE DEMOCRATS MIGHT NOT PRESS THE ISSUE THIS YEAR. ON THE OTHER HAND, THE DEMOCRATS WOULD

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