What will be the impact of the United States’ lifting of differential treatment against Hong Kong?
(Source: Observer.com2020-06-01）
Cui Fan
Several friends asked me on WeChat for my views on the United States’ change in its treatment of Hong Kong. The teaching and research work in the final stage was overwhelming. I didn't plan to write about this question, but a friend called me to ask. After giving the oral answer, I simply checked the data and information and recorded the opinions I expressed verbally.
1. Hong Kong’s status as a separate customs territory
Hong Kong’s status as a separate customs territory is first stipulated by Chinese laws such as the Basic Law and recognized by the central government. According to the definition of the Kyoto Convention of the World Customs Organization, a customs territory refers to the area where a country's Customs Law is fully implemented. According to the Basic Law, China's Customs Law does not apply in Hong Kong. Hong Kong applies its separate customs regulations, and the central government recognizes Hong Kong's status as a separate customs territory.
According to the World w88 Organization's "1994General Agreement on Tariffs and w8826Article, individual customs territories can become members of the WTO (in1947In the text of the General Agreement on Tariffs and w88, it is“Parties”）。1986Year4month238063_81291995Year1month1Japan became a founding member of the World w88 Organization.
Hong Kong participated in the Uruguay Round negotiations of the General Agreement on Tariffs and w88, and also participated in all multilateral negotiations of the World w88 Organization. It is a member of all multilateral w88 agreements, and is also a member of the Government Procurement Agreement and the Information Technology Products Agreement. Hong Kong has mutual treaty obligations with all WTO members.
2. The United States’ w88 and tariff treatment of Hong Kong
We can see from the above introduction that Hong Kong’s status as a separate customs territory and WTO member status were not given by the United States. If the United States is unwilling to grant Hong Kong corresponding treatment, it should invoke it in the WTO“Not applicable to each other”Clause, but this invocation should be made when the other party becomes a founding member or joins, not later. In accordance with the WTO agreement, the United States should abide by all its obligations in the multilateral trading system with Hong Kong, China.
The treaty should be observed. However, the United States has a problem with the relationship between international law and domestic law. Sometimes international treaties can be directly incorporated and applied in the United States, and sometimes they need to be indirectly transformed and applied. This is a complex legal issue, and we will not go into details here.
The U.S. Uruguay Round Agreement Act (URAA) very clearly defines the relationship between WTO law and domestic law. "Uruguay Round Agreement Law" (URAA）No.102（a) clearly stipulates thatWTOThe Agreement shall be void if inconsistent with any law of the United States. Any law of the United States here includes existing laws and laws that come into effect thereafter.
《199210933_11116
2019Year10month15The Hong Kong-related bill passed by the United States in Japan requires the Secretary of State to submit a report to Congress every year to assess whether Hong Kong is autonomous enough to decide whether it should continue to be autonomous under the "1992The U.S. Hong Kong Policy Act of 2016 enjoys special treatment different from that of mainland China. this year5month2811896_11926
5month29On Day 12262_12281|, Trump said at the White House press conference:“I am directing my administration to begin the process of eliminating policy exemptions that give Hong Kong different and special treatment,”ie“I am instructing the executive branch to begin the process of eliminating policy exemptions that grant Hong Kong differential and special treatment.”（Trump flower9Criticized China for minutes, but did not mention the fight against the epidemic and riots in the United States. After speaking, he left the scene without waiting for reporters to ask questions。）
Here“Differences and special treatment”Refers to the different treatment from mainland China, rather than the treatment given to developing economies in the WTO“Special and Differential Treatment”（Special and Differential Treatment, S&DT). On w88 matters such as tariffs and countervailing duties, the United States has never given special and differential treatment to developing countries in mainland China. However, the United States once granted Hong Kong generalized system of preferential treatment, which is a kind of special and differential treatment given to developing economies.
But for this treatment, as early as1989Year1month1Hong Kong will be announced soon“Graduation”No more giving. Therefore, in accordance with the WTO agreement, the treatment given by the United States to China and Hong Kong is most-favored-nation treatment and is treated equally. Although they are two different tariff areas, products originating in mainland China and products originating in Hong Kong are subject to the same most-favored-nation tariff when imported into the United States.
3. Impact of changes in U.S. tariff policy
The key to the problem is that the United States currently imposes high tariffs on China that violate its WTO agreement obligations, but for products imported from Hong Kong, it still complies with the WTO agreement and imposes an average of approximately3.5%'s most-favored-nation tariff. Correspondingly, Hong Kong has also been granting most-favored-nation treatment to the United States and imposes zero tariffs on products imported from the United States. If the United States cancels the treatment it gives Hong Kong that is different from mainland China, most products originating in Hong Kong and exported to the United States may be subject to additional taxes7.5%To25%'s high tariffs.
Products exported from Hong Kong to the United States, if they originate in mainland China and are on the tax list, have already been levied high tariffs; if they originate in areas outside mainland China and Hong Kong, they will not be subject to additional tariffs; both parts are not affected by this policy change.
In principle, only Hong Kong products originating in Hong Kong are affected by this policy change. According to Hong Kong statistics,2018Year or201916363_1638336.5A scale of about 100 million Hong Kong dollars, roughly converted into US dollars4.7billion US dollars, considering that some products are not on the tax increase list, the currently affected goods are probably3.2Around US$16709_16740| (the distribution of products with different tax codes is not taken into account, only the average distribution is calculated).
However, relying solely on Hong Kong statistics may underestimate the impact of this policy change. The additional tariffs were imposed by the United States. We need to look at the statistical caliber of the United States.
According to the statistics of the U.S. International w88 Commission, whether it is import in the narrow sense (used and consumed in the United States after import, not entirely equivalent to the United Nations specialized w88 statistics) or broad import (all imported products, basically equivalent to the United Nations general w88 statistics), regardless of whether it includes import fees but does not include import taxesCIFThe price calculation still uses the customs duty-paid value. The scale of U.S. imports from Hong Kong is2019All years are in47Around US$17640_17662|, with little difference in various calibers and pricing methods.
Then the affected value of goods on the tax increase list may be32Around 100 million U.S. dollars, based on Hong Kong statistics10times. When the United States counts imports, if goods originating in China are labeledmade in ChinaLabel, holding a Chinese Certificate of Origin, even if it is re-exported through Hong Kong, it is regarded as a product imported from China, and may have been affected by the tax increase. The products imported from Hong Kong according to the statistics of the United States are theoretically regarded as originating in Hong Kong by the United States. This scale is ten times the scale of the export of Hong Kong products to the United States according to the statistics of the Hong Kong Statistics Department.
In any case, this part of the products involves Hong Kong’s w88 interests, and some of them may also involve the production and w88 interests of mainland China but have not been subject to additional tariffs before. Although this scale is ten times the scale of domestic exports calculated by the Hong Kong government, it is still approximately3700The scale of the affected products originating in mainland China is US$18684_18709|billion1%Not even.
On the other hand, the United States also exports a large amount to Hong Kong, and it is a surplus. The US exports and surplus to Hong Kong are calculated according to different calibers, and the data vary greatly. Calculated according to the broad caliber of total w88,2019The United States exported to Hong Kong308billion dollar product, with approx.260With a surplus of US$19357_19399|, Hong Kong is the largest source of surplus among all trading partners of the United States. If calculated according to narrow caliber,2019The United States exported approximately to Hong Kong165100 million US dollars of products, the surplus is about118billion U.S. dollars, making it the fourth largest source of surplus in the United States. According to Hong Kong statistics, Hong Kong imports goods from the United States about nearly 100% a year300$100 million.
Therefore, if Hong Kong retaliates against the United States, American products will be affected to a greater extent. However, as a long-term free w88 port with zero tariffs (except for four types of dutiable goods), Hong Kong’s countermeasures by imposing additional tariffs seem to be more costly than gains, because this may affect Hong Kong’s status as a free w88 port and people’s confidence in it. It can be said that Hong Kong’s status as a free w88 port and the policies adopted by the Hong Kong SAR government will definitely have a greater impact than the policies adopted by the United States.
4. The impact of other US policy changes on Hong Kong
Although the United States has not yet issued specific policies, the possibility of imposing high tariffs on products imported from Hong Kong exists. From a w88 perspective, another possible U.S. policy change is export controls. In the U.S. export control country classification table, Hong Kong, China is classified intoBGroup, China is divided intoDGroup.BGroup is less restrictive countries and regions,D21402_21485
After the differential treatment for Hong Kong is cancelled, exports to Hong Kong will also face the same export controls as exports to mainland China. The possibility of the United States implementing this policy change is very high. However, since the United States has actually greatly strengthened its export controls on Hong Kong in recent years, especially this year4month27Since the United States, the US Department of Commerce has promulgated the Export Control Amendment. Therefore, the actual effect of further canceling the different treatment between Hong Kong and mainland China is already relatively limited.
Other aspects that may be affected by Hong Kong may not have much to do with the status of a separate customs territory. However, if the United States believes that Hong Kong no longer has a high degree of autonomy, is unwilling to treat Hong Kong differently from the mainland, and does not even recognize Hong Kong's status as a contracting party, then many agreements between the United States and Hong Kong may need to be re-examined. For example, the Air Services Agreement and the Bilateral Tax Information Exchange Agreement between Hong Kong and the United States (FACTAInter-governmental agreement), bilateral criminal judicial assistance agreement, etc. It remains to be seen whether the United States will cancel these agreements. After all, this may be as harmful to U.S. interests as it is to Hong Kong.
If these bilateral agreements are canceled one by one, whether the U.S. consular affairs in Hong Kong will be affected is also a question. However, since foreign affairs are matters under the jurisdiction of the central government, the agreement on the establishment of a U.S. consular mission in Hong Kong is between the Chinese central government and the U.S. government199722863_22892
In addition, there is also discussion in the society about the use of US measures against Chinese financial institutions in Hong KongSWIFTThe impact on the system, the impact on Hong Kong’s linked exchange rate system, etc. So far, except for the United States’ measures to strengthen information disclosure supervision of Chinese companies listed in the United States, we have not seen any other financial policy trends.
Hong Kong is the world’s financial center, and measures in the financial field may have a greater impact on it. We lack research on this and hope to see analysis from other professionals. However, in principle, Hong Kong's status as a world financial center may be more affected by the policies and economic development of the Hong Kong SAR and mainland China. We hope that the Hong Kong SAR can face the current situation calmly, adhere to the free market economic system that maintains free w88, free investment, free exchange, and free flow of information, overcome the difficulties as soon as possible, and resume economic growth.
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