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Our ref
Your ref
Date
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T G Furness Esq
HKD
FCO
London SW1
215 6207
24 November 1992
Dear Terry,
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GATT: CHINA REACCESSION: US MFN POSITION
1
Department of Trade and Industry
Ashdown House 123 Victoria Street London SW1E 6RB
Enquiries 071-215 5000
Telex 8813148 DIHQ G
Fax 071-828 3258
The US position on MFN status for China has become an issue in the context of the prospective reaccession of China to GATT. It therefore seemed useful to examine and comment on the various arguments being advanced.
General Importance of MFN Principle in GATT
2
Most Favoured Nation (MFN) treatment is of course one of the three cornerstones of the GATT system (the other two being national treatment on internal taxes and regulations and the preference for tariffs as
as the only permitted trade protection measure).
3
Therefore China's demand for normal MFN status once GATT membership has been resumed is fully in accordance with normal GATT practice.
Anomalous US Position and Means of applying US position in GATT
4
In 1951 as a reaction to the Cold War the US Congress enacted an Act under Section 350 of the Tariff Act, 1930. This prohibited the US from granting MFN status to states controlled or dominated by communist regimes. This position was further developed in the 1970's by the Jackson-Vanik amendment, under which the grant of MFN treatment to a communist country would only be granted if that country permitted free emigration, with the possibility of being granted a waiver if the President determined that progress towards the goal of free emigration was being achieved. This was included in the Trade Act, 1974.
5
Thus the US is constrained in what concessions it can grant to China. This problem has arisen before for the US with the
Recycled Paper
888-273
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