TNAG-2750-FCO40-3965-Most-favoured-nation-status-for-China-Hong-Kong-interests-1993 — Page 328

CONFIDENTIAL

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CONFIDENTIAL

15 J^* 1992

FM HONG KONG

TO IMMEDIATE FCO

IN.

TELNO 66

OF 150145Z JANUARY 93

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AND TO IMMEDIATE UKREP JLG HONG KONG, PEKING

CHINA/MFN/HONG KONG: YRTELNO 10 AND MEYER'S LETTER OF 28 DECEMBER 1992 TO SIR JOHN COLES

1. BEFORE COMMENTING ON PARAGRAPHS 4 AND 5 OF MEYER'S LETTER, WE THINK IT IS NECESSARY TO DRAW A DISTINCTION BETWEEN:

(A) CONDITIONS WHICH THE US CONGRESS AND/OR THE CLINTON ADMINISTRATION MIGHT WISH TO IMPOSE, AND WHICH THE CHINESE WOULD HAVE TO ABIDE BY, IF MFN STATUS WERE TO BE FURTHER EXTENDED: AND

(B) THE WAYS IN WHICH THE REVOCATION OF MFN STATUS (SHOULD CHINA FAIL TO MEET THE CONDITIONS) MIGHT BE IMPLEMENTED SO THAT ANY DAMAGE TO HONG KONG COULD BE MINIMISED.

2. ON (A), OUR VIEW (AS SET OUT IN PARAGRAPH 5 OF OUR TELNO 2930 OF 21 DECEMBER 1992) IS THAT IF DURING THE NEXT FEW MONTHS CONDITIONS SHOULD APPEAR TO BE INEVITABLE, THEN WE SHOULD, BEHIND THE SCENES, TRY TO PERSUADE THE ADMINISTRATION TO DEVISE A PROCEDURE WHICH WOULD GIVE THE PRESIDENT MAXIMUM DISCRETION AND FLEXIBILITY IN DETERMINING WHETHER THE CONDITIONS TO BE SET HAVE BEEN MET BY CHINA. FOR EXAMPLE, THE PRESIDENT MIGHT, IN ANNOUNCING BEFORE THE 3 JUNE 1993 DEADLINE HIS DECISIONS TO RENEW CHINA'S MFN FOR ANOTHER YEAR, ISSUE AN EXECUTIVE ORDER OR A POLICY STATEMENT SETTING OUT BROAD AREAS IN WHICH CHINA WOULD BE ASKED TO MAKE IMPROVEMENTS IF MFN WERE TO BE RENEWED AGAIN NEXT YEAR. ANOTHER POSSIBILITY IS THAT ANY BILL IMPOSING CONDITIONS COULD BE BROADLY WORDED TO ACHIEVE THE SAME EFFECT.

3. IN RESPECT OF (B), WE WOULD NEED TO COME UP WITH A FORMULA WHICH SHOULD BE IMPLEMENTABLE, HAS MINIMAL IMPACT ON HONG KONG, AND YET WOULD NOT CREATE A LOOPHOLE UNACCEPTABLE TO THE US CONGRESS. THIS IS, OF COURSE, EASIER SAID THAN DONE. WE OURSELVES HAVE NOT YET BEEN ABLE TO COME UP WITH ANY GOOD IDEAS. AND WHILE WE APPRECIATE VERY MUCH MEYER'S HELPFUL ATTEMPT AT DEVISING SUCH A FORMULA, WE BELIEVE THAT THE SUGGESTION THAT UNCONDITIONAL MFN STATUS SHOULD BE RETAINED FOR EXPORTS FROM CHINA CERTIFIED TO

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