TNAG-2750-FCO40-3965-Most-favoured-nation-status-for-China-Hong-Kong-interests-1993 — Page 101

BRIT EMB WASHINTON I

TUE 04 MAY 93 20:13

PG.07

CONFIDENTIAL

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the process. A further aim was gradually to move MFN away from being the central focal point of the Administration's policy on China into a more subsidiary position within a wider, coherent policy framework.

4.

The Administration had been trying since March to engage in quiet behind-the-scenes dialogue with the Chinese side on human rights, trade and proliferation issues. Secretary of State Christopher had

the outgoing Chinese Ambassador and

and his successor to explore where progress might be made. They had impressed on the Chinese the need for urgent movement. weeks or 30, the Administration would have to sit Congress to thrash out a policy position in MFN renewal.

Within two down with

5. It was fair to say that some modest progress had been made. China had released a few political prisoners. They had sent purchasing missions recently to the U.S. to

buy aircraft, automobiles and other goods amounting to some $2 billion in an attempt to make some dent in the trade surplus. The Chinese had been helpful over the North Korea nuclear issue (though Mr. Lord stressed this was not a factor tied up in the MFN debate). The U.S. had indicated to China that they wished to have a productive and cooperative relationship but this would depend on further progress being made. For the immediate future, the issue for the Administration would be the nature of the conditions to be applied to MFN, 1.e. whether these would be determined by the Executive or by Congress and what type of conditions they would be. There was no question of MFN being withdrawn on June 3rd.

6.

Mr. Wharton added that the Administration had tried to couch its approach to the Chinese on these issues with sensitivity, in a way which did not appear to be applying too much overt pressure on them. It recognised the problem for the Chinese of appearing to be acting under duress in meeting U.S. requirements. But the pressure was of course there. It had to be remembered that for the U.S. public, the imagery of Tiananmen Square remained powerful and exemplified why the U.S. Government was expected to take a robust line with China over human rights issues.

7. Mr. Lord said that the Administration was seeking to establish a united front between itself and Congress on how to handle China. This was a tactical point, but not just that. The fact was that the President believed strongly, as did Mr. Lord himself, that China should be pressed on human rights and other issues and that conditions should be applied to MFN to achieve this.

8.

Governor asked whether China had been keeping to the various economic agreements it had reached with the U.S.. Joan Spero said the record was patchy. Mr. Lord amplified that on intellectual property rights, China's performance had been fairly

CONFIDENTIAL