WTO arbitrators on Wednesday concluded that the US was out of line in requiring that products from Hong Kong be labeled as “Made in China,” a move that was part of Washington’s response to a crackdown on pro-democracy protests there in 2019 and 2020.
A WTO dispute panel found the US violated its obligations under the trade body’s rules and rejected Washington’s argument that US “essential security interests” allowed for such labeling.
The panel said the situation did not pose an “emergency” that would justify such an exemption under the trade body’s rules.
Photo: AFP
The US or Hong Kong could appeal the ruling to the WTO’s appeals court.
However, the Appellate Body is currently inactive because the US has almost single-handedly held up appointments of new members to the court amid concerns it had exceeded its mandate. So any such appeal would go into an arbitration void and remain unsettled.
The US Trade Representative’s (USTR) office said that it would ignore Wednesday’s ruling anyway.
“The United States does not intend to remove the marking requirement as a result of this report, and we will not cede our judgment or decision-making over essential security matters to the WTO,” USTR spokesperson Adam Hodge said in a statement.
Hong Kong is one of China’s special administrative regions and is considered a separate trading entity from China.
At a news briefing yesterday, Hong Kong Secretary for Commerce and Economic Development Algernon Yau (丘應樺) said he had written to the USTR urging the US to drop the label requirement.
The US market only accounts for about 0.1 percent of Hong Kong’s exports, but the requirement has caused “unnecessary concern” for manufacturers, he said.
“Even though the financial implication is minimal, it caused a lot of confusion to the customers regarding ‘Made in Hong Kong’ or ‘Made in China,’” he said.
Three decades ago, the US Congress passed a law allowing products from Hong Kong to benefit from a trading status different from China’s, and potentially lower tariffs, if it remained sufficiently autonomous. By marking products as “Made in China,” the US can ratchet up the tariffs it levies on goods from Hong Kong.
Mass protests persisted for months in Hong Kong in 2019 and 2020. They abated after Beijing imposed a National Security Law, using it to silence or jail many democracy advocates.
In July 2020, then-US president Donald Trump issued an executive order saying that Hong Kong was “no longer sufficiently autonomous to justify differential treatment in relation to the People’s Republic of China.”
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