CONFIDENTIAL
1553
MDLIAN 1237
PROVISION WOULD NOT EXEMPT HONG KONG FROM DAMAGE.
5.
SECTORAL EXCLUSIONS MIGHT BE MORE FEASIBLE, ALTHOUGH THE ADOPTION OF THIS COURSE MIGHT INVITE VARIOUS LOBBIES TO STAKE THEIR OWN CLAIMS, GOING BEYOND THE HONG KONG ANGLE. ULTIMATELY WE JUDGE THERE MIGHT BE GREATER PRESSURE FOR SANCTIONS AGAINST EG CHINESE TEXTILES, THAN AGAINST PRIMARY MATERIALS. IN THIS CASE HONG KONG MANUFACTURERS WOULD BE DIRECTLY AFFECTED.
6. THERE MIGHT BE SCOPE FOR EXEMPTION OF HONG KONG JOINT VENTURES, AS SUGGESTED IN TUR. BUT IT WOULD PERHAPS BE MORE PRACTICAL FOR WASHINGTON TO EXPLORE THE POSSIBILITY OF EXCLUDING ALL/ALL JOINTLY OR SOLELY FOREIGN FUNDED ENTERPRISES IN CHINA. IT COULD BE ARGUED THAT THESE ARE A KEY COMPONENT OF CHINA'S EVOLVING MARKET ECONOMY. AN ALTERNATIVE APPROACH, BUT WITH A SIMILAR EFFECT WOULD BE TO TARGET ONLY STATE OWNED ENTERPRISES, AS THE BACKBONE OF THE NON-MARKET ECONOMY. HONG KONG WOULD NOT BE GREATLY AFFECTED BY THIS. ONE WOULD NEED TO INVESTIGATE WHAT PROPORTION OF CHINA'S EXPORTS TO THE US COME FROM STATE OWNED ENTERPRISES. WOULD BE THAT IT IS WELL BELOW 50 PER CENT.
7.
OUR GUESS
PRESENTATIONALLY, WE AGREE THAT WE WOULD HAVE TO ADOPT THE LINE PROPOSED IN PARA 4 OF TUR. CAREFUL DIPLOMACY WOULD BE NEEDED TO
MINIMIZE THE RISKS OF THE CHINESE DISCOVERING WHAT WE WERE UP TO.
MCLAREN
YYYY
DISTRIBUTION
74
ΜΑΙΝ
73
.MFN AND HONG KONG
HKD
RAD
EASD/ODA
ECONOMIC ADVISERS
PS
ERD
ESED
FED
JOINT DIRECTORATE
NAD
NEWS D
PS/MR GOODLAD
PS/PUS
SIR J COLES
MR CROWE
MR MILES
MR HUM
ADDITIONAL
1
DTI//MR MURRAY OT2/3
NNNN
PAGE
2
CONFIDENTIAL
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