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New U.S. Policy Will Affect Trade with Hong Kong

President Trump announced a change in U.S. policy that will have a significant impact on both imports from and export to Hong Kong.  The move, announced on May 29, will affect “the full range of agreements we have with Hong Kong … with few exceptions”, including economic privileges and law enforcement, and will eliminate special trade privileges.

The announcement comes after China’s parliament voted last week to impose national security legislation on Hong Kong, a move which Trump said violated China’s promise to protect its autonomy.  The sweeping set of new laws, aimed to quell the unrest, prohibits acts and activities of free speech and other civil liberties and establishes that the Chinese Communist Party will be responsible for making and enforcing law in the city-state, a move that critics fear will criminalize all forms of dissent and opposition.  U.S. Secretary of State Michael Pompeo said that China’s leadership has broken its promise of preserving Hong Kong’s autonomy by pursing tighter control over Hong Kong.  “If the Chinese are going to treat Hong Kong the same way they treat mainland China, there’s no basis for the United States to treat it differently as well,” Pompeo added.

“We will take action to revoke Hong Kong’s preferential treatment as a separate customs and travel territory from the rest of China,” Trump said.  The US will also take steps to sanction Chinese and Hong Kong officials “directly or indirectly involved in eroding Hong Kong’s autonomy.”

Impacts of the new policy on Hong Kong will include the extension of:

  • The Section 301 additional tariffs on Chinese goods
  • Antidumping and countervailing duties on Chinese goods
  • Export controls for dual-use technologies, which aim to prevent China from gaining access to certain types of advanced technology

Other possible impacts may include:

  • Country of origin labels on goods made in Hong Kong
  • Termination of U.S. recognition of certificates of origin or other documents issued by authorities in Hong Kong
  • Banking and finance operations
  • Taxation provisions
  • Hong Kong-flagged ships and aircraft
  • Travel and visas

Soon after the announcement, the White House also issued a proclamation barring Chinese researchers with ties to entities that implement or support China’s “military-civil fusion strategy” from entering the U.S., to conduct research.

China Threatens to Retaliate

China said this morning that any attempts by the U.S. to harm Chinese interests will be met with firm countermeasures.  Zhao Lijian, a spokesman for the Chinese Foreign Ministry, said, “The announced measures severely interfere with China’s internal affairs, damage U.S.-China relations, and will harm both sides.  China is firmly opposed to this…  Any words or actions by the U.S. that harm China’s interests will meet with China’s firm counterattack.”

OCEANAIR will closely monitor the situation and provide further details as they become available.

 

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Sources:

  • Sandler Travis & Rosenberg, U.S. Trade with Hong Kong to be Affected by Policy Change
  • Reuters, China warns U.S. it will retaliate on moves over Hong Kong
  • New York Times, Rebuking China, Trump Curtails Ties to Hong Kong and Severs Them With W.H.O.
  • Bloomberg, U.S. Has No Basis to Give Hong Kong Special Treatment, Pompeo Says
  • South China Morning Post, Donald Trump says US to end Hong Kong trade privileges as ‘it is no longer autonomous from China’ after new security law introduced by Beijing

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