China

US Broke Trade Rules With Hong Kong Label Demand, WTO Says

A three person WTO panel concluded that the US had violated international trade laws by demanding that Hong Kong imports be labelled as coming from China. Photo: Reuters.

The World Trade Organisation (WTO) said on Wednesday the US broke international trading rules by demanding that products imported from Hong Kong be labelled as coming from China.

A three-person WTO panel concluded that the the move had given Hong Kong unfavourable treatment than other member countries.

Until 2020, the United States had treated Hong Kong, which is a separate WTO member, in the same manner as before it passed from British control in July 1997.

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Then US President Donald Trump signed an order requiring that be changed, with Washington arguing that the Chinese territory was not sufficiently autonomous to justify treatment different from that of China. The order came into effect in late 2020.

The United States said it had applied an exception allowing for measures to protect a country’s “essential security interests”.

The panel acknowledged that tensions had increased between the United States and Hong Kong, but said these had not risen to an “emergency in international relations”, the threshold required to apply the exception.

The panel concluded its 96-page report by saying that the United States should bring its measure into conformity with global trading rules.

US Rejects ‘Flawed’ Finding

The United States said that it strongly rejected the “flawed” interpretation and conclusions of the panel and that it did not intend to remove the marking requirement.

“The US action responded to highly concerning actions by the People’s Republic of China to erode Hong Kong, China’s autonomy and the democratic and human rights of its people, threatening US national security interests,” US Trade Representative spokesperson Adam Hodge said in a statement.

The Hong Kong government welcomed the ruling and said it had affirmed its special status as a separate customs territory.

“The revised origin marking requirement is politically motivated and a vain attempt to interfere with Hong Kong’s internal affairs through weaponising trade,” Algernon Yau, secretary for commerce and economic development, said in a statement.

Reuters, with additional editing from Alfie Habershon

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Alfie Habershon

Alfie is a Reporter at Asia Financial. He previously lived in Mumbai reporting on India's economy and healthcare for data journalism initiative IndiaSpend, as well as having worked for London based Tortoise Media.