The Fall of Hong Kong, China’s Trade Middleman

The news of China's implementation of the national security law is not new, but the treatment of the once important sovereign state by world leaders is. Hong Kong is a trade hub between China and the rest of the world. It has been given special treatment by the United States, the United Kingdom, and the European Union as an autonomous zone.

The United States was first on the list of superpowers to strip Hong Kong of its preferential treatment. Since the United States-Hong Kong Policy Act of 1992 and Hong Kong's release as a British territory in 1997, Hong Kong was treated separately from China and was a major trade hub between the United States and China. Section 202 of the act granted permission to the President of the United States to sign an executive order to remove Hong Kong's treatment. On June 14, 2020, Donald Trump signed into effect the Hong Kong Autonomy Act of 2020, which will no longer treat Hong Kong as a sovereign state.

What does this mean for importers? Goods that are produced in Hong Kong will have to be marked as country of origin "China." However, according to the US Customs Border Protection (CBP) website, although the articles will be physically marked country of origin China, for declaration purposes, imports must be declared "Hong Kong" on documentation. For the time being, items produced in Hong Kong will not be subject to the same Section 301 tariffs imposed on goods made in China.

Following the United States, the United Kingdom implemented sanctions over Hong Kong, starting with suspending its extradition treaty and extending its arms embargo to Hong Kong. The United Kingdom will no longer export guns, military supplies, and other defense items to Hong Kong. The European Union followed shortly behind and implemented an arms embargo on Hong Kong as well. The European Union will also be limiting its technology exports to Hong Kong, including the restriction of technology that can be used for "internal repression, interception of internal communications or cyber surveillance."

For the time being, Hong Kong's future on the international stage is unclear. The regulations by the United States have changed several times and may change again. To learn more about how these changes may affect your company, please contact us at sales@allynintl.com.

Contributor: George Ciaffone

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