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MAB 091/2
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MDHIAN 0943
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FM WASHINGTON
TO IMMEDIATE FCO
TELNO 2097
OF 28225OZ SEPTEMBER 92
TOP COPY
INFO IMMEDIATE PEKING, HONG KONG, UKREP JLG HO DISTT?, ACTOR
162
OUR TELNO 1996: US/CHINA: MFN AND SECTION 301
SUMMARY
1.
NSC OPTIMISTIC THAT PRESIDENT'S VETO OF MFN CONDITIONALITY BILL WILL BE SUSTAINED PROVIDED THE CHINESE ASSURE
KEY SENATORS THAT THEY WILL NOT SUSPEND PURCHASES OF US GRAIN. NEITHER NSC NOR STATE EXCLUDE POSSIBILITY OF US TRADE SANCTIONS AGAINST CHINA UNDER SECTION 301 ALTHOUGH AN AGREEMENT MAY BE
REACHED BY THE 10 OCTOBER DEADLINE.
DETAIL
MFN
C
G
2. PAAL (NSC) TOLD HUM (AUSS) VISITING ON 28 SEPTEMBER THAT THE PRESIDENT WOULD SOON VETO THE MFN CONDITIONALITY BILL (TUR), AND THE VETO OVERRIDE DEBATE WOULD TAKE PLACE BEFORE THE END OF THE CON- GRESSIONAL SESSION CAROUND 4/5 OCTOBER). HE EXPECTED THE PRESIDENT'S
VETO TO BE SUSTAINED. THE ONE AREA OF CONCERN WAS THAT THE CHINESE HAD RECENTLY THREATENED TO RETALIATE FOR THE TAIWAN F16 DEAL BY
CANCELLING ORDERS OF US GRAIN (PATTISON'S TELELETTER OF 21 SEPTEMBER). A NUMBER OF SENATORS WHO WERE CRUCIAL TO MAINTAINING THE PRESIDENT'S SUPPORT ON MFN CAME FROM GRAIN STATES. PAAL UNDERSTOOD, HOWEVER, THAT THE CHINESE AMBASSADOR INTENDED TO INTENDED TO REASSURE SENATOR DOLE THAT THE CHINESE WOULD NOT/NOT INTERFERE WITH GRAIN PURCHASES. SO, THE PRESIDENT'S VETO WOULD BE SUSTAINED. ASSURANCES WERE INSUFFICIENT, THE ADMINISTRATION COULD BE IN TROUBLE.
SECTION 301
BUT IF CHINESE
3. BOTH PAAL (NSC) AND PASCOW (STATE) SAID THE LAST PHASE OF THE SECTION 301 NEGOTIATIONS WAS LIKELY TO BE DIFFICULT. THERE HAD BEEN SOME PROGRESS IN CERTAIN AREAS, BUT NONE IN OTHERS. FURTHER
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