US legislation on Hong Kong: What does it mean?

Pro-democracy protesters chant slogans in a shopping mall in Hong Kong on Nov 27, 2019.
Pro-democracy protesters chant slogans in a shopping mall in Hong Kong on Nov 27, 2019.PHOTO: AFP
A member of a safety team established by Hong Kong authorities sorts through items left by protesters at Hong Kong Polytechnic University on Nov 28, 2019.
A member of a safety team established by Hong Kong authorities sorts through items left by protesters at Hong Kong Polytechnic University on Nov 28, 2019.PHOTO: REUTERS

WASHINGTON (REUTERS) - United States President Donald Trump has signed two Bills that back protesters in Hong Kong and threaten China with possible sanctions for human rights violations.

Mass protests for more democracy and autonomy have rocked Hong Kong for more than five months, with escalating violence and fears that China will ratchet up its response to end the unrest.

The "Hong Kong Human Rights and Democracy Act", which the Senate and House passed last week, puts the special treatment the former British colony enjoys under US law under tighter scrutiny, linked to the extent of Hong Kong's autonomy from Beijing.

A second Bill, also approved by both chambers, banned the export of crowd-control munitions, including tear gas, rubber bullets, stun guns and tasers, to the Hong Kong police force.

WHAT NEXT?

Now that the Bills have become law, the State Department is required to certify at least once a year that Hong Kong retains enough autonomy to justify the favourable US trading terms that have helped it maintain its position as a world financial centre.

Officials responsible for human rights violations in Hong Kong could also be subject to sanctions, including visa bans and asset freezes.

While many see the acts as symbolic, they have the potential if implemented to completely upend relations between the US and Hong Kong and change the territory's status to that of any other Chinese city.

At the heart of matter is Beijing's promise to allow Hong Kong a "high degree of autonomy" for 50 years when it regained sovereignty over the city in 1997, which has formed the basis of the territory's special status under US law. Protesters say freedoms have been steadily eroded.

BEIJING ANGERED

China had denounced the legislation as gross interference and violation of international law. Now that the Bills have become law, tensions between Washington and Beijing are likely to increase and could affect negotiations to end a damaging trade war that Mr Trump has made a top priority.

 
 
 

Some analysts say any move to end Hong Kong's special treatment could prove self-defeating for the US, which has benefited from the business-friendly conditions in the territory.

If Hong Kong becomes just another Chinese port, this could hurt not just the city and China, but US businesses too, and companies that rely on the territory's role as a middleman, or for trans-shipping, would likely take their business elsewhere.

Even if Mr Trump had tried and failed to veto the Bills, they contain strong waivers that allow him to block their provisions on national security and national interest grounds.

At the same time, even without the Bills, the President can already suspend elements of Hong Kong's special status by executive order if he determines that the territory is "not sufficiently autonomous" from Beijing.


Riot police officers stand guard as anti-government office workers attend a lunchtime protest in Hong Kong on Nov 27, 2019. PHOTO: REUTERS

HOW IMPORTANT IS HONG KONG'S SPECIAL STATUS?

From a business perspective, one of the most important elements of Hong Kong's special status has been that it is considered a separate customs and trading zone from China.

 
 
 

That has meant, for instance, that trade war tariffs don't apply to exports from Hong Kong.

According to the State Department, 85,000 US citizens lived in Hong Kong in 2018 and more than 1,300 US companies operate there, including nearly every major US financial firm.

The territory is a major destination for US legal and accounting services, and in 2018, the largest US bilateral trade-in-goods surplus was with Hong Kong at US$31.1 billion (S$42.4 billion).

Trade between Hong Kong and the US was estimated to be worth US$67.3 billion in 2018, with the US running a US$33.8 billion surplus - its biggest with any country or territory, according to the Office of the US Trade Representative.

The American Chamber of Commerce in Hong Kong has said that anything that changes the status of the territory "would have a chilling effect not only on US trade and investment in Hong Kong but would send negative signals internationally about Hong Kong's trusted position in the global economy".