HK commerce chief: New US rule on SAR exports 'pointless'

Trade leaders in Hong Kong slammed a new US rule that demands Hong Kong relabel its exports to that country as being from China, saying the rule disregards international trade agreements and norms, and is destined to backfire as the US currently enjoys its largest trading surplus with the city in years.

Hong Kong Secretary for Commerce and Economic Development Edward Yau Tang-wah said the new US rule that Hong Kong exports to the US cannot be labeled as "Made in Hong Kong" runs contrary to World Trade Organization regulations.

Yau made the remarks on Thursday after discussing the impact of the new rule with major trade organizations.

The US administration announced on Tuesday that goods made in Hong Kong for export to the US will need to be labeled as "Made in China" after Sept 25.

During a media briefing, Yau described the new US rule as "unreasonable", "barbarous", and inconsistent with WTO rules. He emphasized that Hong Kong, with its special status as a separate customs territory conferred by the Basic Law and recognized by the WTO, has every right to label its exports as "Made in Hong Kong".

The commerce chief added that the new rule will have minimal impact on the city's manufacturing sector. "In 2019, the total value of 'made in Hong Kong' products exported to the US was HK$3.7 billion (US$477.4 million), which is less than 0.1 percent of the city's total export of goods," Yau explained.

A spokesperson for the Chinese Manufacturers' Association of Hong Kong condemned the US for making trouble out of nothing, as it is stirring up huge confusion in the application procedures for the "Certificate of origin", an export document for trade formalities.

"Hong Kong manufacturers not only need to change their products' packaging under current circumstances, but their goods may also be unable to be recognized by international customs as their origin has now changed."

With the distinct possibility that "many local manufacturers may be caught in this dilemma, we do not rule out the possibility that we will suspend all Hong Kong's exports to the US," the spokesperson said.

Kennedy Wong Ying-ho, vice-president of the Hong Kong Chinese Importers' and Exporters' Association, said the "unreasonable" new rule might harm American business interests as it has hurt relations between Hong Kong and the US.

Wong told China Daily on Wednesday that the US has been enjoying a substantial trade surplus with Hong Kong in terms of trade in goods. "The surplus is approximately HK$30 billion to HK$40 billion, which is not a small number in terms of a trade surplus, especially when the US is not maintaining a trade surplus with most countries or regions in the world."

According to Hong Kong's Trade and Industry Department, the US had a US$31.1 billion surplus in merchandise trade with Hong Kong in 2018, which is the highest trade surplus the US enjoys with any single economy.

Wong believes Hong Kong can counter such unjustifiable sanctions from the US, as long as it continues to cooperate with the Chinese mainland and maintain the goal of further reforms and opening up its economy.

"The world now is interlinked. It's really not the same as the Cold War era, even though some US senior officials may think otherwise," Wong said. "I think Hong Kong's consumer market remains attractive to international businesses."

Hong Kong Barrister Lawrence Ma Yan-Kwok told China Daily that the new US rule will have minimal effect on Hong Kong because the city is no longer a "manufacturing economy", as was the case in the 1980s.

Ma said that industries such as tourism and financial services are the key driving forces of Hong Kong's current economic growth, along with vibrant and diverse professional services sectors.

"There have been a lot of professions like legal and accounting (sectors), all these professionals who are generating or contributing to the growth of Hong Kong and its GDP," Ma said, adding that the new US rule will have a negligible effect on Hong Kong's economy.

Azam Khan contributed to this story.