TNAG-2468-FCO40-3592-Most-favoured-nation-status-for-China-Hong-Kong-interests-1992 — Page 67

CONFIDENTIAL

LOSS OF MFN STATUS IN THE US FOR CHINA AND SECTION 301 ACTION

MFN

1.

Washington TelNo 1996 and Pattison's teleletter give the

latest state of play- the Senate has passed a Bill which would withdraw MFN status in 1993 for products manufactured by State-owned companies unless China makes progress in a number of areas. A Presidential veto would be likely to be

sustained.

2.

Hong Kong consider that it is not possible to quantify what effect this measure would have because it is impossible to separate goods from State-owned companies from others. In general terms loss of MFN would have the following effects

on Hong Kong:

-Loss of up to 60,000 Hong Kong jobs

-a halving of GDP growth

-a loss of income of HK$ 12 to 16 Bln (US$ 1.5 to 2.0bln)

SECTION 301

3. The attached note prepared by Hong Kong gives an

assessment of the impact on Hong Kong if the US were to impose Section 301 Action on China.

hum.briefing.MFN.mvs

CONFIDENTIAL

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