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want to pay if they damage Hong Kong. Real constraints on
Chinese behaviour will arise only when they see that their
policies towards Hong Kong will, if continued, affect their own economic reform programme. The most powerful of the tools listed are therefore US policies towards and trade with China, especially MFN and GATT reaccession.
14.
We do not yet know how Clinton will approach MFN. It seems
unlikely that he will be able to renew MFN unconditionally. We
have made it clear that we are against any linkage between MFN
renewal and China's treatment of Hong Kong. The best outcome for
us would be for the threat of withdrawal to stay hanging over china, but without the imposition of conditions (for instance linking MFN to human rights) likely to lead to the withdrawal of
MFN because the Chinese could or would not meet them. It will be
tricky to achieve this. We will need to consider for example how to prevent Congress giving expression to US dissatisfaction with China through opposition to MFN renewal.
15.
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the
On GATT, there are constraints on us. While there is scope to influence the timescale of the application and indeed the outcome, our traditional position has been to avoid taking positions in GATT on the basis of political considerations DTI would take considerable persuasion to depart from this.
Looking at GATT from another angle, the US position on GATT
reaccession will be crucial we could work towards influencing
that.
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16.
Declaratory policy, eg through G7 or CHOGM, is less likely
to have a direct influence. But it could be helpful in reminding
China of international interest. On the downside, it would tend
to feed conspiracy theories (the Chinese were quick to pick up the lead given by Lee Kuan Yew when he came out last year with a disobliging international conspiracy theory linking the Governor's constitutional package with US efforts to undermine
internat.NAT
JEB
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