Yue warns of obstacles to China MFN renewal
The Government has warned of new sanctions against China emerging during the United States congressional debate on the renewal of most favoured nation (MFN) trade status.
Secretary for Trade and Industry Denise Yue Chung-yee said a volatile Congress could still push for some form of legislation, non-binding resolution or other measures targeting China.
Before the Legislative Council's Trade and Industry panel yesterday, Miss Yue repeated warnings of the devastating impact on the territory's economy if a trade war were declared between its two major trading partners.
According to latest Government research, failure to renew MFN status could cost the territory about $246 billion worth of trade, up to 86,000 jobs and $34 billion in income.
The territory's gross domestic product growth could fall by up to 2.8 percentage points - about 60 per cent of its trend rate of 5 per cent - and its role as a gateway to China undermined.
US President Bill Clinton has to submit his decision to renew China's MFN status to Congress on June 3.
Congress may pass a joint resolution disapproving the president's decision before September 1. The president then has 10 days to veto the resolution and Congress has 15 legislative days to override the veto with a two-thirds majority.
There is confidence Mr Clinton's stated support for MFN renewal will be backed by Congress.
But traditional congressional concerns about China, ranging from the Sino-US trade deficit to human rights, have been heightened by reports of alleged Chinese involvement in election campaign financing in the US, concerns about religious freedom from the increasingly powerful conservative religious lobby and Hong Kong's transition.
Miss Yue said: 'These developments have set the stage for right-wing Republicans and left-wing Democrats in Congress, as well as the conservative religious and human rights groups, to mount a vociferous campaign against the US administration's policy of engagement.
'Increasingly, the debate on MFN is becoming a domestic partisan issue held hostage to the perpetual election campaign position in US politics.' This could result in Congress pushing for some measure to express its concern, which could trigger a retaliatory response from China.
While the threat of 'short-term' renewal has diminished, there is still the possibility Congress could seek alternative measures.
Over the past few months, the Government has mounted a vigorous campaign involving Governor Chris Patten writing to Mr Clinton, House Speaker Newt Gingrich and chairmen of major congressional committees.
TRADE VICTIM Government warns a volatile US Congress may still attach conditions to China's MFN renewal Failure to renew MFN could cost Hong Kong $246 billion in trade, 86,000 jobs and $34 billion in income
