WASHINGTON (Reuters) – The United States began eliminating Hong Kong’s special status under US law on Monday, halting defense exports and restricting territory access to high-tech products as China prepares Hong Kong’s new security legislation .
FILE PHOTO: United States Secretary of State Mike Pompeo gives a press conference on the deals with China and Iran, and on fighting the coronavirus disease pandemic (COVID-19), in Washington, United States, June 24, 2020. Mangel Ngan / Pool via REUTERS
The Commerce Department said it was suspending “preferential treatment of Hong Kong over China, including the availability of exceptions to export licenses,” adding that further actions to remove Hong Kong’s privileged status were being evaluated.
“We urge Beijing to immediately reverse course and deliver on the promises it has made to the people of Hong Kong and the world,” he said.
The U.S. measures come as China’s main parliament decision-making body deliberates on a national security bill for Hong Kong that pro-democracy activists fear will be used to eliminate dissent and reinforce control of Beijing.
The standing committee of parliament is expected to pass the bill before its current meeting ends on Tuesday.
“The Chinese Communist Party’s decision to gut the freedoms of Hong Kong has forced the Trump administration to reevaluate its policies towards the territory,” said United States Secretary of State Mike Pompeo.
He said that starting Monday, Washington would end exports of defense equipment to Hong Kong and take steps to end the export of dual-use technologies to the territory. These technologies have commercial and military uses.
“The United States is forced to take this measure to protect the national security of the United States. We can no longer distinguish between exporting controlled items to Hong Kong or mainland China, “said Pompeo.
Kurt Tong, former United States Consul General in Hong Kong, told Reuters the United States measure would not cover a large amount of trade between the United States and Hong Kong, as the territory was not a major manufacturing hub and its economy. it was almost exclusively service.
He also noted that “‘suspend’ is different from ‘finish’ and is consistent with implicit conditionality.”
The Chinese embassy in Washington did not immediately respond to a request for comment.
Last month, United States President Donald Trump responded to China’s plans for the security law by saying he was initiating a process to remove the special economic treatment that has allowed Hong Kong to remain a global financial center since its delivered by Great Britain in 1997.
Trump did not come to call for an immediate end to the privileges, but said the measures would affect the full range of US deals with Hong Kong, from an extradition treaty to export controls on dual-use technologies and more “with few exceptions. ”
The US announcements come at a time of heightened US rhetoric against Beijing as Trump campaigns for reelection. Opinion polls have shown that voters are increasingly bitter towards China, especially about the coronavirus, which started there.
Last week, Pompeo said that Washington was imposing visa restrictions on current and former officials of the ruling Communist Party of China, which held itself responsible for undermining Hong Kong’s autonomy.
Beijing responded on Monday by saying it would impose visa restrictions on US individuals with “egregious conduct” on issues related to Hong Kong.
Analysts say that completely ending Hong Kong’s special treatment could backfire for the United States, which has benefited from favorable business conditions in the territory.
According to the State Department, 85,000 U.S. citizens lived in Hong Kong in 2018, and more than 1,300 U.S. companies operate there, including almost all of the major U.S. financial companies.
The territory is an important destination for the legal and accounting services of the United States. In 2018, the largest bilateral US goods trade surplus was with Hong Kong at $ 31.1 billion.
In 2018, $ 432.7 million of products were shipped to Hong Kong under the exceptions of the Commerce Department, mainly related to encryption, software and technology.
Last year, the State Department approved approximately $ 2.4 million in controlled defense items and services to Hong Kong government authorities, of which approximately $ 1.4 million was shipped.
Reports by Chris Sanders, Lisa Lambert, Mike Stone, David Lawder and David Brunnstrom; additional reports from David Shepardson; Editing by Chris Reese and Tom Brown
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