On May 29, 2020, the president announced in a White House press conference the Administration’s determination that Hong Kong is no longer sufficiently autonomous from the People’s Republic of China (“PRC”), and that the US Government would take “strong and meaningful” steps to “begin the process” of reviewing and revoking the “full range of agreements” that currently provide Hong Kong with preferential treatment. This determination follows Secretary of State Michael Pompeo’s certification to Congress on May 27, 2020 that Hong Kong no longer maintains a sufficient degree of autonomy from the PRC to warrant special treatment by the US. The president’s announcement and Secretary Pompeo’s certification were made in response to the May 28, 2020 decision of the PRC National People’s Congress to draft national security legislation for Hong Kong.
These actions by themselves do not have any immediate impact on the treatment of Hong Kong for trade or other purposes and there is no timeline for further action. However, there are several key areas that could be implicated in the coming months as a result of this determination.
Under the United States-Hong Kong Policy Act of 1992 (the “Hong Kong Policy Act”), Hong Kong is provided “different” treatment by the US Government than that provided to the PRC so long as Hong Kong remains “sufficiently autonomous” under the “one country, two systems” principle. This includes special treatment in areas including but not limited to customs tariffs, export controls, immigration, foreign investment, and extradition. The Hong Kong Policy Act directs the US Secretary of State to submit annual reports to the appropriate congressional committees on conditions in Hong Kong of interest to the United States, including matters relevant for the purposes of determining whether Hong Kong remains “sufficiently autonomous” from the PRC. In conjunction with the annual report and pursuant to amendments to the Hong Kong Policy Act made by the Hong Kong Human Rights and Democracy Act of 2019 passed into law in November 2019, the Secretary of State is also required to issue an annual certification to Congress that indicates, among other things, whether Hong Kong continues to warrant its preferential treatment under US law.
Secretary Pompeo delayed submitting the annual report this year to allow him time “to account for any additional actions that Beijing may be contemplating in the run-up” to the PRC’s May 22 National People’s Congress “that would further undermine the people of Hong Kong’s autonomy.” Then, on May 27, 2020, Secretary Pompeo certified to Congress that Hong Kong no longer warrants different treatment from the PRC. On May 28, 2020, the State Department issued the 2020 Hong Kong Policy Act Report, which, among other things, concluded that “China has shed any pretence that the people of Hong Kong enjoy the high degree of autonomy, democratic institutions, and civil liberties guaranteed to them by the Sino-British Joint Declaration and the Basic Law.”