TNAG-2469-FCO40-3593-Most-favoured-nation-status-for-China-Hong-Kong-interests-1992 — Page 181

18 November 1992

CONFIDENTIAL

Christopher Meyer Esq CMG Washington

CHINA/MFN

1.

Many thanks for your letter of 14 October. You helpfully put your finger on an important issue about which we need to start thinking now. You will have seen the subsequent rounds of telegrams resting with Washington telno 2497 and Hong Kong's response in their telno 2720.

I think some useful common ground emerges from these exchanges :

2.

we should continue for the present making the simple point in Washington that withdrawal of MFN status would badly damage Hong Kong. We agree with the two lobbying stages you identify in para 11 of Washington telno 2497. It will clearly be important to get the message across to new arrivals in Congress;

but we should be under no illusion that the new President would be willing to veto a bill along the lines of that enclosed with your letter. Resting our strategy on efforts to persuade him otherwise would not be prudent;

we should therefore as you suggest be looking for ways in which legislation might be amended to draw its teeth as far as Hong Kong is concerned. The tactics of deploying any such ideas in Washington will need careful thought so as not to muddy our basic message or to turn what is at present a cooperative relationship with the Chinese on this issue into a further bone of contention;

3

As regards specific ideas, Hong Kong have already pointed out the problems with trying to disentangle state and non-state enterprises. Another possibility we have looked at here is a provision that Chinese goods passing through Hong Kong should be stamped by the Hong Kong Government and treated

chinamfn.SA.kr

CONFIDENTIAL