TNAG-2469-FCO40-3593-Most-favoured-nation-status-for-China-Hong-Kong-interests-1992 — Page 196

CONFIDENTIAL

нив

0942

CONFIDENTIAL

FM FCO

TO PRIORITY WASHINGTON

TELNO 1365

OF 121746Z NOVEMBER 92

INFO PRIORITY HONG KONG, PEKING

c.c.

M. Impen. ITMOT:

(93)

045061

MDLOAN 1168

HONG KONG TELNO 2562 AND PEKING TELNO 1498 : LOBBYING THE CLINTON ADMINISTRATION

CHINA/MFN :

1. WE WERE GRATEFUL FOR THE COMMENTS IN TURS ON THE POINTS FIRST RAISED IN MEYER'S LETTER OF 14 OCTOBER TO SIR J COLES. WE

BUT GIVEN THAT YOU WILL BE REPLYING SHORTLY TO MEYER'S LETTER.

WILL BE SEEING WINSTON LORD ON 17 NOVEMBER, YOU MIGHT FIND SOME INTERIM THOUGHTS FROM HERE USEFUL.

2. ON A TECHNICAL POINT, WE NOTED FROM YOUR TELNO 2483 THAT CARLA HILLS TOLD LU PING THAT CHINA'S ACCESSION TO THE GATT WOULD NOT AUTOMATICALLY MEAN THAT THE US WOULD GRANT CHINA UNCONDITIONAL MFN STATUS. WE TAKE THIS AS BEARING OUT STATE'S POINT IN YOUR TELNO 2338 THAT THE US WOULD CONSIDER CHINA TO BE APPLYING AS A NEW MEMBER OF THE GATT AND WOULD WANT TO ENTER A RESERVATION UNDER ARTICLE 35 TO ENABLE THEM TO WITHHOLD UNCONDITIONAL MFN FROM CHINA. WE ARE SEEKING DTI'S COMMENTS ON CHINA'S CLAIM THAT THE US CANNOT INVOKE ARTICLE 35.

3. ON THE SUBSTANCE OF THE MFN ISSUE, WE AGREE WITH HONG KONG THAT, FOR THE PRESENT, YOU SHOULD CONTINUE TO EMPHASISE IN YOUR LOBBYING CAS YOU HAVE ALREADY BEEN DOING) THE ESSENTIAL POINT THAT WITHDRAWAL OF MFN FROM CHINA WOULD SERIOUSLY DAMAGE HONG KONG'S ECONOMY AND THAT THERE ARE NO SIMPLE WAYS OF MITIGATING THAT. (YOU MIGHT DRAW ON THE USEFUL POINT IN HONG KONG TELNO 2666 ABOUT STEEL AND BICYCLES TO ILLUSTRATE THE IMPOSSIBILITY OF A SIMPLE DISTINCTION BETWEEN STATE PRODUCED AND PRIVATELY PRODUCED GOODS.)

BUT WE ALSO ACCEPT THAT WE ARE LIKELY TO BE FACED WITH A BILL EARLY IN THE LIFE OF THE CLINTON ADMINISTRATION WHICH HAS VERY WIDESPREAD CONGRESSIONAL SUPPORT AND WHICH WE CANNOT EXPECT THE NEW PRESIDENT TO VETO. WE THEREFORE AGREE THAT THE EXPERTS IN HONG KONG AND HERE SHOULD LOOK AT THE DRAFT LEGISLATION AS SOON AS IT APPEARS AND CONSIDER WAYS OF LIMITING THE DAMAGE TO HONG KONG, EITHER BY AMENDMENTS TO THE COVERAGE OR DELAYS TO ENTRY INTO

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