RESTRICTED
3. It is encouraging that (thanks to the lobbying that you and Hong Kong have been doing) there is much understanding of, and sympathy for, Hong Kong's position in Congress. By now the Administration should also be more aware of the pressures they are likely to face from US exporters and the potential damage to the US economy if MFN is not renewed. But the pressures for tough action against China, in 1994 if not 1993, will remain. I think we are all agreed that we should maintain the line that Hong Kong's interests are best served by unconditional MFN renewal, but should also be ready to discuss at the right moment with the Administration ways of giving the President maximum discretion and flexibility in determining whether any conditions have been met.
4.
The
I have consulted Hong Kong on the helpful suggestion in your letter that if conditional renewal becomes inevitable, we might propose to the Administration that unconditional MFN status be retained for exports from China certified to have passed through Hong Kong. view of the experts there is that this would certainly reduce the impact on Hong Kong if it could be achieved. But they, like you, are doubtful whether the Administration could convince Congress that this would be an effective penalty as it would exempt such a large proportion of Chinese exports to the US. There would be considerable scope for evasion, and for Hong Kong to become entangled in disputes with the US authorities about operation of the certification regime. But I recognise that it is easier to pour cold water on the good ideas of others than to come up with alternatives. We and Hong Kong will continue to look for ways in which the impact of MFN withdrawal on Hong Kong could be mitigated if it ever came to that. I suspect that there is no easy answer, and that it will be much better to concentrate on persuading the Administration and Congress to settle on conditions which the Chinese can actually meet.
your ever
mfn.ADMIN
JEB
RESTRICTED
John Lokes.
Sir John Coles
No comments yet.
Private notes are available after approval.