TNAG-2750-FCO40-3965-Most-favoured-nation-status-for-China-Hong-Kong-interests-1993 — Page 301

25 JAN '93 13:25 11 & 00 3 LOMBARD ST.

PRIVATE AND CONFIDENTIAL

NOTE FOR THE RECORD

Cc: HK/SK/CGRL/NMSR

P.2/5

Visit to Washington

My meetings in Washington concentrated on Hong Kong/China. It was not the best time to be there, with the new Administration in office barely a day. I attach a list of those whom I met. My main impressions are:

even though it will be some while before the shape of a new policy emerges, it is already clear that the Clinton Administration will live up to its promise to get tougher with China. The appointment of Winston Lord with his born-again views on human rights is evidence enough of that ("a very stupid appointment" - Scowcroft). Just continuing President Bush's policies is not seen as an adequate option;

anyway the Administration do not have much choice. Congressional concern remains high on China-related issues: human rights, nuclear proliferation, arms sales, unfair trade practices. The balance in Congress has moved further in favour of using the leverage of MFN to extract concessions from China. Congress will not allow the Administration to back away from commitments given during the Presidential election campaign. If necessary it will act itself and draft legislation attaching conditions to MFN is already in preparation;

there are indications, however, that the Administration's preference will be to proceed gradually and avoid a major confrontation with China over MFN this year. That depends on whether the President can convince Congress that he can achieve results by direct bilateral negotiation with China. On balance, Congress are likely to give him that chance;

even so there is a general expectation that conditionality will have to be applied by 1994 at the latest, except in the unlikely event that the Chinese make major concessions;

there is room for manoeuvre over how specific any conditions attached to MFN should be. The Administration seem prepared to be flexible and avoid imposing unreasonably onerous conditions (eg release of political prisoners rather than release of all political

prisoners);