HK could plead case against ‘made in China’ move at World Trade Organisation, commerce minister reveals

15-Aug-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong is studying the World Trade Organisation rule book for ways to challenge the US over its requirement that the city’s brands carry “made in China” labels, the commerce minister has revealed.

Speaking on a radio programme on Friday, Secretary for Commerce and Economic Development Edward Yau Tang-wah remained tight-lipped on the details, but he said initial work had begun to study ways, including through legal means, to take Hong Kong’s case to the global trade body.

“We will study the ways to see how to do it, and what the past examples are,” he said. “But our offices in Geneva and in Washington DC, as well as our lawyers in the Department of Justice, are doing such work. This is what I can say at this stage.”

Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.

In the latest salvo between Washington and Beijing, the change of product labels arose from US President Donald Trump’s executive order suspending the privileges Hong Kong enjoyed under the Hong Kong Policy Act of 1992, with the result that it would be treated as “just another Chinese city”.

The order was signed in response to Beijing’s decision to impose a national security law in June, a move Trump said trampled on Hong Kong’s democratic development and the autonomy guarantees mandated under the “one country, two systems” governing principle.

Two days after Washington said Hong Kong’s US-bound exports must drop the tag of “Made in Hong Kong” from September 25, US Customs and Border Protection on Thursday issued a clarification on its website saying the goods could still use “HK” as a country of origin, which effectively meant punitive tariffs connected to the US-China trade war would not apply to Hong Kong goods.

Responding shortly afterwards, Yau said the clarification caused confusion.

“It is an attempt to impose an origin marking on Hong Kong products, basically asking Hong Kong traders to tell a lie,” he said. “How can products made in Hong Kong be labelled as from some other place?

“To put it simply, can a Canadian product be named as US made or Mexican made?”

Yau’s comments were ridiculed by the opposition camp, with some questioning whether the minister was suggesting the quality of Hong Kong products were better than mainland ones, or whether Hong Kong should not be seen as part of China.

On Friday morning, Yau made it clear that it was trade rules he was concerned about, not product quality or politics.

He called the US decision an “unacceptable misrepresentation” to be “strongly condemned”, saying Hong Kong’s membership of the WTO, as well as its status under one country, two systems, identified the city as a separate customs territory.

“Trade is bilateral, the more uncertain it is, the worse off it is for the both of us,” he said.

As an example, the commerce minister cited the trade war, during which consumer confidence fell and uncertainty rose, and the US trade surplus to the city fell by 14 per cent year-on-year in 2019, even though the tariffs did not apply to Hong Kong products.

The minister said many local companies were leveraging their US partners to seek urgent clarification, and to put pressure on the US administration over the new rules.

In 2019, Hong Kong exported $471 million worth of goods made in the city to the US, accounting for 0.1 per cent of the city’s total exports. Most of those were jewellery, electronic goods and electric appliances.

Yau also said even though the rules might not have a huge impact across the board for local commerce, it was important to look at the disproportionate impact on individual industries.

He said after the US slapped a 23 per cent tariff on aluminium products on several jurisdictions, including Hong Kong, two years ago, the Hong Kong government had also made representations to Washington, even though it only affected one local company whose major market was the US.

But he also admitted uncertainty in using the WTO’s dispute settlement mechanism to resolve the latest dispute, acknowledging that while the trade body operates on a rules-based system, the US has often obstructed proceedings deemed unfavourable to it, including by blocking the appointment of members to the dispute settlement panel and holding up meetings.


Category: Hong Kong

Print This Post