US Revokes Hong Kong Special Trading Status, Stops Defense Exports

June 30, 2020 Updated: June 30, 2020

The Trump administration announced on Monday that it is revoking Hong Kong’s special trading status and stopping its defense equipment exports to Hong Kong, in order to protect U.S. national security amid the passing of Beijing’s national security law for Hong Kong.

“With the Chinese Communist Party’s imposition of new security measures on Hong Kong, the risk that sensitive U.S. technology will be diverted to the People’s Liberation Army or Ministry of State Security has increased, all while undermining the territory’s autonomy. Those are risks the U.S. refuses to accept and have resulted in the revocation of Hong Kong’s special status,” Secretary of Commerce Wilbur Ross said in a statement.

“Commerce Department regulations affording preferential treatment to Hong Kong over China, including the availability of export license exceptions, are suspended. Further actions to eliminate differential treatment are also being evaluated.

“We urge Beijing to immediately reverse course and fulfill the promises it has made to the people of Hong Kong and the world,” he added.

The United States previously treated Hong Kong as a separate entity from mainland China in the areas of trade, investment, and immigration. This has meant that current U.S. tariffs on billions of dollars worth of Chinese goods have not applied to Hong Kong.

President Donald Trump had warned of the move to revoke Hong Kong’s special status in late May as the Chinese Communist Party (CCP) moved to draft its so-called national security law. At the time, Trump also said that U.S. travel advisories would be updated “to reflect the increased danger of surveillance and punishment by the Chinese state security apparatus” following the national security law’s approval.

The administration will also “take necessary steps” to sanction Chinese and Hong Kong officials “directly or indirectly involved in eroding Hong Kong’s autonomy,” Trump said at the time.

Halt to Defense Exports

Secretary of State Mike Pompeo announced in a statement on Monday that in addition to stopping exports of U.S.-origin defense equipment to Hong Kong, the administration will also take steps to impose similar restrictions on Hong Kong as it does for China on U.S. defense and dual-use technologies.

“The Chinese Communist Party’s decision to eviscerate Hong Kong’s freedoms has forced the Trump Administration to re-evaluate its policies toward the territory,” Pompeo said. “As Beijing moves forward with passing the national security law, the United States will today end exports of U.S.-origin defense equipment and will take steps toward imposing the same restrictions on U.S. defense and dual-use technologies to Hong Kong as it does for China.”

Mike Pompeo holds a joint news conference
Secretary of State Mike Pompeo holds a joint news conference on the International Criminal Court at the State Department in Washington on June 11, 2020. (Yuri Gripas/POOL/AFP via Getty Images)

“The United States is forced to take this action to protect U.S. national security,” he continued. “We can no longer distinguish between the export of controlled items to Hong Kong or to mainland China. We cannot risk these items falling into the hands of the People’s Liberation Army, whose primary purpose is to uphold the dictatorship of the CCP by any means necessary.”

Pompeo said that the administration’s decision seeks to “target the regime, not the Chinese people.”

“It gives us no pleasure to take this action, which is a direct consequence of Beijing’s decision to violate its own commitments under the U.N.-registered Sino-British Joint Declaration … given Beijing now treats Hong Kong as ‘One Country, One System,’ so must we,” Pompeo said.

CCP’s National Security Law

Beijing formally began the process of drafting a national security law for Hong Kong on May 28, after the National People’s Congress (NPC) conducted a ceremonial vote.

The law would criminalize those who engage in activities connected to “subversion, secession, terrorism, and any interfering activities by foreign countries and outside influences” that the CCP sees as a challenge to its one-party governing.

The NPC is a ceremonial rubber-stamp that approves directives from the CCP. The central government’s law will now go to Hong Kong’s pro-Beijing chief executive officer Carrie Lam, who will need to issue a legal notice in the Government Gazette for the law to come into effect.

Lam on June 30 refused to comment on the status of the national security law for her city, despite local media reporting that the law has been passed in Beijing.

carrie lam
Hong Kong’s Chief Executive Carrie Lam speaks at her weekly press conference at the government headquarters in Hong Kong on June 30, 2020. (Anthony Wallace/AFP via Getty Images)

Critics say such a law would further threaten Hong Kong’s autonomy and allow the CCP to target dissident voices under the guise of safeguarding the CCP’s “national security.”

Hong Kong was handed back from British colonial rule to Chinese sovereignty in 1997 with the express guarantee under the Sino-British Joint Declaration that the city’s high degree of autonomy and essential freedoms would be preserved under the principle of “one country, two systems” until 2047.

CCP foreign ministry spokesperson Zhao Lijian said on June 29 that the regime will impose visa restrictions on U.S. individuals who have acted maliciously on issues related to Hong Kong, according to Chinese state-run media Xinhua.

In a statement late June 29, Pompeo responded, “The Chinese Communist Party’s threats to restrict visas for U.S. citizens is the latest example of Beijing’s refusal to accept responsibility for breaking its commitment to the people of Hong Kong. We will not be deterred from taking action to respond.”

Eva Fu and Frank Fang contributed to this report.

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