TNAG-2750-FCO40-3965-Most-favoured-nation-status-for-China-Hong-Kong-interests-1993 — Page 231

CONFIDENTIAL

37

051213

MDTTAN 8251

CONFIDENTIAL

FM WASHINGTON

TO TELELETTER FCO

TELELETTER NFR

OF 11003OZ MARCH 93

HKA 091/1

RECEIVED IN REGISTRY 17 MAR 1993

DESK OFFICER

REGISTRY

INDEX

PA

Action Taken:

AND TO TELELETTER HONG KONG, PEKING

FROM: S D PATTISON, WASHINGTON

TO: J C MORRIS ESQ., HONG KONG DEPARTMENT, FCO

Mvr

This Barnes Jones Ar Bunter 213 Caruthining 12/3.

I can't say this settle my mind.

+

pa.

し

"11/3

CC:

W EHRMAN ESQ PA/HONG KONG

A PAUL ESQ., UKREP JLG HONG KONG

M COX ESQ., PEKING

U.S./CHINA: MFN RENEWAL

1.

1.

THANK YOU FOR YOUR TELELETTER OF 9 MARCH.

2.

THE FACT THAT HONG KONG PROFITS OUT OF THE U.S./CHINA TRADE

IMBALANCE IS ALREADY VERY WELL KNOWN HERE. A NUMBER OF AMERICAN

OFFICIALS HAVE POINTED OUT TO ME THAT THE GROWING U.S./CHINA

DEFICIT IS REALLY THE RESULT OF DECISIONS BY HONG KONG AND TAIWANESE BUSINESSMEN TO TRANSFER MANY OF THEIR MANUFACTURING OPERATIONS TO CHINA. LIKE YOU, THEY HAVE NOTICED THAT THE U.S./GREATER CHINA DEFICIT HAS REMAINED MORE OR LESS CONSTANT. SOME DRAW THE LOGICAL CONCLUSION: WHY SHOULD HONG KONG BE ALLOWED

TO PROSPER AT U.S. EXPENSE.

3.

OUR ARGUMENTS ON MFN THEREFORE HAVE FOCUSSED LESS ON THE TRADE IMBALANCE THAN ON THE FACT THAT MEN IS NOT THE RIGHT TOOL TO ADDRESS CONCERNS ABOUT CHINESE BEHAVIOUR ACROSS THE BOARD, I.E. IN TRADE, HUMAN RIGHTS OR ARMS PROLIFERATION. I HAVE ARGUED THAT IT IS BETTER FOR THE AMERICANS TO TARGET EACH OF THESE AREAS INDIVIDUALLY, AND TO DEVELOP A DIFFERENT APPROACH TO EACH WHILE LEAVING MFN INTACT. INDEED, THESE ARE BROADLY THE ARGUMENTS OF SENATOR BAUCUS (SEE MY TELELETTER OF 12 JANUARY).

4. ONE AREA WHERE THE AMERICANS HAVE STARTED TO DO THIS IS OVER BILATERAL TRADE. LAST AUTUMN THEY SIGNED A MARKET ACCESS AGREEMENT WITH THE CHINESE, AND HAVE RECENTLY HELD A FOLLOW-UP MEETING TO TRY TO IMPLEMENT IT (MY TELELETTER OF 9 MARCH TO WARRICK MORRIS, FED).

PAGE

1

CONFIDENTIAL