Washington’s Self-Defeating Hong Kong Strategy

Those who drafted the 1992 Hong Kong Policy Act had a simple goal: to bolster Hong Kong’s autonomy as it changed hands from the United Kingdom to China. To this end, Congress authorized Washington to treat Hong Kong as an entity separate from mainland China in several policy areas. But Congress also mandated that this differential treatment should last only as long as the United States deemed Hong Kong sufficiently autonomous, to begin with—setting an unintentional but pernicious trap for Washington policymakers ever since. 

Last December, I warned in Foreign Affairs that the trap was at risk of snapping shut. Congress had just revised the 1992 law, adding a requirement for the secretary of state to annually “certify” whether Hong Kong was still autonomous enough to warrant the differential treatment. On May 21, Beijing announced that a new national security law would be imposed on the people of Hong Kong, criminalizing certain forms of political dissent in the city, and Washington stepped firmly into the trap. On May 27, U.S. Secretary of State Mike Pompeo certified to Congress that Hong Kong no longer qualified for differential treatment, and two days later, U.S. President Donald Trump announced that he would begin revoking Hong Kong’s unique status under U.S. law.

The relationship between Washington and Hong Kong has long benefited both societies and helped the city retain its autonomy from the mainland. Now, the United States stands poised to tear apart the legal fabric of that once close relationship. The decoupling will hurt the people of Hong Kong and damage U.S. business and foreign policy interests—and it will do so without punishing China much at all.

he White House’s indignation over the new national security law is certainly justified. China is sidestepping Hong Kong’s parliament to criminalize “seditious” dissent and foreign “interference” in the city and to allow mainland Chinese security forces to operate in Hong Kong. The law clearly violates both the letter and the spirit of the 1984 Sino-British Joint Declaration and the Basic Law, the two cornerstones of Hong Kong’s autonomy, and it is without hyperbole the single worst step Beijing has taken to date in its effort to stifle the city’s political dynamism. The repercussions for Hong Kong’s judicial and political autonomy, not to mention its social stability, are grim.

Tellingly, however, no country besides the United States has responded to Beijing’s transgressions by putting greater distance between itself and Hong Kong. Australia, Canada, Japan, the United Kingdom, and other like-minded nations—all just as invested as the United States in Hong Kong’s continued autonomy and success—are looking for ways to support the city and its people rather than taking steps that will worsen, however unintentionally, the damage Beijing has inflicted.

A VALUABLE RELATIONSHIP

More than a dozen bilateral agreements between the United States and Hong Kong govern everything from airline regulations to the extradition of fugitives, prisoner transfers, mutual legal assistance, port and container security, counterterrorism, and the exchange of tax information. Fortunately, Washington need not cut these valuable ties indiscriminately. Contrary to some media portrayals, Pompeo’s decertification of Hong Kong still leaves the Trump administration with broad discretion over what aspects of the relationship to alter, either in whole or in part.

Indeed, Washington retains considerable leeway to mitigate the worst effects of the Hong Kong Policy Act trap. Some changes to which Trump alluded, such as eliminating the bilateral extradition agreement or realigning Hong Kong’s export controls status to match China’s, would have a relatively minor practical impact. Some, however, would entail serious costs. Agreements supporting law enforcement cooperation, for instance, are necessary in the fight against drug trafficking, tax evasion, and terrorist financing. Absent direct U.S.-Hong Kong cooperation, China will not step in to help the United States on law enforcement matters under Hong Kong’s jurisdiction.  

The White House is currently mulling over other, equally problematic measures. American-operated planes currently enjoy relatively liberal access to U.S.-Hong Kong air routes. If the agreement governing such access is voided, U.S. airlines will be the only ones worldwide applying to Beijing for permission fly to Hong Kong. Their right of access would almost certainly be diminished, and the only winners would be China’s state-owned airlines.

On the trade front, Trump has envisaged downgrading Hong Kong’s customs status, a measure that might backfire, depending on the city’s reaction. The United States currently charges relatively low tariffs on products from Hong Kong, and Hong Kong levies none at all on U.S. products other than tobacco. In 2019, producers in the city shipped only about $5 billion in goods to the United States, while American farmers and manufacturers sent $31 billion in the other direction. If the United States were to extend the punitive tariffs it has imposed on Chinese exports to Hong Kong’s, the city might retaliate, leading to an important net loss of market share for U.S. producers—and benefiting mainland Chinese companies, along with those of other major players, such as Japan and Taiwan.

A BETTER PATH

Washington would do well to take its diplomatic cues from like-minded partners. Australia, Canada, and the United Kingdom, in a joint statement, that the United States belatedly echoed, highlighted that China is breaking its own policies, promises, and treaty commitments. A good next step would be to consider taking the matter to the International Court of Justice. China would no doubt ignore the court’s ruling, but the process would be severely embarrassing: it would place the blame squarely on Beijing, whereas now the United States looks like the one undermining the status quo.

Some members of Japan’s ruling party have called on their government to downgrade a planned state visit by Chinese President Xi Jinping in order to make Beijing pay a diplomatic price for its transgressions. Other nations are looking to support Hong Kong as an autonomous economic entity: Australia and the Association of Southeast Asian Nations recently concluded free trade agreements with Hong Kong to secure their own access to the city’s markets and bolster trade and investment. Taiwan and the United Kingdom, among others, have responded to China’s aggressive new policy by opening their doors wide to emigrants from Hong Kong. The editorial board of The Wall Street Journal has called on Washington to do the same, writing: “The challenge for the U.S. is to find policies that impose costs on China when it breaks global rules without also hurting America.”

Pompeo has called China’s national security law “disastrous,” and with good reason. But labeling the law a “death knell” for Hong Kong, as the secretary of state did, goes too far. The city remains alive, albeit under intense pressure from Beijing. It stands second on the Heritage Foundation’s list of free economies, remains among the best places to do business according to the World Bank, and ranks 16th on Transparency International’s Corruption Perceptions Index (higher than the United States). Hong Kongers clearly treasure their freedoms and want their city to be a vibrant place to live and work for years to come. Washington’s goal should be to maintain Hong Kong’s positive status quo as much as possible, not to assist in its erosion.

Source: FOREIGN AFFAIRS

* He is an American diplomat and business consultant, and the former Consul General of the United States of America to Hong Kong and Macau. He joined The Asia Group LLC as a Partner in July 2019.