TNAG-2468-FCO40-3592-Most-favoured-nation-status-for-China-Hong-Kong-interests-1992 — Page 8

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By Fax

1 September 1992

Doc with wr)

Ms J Clarke

OT2/1b, DTI

66-74 Victoria Street London SW1

Men Murray O6T2/2.

British Embassy Washington

Commercial Department

3100 Massachusetts Ave N.W. Washington D.C. 20008-3600

Telephone: (202)

Telex: RCA 211427 or 216760-WUI 64224

Facsimile: (202) 898-4224

Dear Jan

Джа

Mr Love

CC

Mr. Murray

Cr

HKD

FLC

Mi

Fumes

FRI

-

rco

US/CHINA: SECTION 301 RETALIATION

Mr C Greenwood

1. On 21 August the US published a preliminary list of products from China which could face tariff increases if agreement cannot be reached by 10 October on market access to China. The list (enclosed with bag copy of the letter) represents about $3.9 billion in Chinese imports to the US. Michael Moskow, who led the press conference announcing the publication of the list, would not be drawn on the value of the final list, apart from telling journalists not to assume it would be cut in half (as for oilseeds). I have nevertheless seen speculation that the eventual list will be about $2 billion-worth.

2. The largest individual category of goods on the list is footwear. Other large categories are silk apparel, leather goods, minerals, industrial hardware and electronic goods. Textiles and apparel other than silk have been left off the list because, according to USTR, they are handled under the US/China bilateral agreement, which restricts Chinese textile exports to the US. Despite this explanation, the American Textile Manufacturers' Association has responded angrily saying that the

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exclusion of textiles other than silk shows that the Administration is not serious about getting tough with China. Another major Chinese export which will not be hard hit by the list is toys. Only ten per cent of Chinese toy and game exports to the US are on the list, because the remainder are not easily obtainable from other sources and consumers would suffer (just before the election and Christmas shopping time).

3.

The preliminary list was published in the Federal Register on 26 August. There will now be a 30 day public comment period, culminating in three days of public hearings (September 23-25). After this USTR will draw up the final list, which will be announced on 10 October if USTR decides to retaliate. In the meantime, Moskow said that the negotiations with the Chinese will continue, with working and high-level consultations in Beijing in mid-September.