TNAG-2750-FCO40-3965-Most-favoured-nation-status-for-China-Hong-Kong-interests-1993 — Page 153

3 MASHINTON 1

THU 29 APR 93 15:16

CONFOONNUAL

Talking Points on China MFN

PG.02

President Clinton wants to work closely with the Congress to achieve a policy both can fully support. This will maximize our leverage with the Chinese to get results.

We need to move our relationship with China beyond the annual debate on extending MFN. There are many other aspects of the relationship where we can also work effectively to improve China's behavior.

Conditioning MFN status on Chinese improvement in areas of concern to us can be a useful tool. But, actually revoking il would hurt some of the wrong people in China, harm American business interests and damage Hong Kong.

We have many serious issues with the Chinese. Our strategy has been to use this beginning of a new Administration and the prospect of the annual MFN debate as leverage with Beijing on these issues.

Thus we have been quietly and intensively negotiating with the Chinese on Human Rights, Non-proliferation and Trade issues.

There has been some progress during this Administration not dramatic, but not inconsequential either. The Chinese signed the Chemical Weapons Convention, have released a number of leading political dissidents and religious leaders, and have sent several buying missions to the US to purchase American passenger aircraft, minivans, cars and other products. Chinese sometimes wait until the last minute to make concessions, so there may be some further progress towards mid to late May. We intend to maintain the pressure.

The

There is little chance that further progress by late May will be so substantial as to make unconditional MFN extension possible. We will almost certainly have to attach conditions

to a year's extension of MFN to June 1994.

while hearings are an important way to share information, it would be very helpful if hearings on China MFN could be held in abeyance through May while our sensitive negotiations with the Chinese are under way. For tactical reasons with the Chinese, it is better not to highlight our negotiating approach of using MFN as leverage.

The Executive Branch and Congress are working for the same objectives. We plan to continue our close coordination.

SEFOGEN 199

A