Biden Should Rethink Hong Kong Policy

Back in 2020, I wrote an article titled Trump should rethink Hong Kong policy regarding his decision to revoke the Hong Kong Policy Act, and requiring products made in Hong Kong to be labelled Made in China.

Likewise, Joe Biden, should abide by last week’s World Trade Organization’s ruling to restore the Hong Kong Policy Act of 1992 that Trump revoked.

The U.S. is rejecting the ruling. U.S. Trade Representative Katherine Tai said Washington did not intend to remove the requirement and called the body’s decision a “flawed interpretation.”

The U.S. can appeal. However, since it has blocked any new appointments to the WTO’s appellate body due to complaints over judicial activism and sovereign concerns, there are no judges to hear appeals.

The Act should not be a political football between China and U.S., nor should it be between Democrats and Republicans in Washington.

The Hong Kong Policy Act was not the creation of a democratic administration. It was the administration of former Republican president, George H.W. Bush, that enacted it two years after China’s National People’s Congress approved the Basic Law for Hong Kong.

There was much optimism all around then; Deng Xiaoping, who devised the one-country-two-systems was in command, and many believed that Hong Kong was Deng’s experiment for China to move towards political liberalization. Thus, the Hong Kong Policy Act had political intent. That is, granting special trading privileges to the People’s Republic of China’s new Special Administrative Region will encourage Beijing not to renege on its promise to let Hong Kongers rule Hong Kong with a high degree of autonomy.

This particular Hong Kong policy might not, however, have been a single-handed American initiative. Britain and other western democracies that seek to maintain their base in Hong Kong and enhance their trade with China must have played a key role in persuading Bush. Thus, the deal to make Hong Kong a separate customs territory from the People’s Republic has also been adopted by the WTO.

Now, over two decades after Deng’s demise and Hong Kong’s merger with China, the climate has changed; there is increasing evidence that Beijing will not risk its national interest and let Hong Kong shape the way some foreign powers and pro-democracy elements in Hong Kong desire.

In this situation, President Biden, U.S. State Department and Trade Representative, should take a step back and consider if the move to treat Hong Kong like just any other province of China would do them any good. Hong Kong is caught between the xenophobic leaders of the world’s two largest economies and military power. Biden and Trump’s America is far from everything America was before. For Biden, like Trump, it is “America First.” Similarly, for President Xi Jinping, Deng Xiaoping’s thoughts are not of paramount importance. His goal is to bring to the mainland’s fold, at his terms, every inch of territory Beijing considers its own.

Against these realities, Biden is making a huge mistake. His decision to ignore the WTO ruling and require Hong Kong products exported to the U.S. to continue to carry Made in China rather than Made in Hong Kong label is wrong in more ways than one. It is illegal, politically short-sighted and not in America’s best long-term interest.

Soon after Washington announced the labeling rule on August 11, 2020, to take effect on November 9, Hong Kong filed a complaint with the Office of the U.S. Trade Representative, demanding the US drop the regulation. On October 13, at a session of WTO’s General Council, Hong Kong denounced the US decision and demanded again that the US drop the new requirement. On October 30, Hong Kong filed a formal complaint with the WTO and circulated it to all members, demanding dialogue with the US to resolve the labeling matter within 60 days.

Last week, on Thursday December 22, 2022, the trade experts of the WTO, the Dispute Settlement Body, found in Hong Kong’s favor and supported its argument that it is a separate customs territory from China and urged the U.S. to abide by its findings.

Hong Kong has followed the rules of a law based order. The U.S. should as well.

The U.S. requirement of Hong Kong products being labelled Made in China has little economic impact on Hong Kong. Only 0.1% of Hong Kong made products are exported to the U.S. It only makes America look and sound just like what America is accusing, portraying, and making China look like. Ugly!

The US is the only country of Hong Kong’s about 170 markets demanding that products made there be labelled Made in China. No other country is requiring the change America has. There are around 7,000 manufacturing companies in Hong Kong, making everything from jewelry, watches, electronic goods, pharmaceuticals and food, with about 400 home-grown brands which enjoy global demand.

The Hong Kong brand is recognized worldwide for its quality, craftsmanship, certification and protection of intellectual property – unlike the mass-produced China-made products.

It is time America get back to business basics and reinstate the Hong Kong Policy Act and honor Made in Hong Kong label, as it did before. Failing to do so, America looks just like the law-breaker it accuses China of being.