SINO-AMERICAN trade negotiations have a tendency to be enacted in an atmosphere of high drama. Last year's sabre-rattling was over the Most Favoured Nation status of China. In 1992 the smoke billowed around talks on forging an accord for protecting intellectual property rights. They have tended to follow the same pattern: a threat of trade sanctions by Washington prompts promises of retaliation from Beijing. After a final round of intense negotiations, both parties agree to a last-minute settlement. The Hang Seng Index provides a suitable accompaniment by plunging as the talks get tough, only to rise triumphantly as the former combatants embrace. This could be one explanation for the business community's cool response to the latest round of threats being exchanged over enforcement of intellectual property rights. Like an audience that knows the script, local business is claiming it has seen it all before. China and the US are the territory's largest trading partners, so it would clearly be one of the biggest losers in a trade war. But the concerns are being tempered by memories that previous disputes have been resolved by last-minute compromises. It is estimated that the worst-case scenario would mean 100 per cent tariffs on seven per cent of China's exports to the US, or 11 per cent of US-bound goods routed through Hong Kong. The range of goods on the list - from footwear to packaging - are those that tend to pass through Hong Kong, and the impact on local trade would be great. But the final list is unlikely to contain all the items and there is still a month to finalise negotiations. China's retaliatory list includes freezing talks with car-makers and blocking chemical and pharmaceutical firms' access to intellectual property protection. The real costs for both sides in lost deals would be incalculable, particularly for Beijing, which is struggling to restore confidence among nervous foreign investors. Business is confident about a successful outcome, not only from a sense of deja vu but a realisation that both sides know the cost of failure is too high.