WTO rules for Hong Kong in its trade dispute with US

[Nan Yang]

WTO rules for Hong Kong in its trade dispute with US ​

• World Trade Organization panel finds that US broke trade rules in forcing Hong Kong goods to be relabelled ‘Made in China’
• US rejects the ruling, saying ‘we will not cede our judgment or decision-making over essential security matters to the WTO’

Finbarr Bermingham in Brussels
Published: 1:01am, 22 Dec, 2022

A World Trade Organization panel has found that the United States broke trading rules when it required products made in Hong Kong to be relabelled “Made in China”. Photo: AFP

The United States broke global trading rules by requiring that goods from Hong Kong be labelled “Made in China”, the World Trade Organization found on Wednesday.

Following Beijing’s crackdown on democracy protests in Hong Kong, the US in August 2020 said that goods from Hong Kong, which is a WTO member in its own right, would have to be relabelled to gain entry to its ports - a move intended to underscore the financial hub’s status as “just another Chinese city” in Washington’s eyes.

However, a panel of WTO judges found that this violated US commitments to the global trade organisation. Under Article IX: 1 of the General Agreement on Goods and Tariffs (GATT), members must ensure that marking requirements do not disadvantage firms from other WTO members.

The US argument that the relabelling was necessary to protect its “essential security interests” did not hold water with the judges.

While there was evidence of the US “and other members being highly concerned about the human rights situation in Hong Kong”, the panel ruled, the situation had not yet “escalated to a threshold of requisite gravity to constitute an emergency in international relations” that would permit such behaviour.

The US “strongly” rejected the ruling, criticising it as a “flawed interpretation and conclusions”, according to a statement from Adam Hodge, a spokesman for the office of the United States trade representative.

“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,” Hodge said.

He said that Beijing’s actions “to erode” the autonomy and democratic and human rights in Hong Kong were threatening US national security interests.

“Issues of national security cannot be reviewed in WTO dispute settlement, and the WTO has no authority to second-guess the ability of a WTO member to respond to what it considers a threat to its security,” the USTR statement said.

It added that the panel’s report “further underscores the need for fundamental WTO reform”.

The Hong Kong government welcomed the ruling, which affirmed the city as a separate customs territory.

“The ruling has once again confirmed that the US has disregarded international trade rules, attempted to impose discriminatory and unfair requirements unilaterally, unreasonably suppressed Hong Kong products and enterprises, and politicised economic and trade issues,” Algernon Yau, the secretary for commerce and economic development, said in a statement.

Hong Kong Secretary for Commerce and Economic Development Algernon Yau, shown at the Apec conference in Bangkok last month, hailed the WTO ruling. Photo: Sam Tsang

The US reserves the right to appeal the case, but since it has blocked any new appointments to the WTO’s appellate body, there are no judges to hear appeals.

Hong Kong is a member of an alternative appeal court that some WTO members have established, but the US is not. In Geneva parlance, launching an appeal under such circumstances is known as “appealing into the void”.

Earlier this month, the US said it would not abide by a WTO verdict that trade tariffs enacted during the Donald Trump administration on steel and aluminium violated its WTO commitments.

At the time, United States Trade Representative Katherine Tai warned the WTO that it was skating on “very, very thin ice”, because the verdict “gets deep into creating requirements and parameters for what is or is not a legitimate national-security decision”.

US Trade Representative Katherine Tai criticised an earlier WTO ruling on tariffs last week, saying it overstepped its authority by “creating requirements … for what is or is not a national-security decision”. Photo: Bloomberg

The dispute with Hong Kong arose after a Trump signed a 2020 executive order which ended Hong Kong’s special trading status in the US.

The order on “Hong Kong normalisation” was in response to Beijing’s imposition of a sweeping national security law on Hong Kong targeting what it considered acts of secession, subversion, terrorism and collusion with foreign forces.

In August 2020, a notice appeared on the US Federal Register requiring that Hong Kong-made goods be relabelled as “Made in China” to be permitted entry to US ports - a move that implied the US did not consider Hong Kong a separate customs entity to China.

As a WTO member, Hong Kong goes by the official title “Hong Kong, China”. It insists that its customs jurisdiction is operated independently of Beijing.

The Hong Kong government complained to the WTO in late 2020, laying out seven rules of the global trade system that it said the US had broken.

Hong Kong believed the US policy “undermined the Hong Kong brand” and placed an “unnecessary burden” on Hong Kong businesses.

Additional reporting by Orange Wang

 

[Hamartia Antidote]

Hong Kong is not China, according to the WTO

The World Trade Organization ruled that the US government’s requirement that Hong Kong-made goods be labeled “Made in China” is unwarranted and violates international regulations.

finance.yahoo.com

The World Trade Organization ruled that the US government’s requirement that Hong Kong-made goods be labeled “Made in China” is unwarranted and violates international regulations.

Hong Kong is a special autonomous region belonging to China, and for the last three decades has been considered by the US to be a separate trading entity from the mainland, a status that often carried lower tariffs.

.....

 

[Zsari]

Hong Kong is not China, according to the WTO

The World Trade Organization ruled that the US government’s requirement that Hong Kong-made goods be labeled “Made in China” is unwarranted and violates international regulations.

finance.yahoo.com

The World Trade Organization ruled that the US government’s requirement that Hong Kong-made goods be labeled “Made in China” is unwarranted and violates international regulations.

Hong Kong is a special autonomous region belonging to China, and for the last three decades has been considered by the US to be a separate trading entity from the mainland, a status that often carried lower tariffs.

.....

So it's not about "essential security matter"? Another slap in the face of the so-called rule-based order.

 

[jhungary]

So it's not about "essential security matter"? Another slap in the face of the so-called rule-based order.

Depends on what article, if those item made in Hong Kong were of Strategic importance (Or so called Strategic Article), then yes, this is essential security matter

On the other hand, it also related to Financial Security. Because Anti-Trust and Dumping both belong to Economic Security Category, and those are as real as national security concern.

And finally, WTO ruling probably wouldn't do much because US could most likely just take out Hong Kong Special Status and equate it to the mainland, they already done it in other field, such as immigration issue (Side note, you can no longer apply for Diversity Visa if you are born in Hong Kong because now INS see you as born in Mainland China) they would simply extend it to tax and excise.

 

[Zsari]

Depends on what article, if those item made in Hong Kong were of Strategic importance (Or so called Strategic Article), then yes, this is essential security matter

On the other hand, it also related to Financial Security. Because Anti-Trust and Dumping both belong to Economic Security Category, and those are as real as national security concern.

And finally, WTO ruling probably wouldn't do much because US could most likely just take out Hong Kong Special Status and equate it to the mainland, they already done it in other field, such as immigration issue (Side note, you can no longer apply for Diversity Visa if you are born in Hong Kong because now INS see you as born in Mainland China) they would simply extend it to tax and excise.

Pay attention and note what's highlighted by someone I was responding to. Yes, US has already rejected the WTO ruling, so it's not going to abide by it, showing how irrelevant the so call rule-based order is to the US when it is inconvenient. And no, whatever US does elsewhere have no bearing in the WTO, as HK has a separate membership within the WTO.

 

[jhungary]

Pay attention and note what's highlighted by someone I was responding to. Yes, US has already rejected the WTO ruling, so it's not going to abide by it, showing how irrelevant the so call rule-based order is to the US when it is inconvenient. And no, whatever US does elsewhere have no bearing in the WTO, as HK has a separate membership within the WTO.

But then no one can force US to accept that Hong Kong is a separate member than China.

That is the core of the issue here. Not whether or not US will abide to the ruling nor whether that constitute security concern....

 

[Zsari]

But then no one can force US to accept that Hong Kong is a separate member than China.

That is the core of the issue here. Not whether or not US will abide to the ruling nor whether that constitute security concern....

Yes. No one can force the US to do anything. Might makes everything right, that's the whole point of it. Guess you still don't get it.

 

[Nan Yang]

Hong Kong is not China, according to the WTO

The World Trade Organization ruled that the US government’s requirement that Hong Kong-made goods be labeled “Made in China” is unwarranted and violates international regulations.

finance.yahoo.com

The World Trade Organization ruled that the US government’s requirement that Hong Kong-made goods be labeled “Made in China” is unwarranted and violates international regulations.

Hong Kong is a special autonomous region belonging to China, and for the last three decades has been considered by the US to be a separate trading entity from the mainland, a status that often carried lower tariffs.

.....

Quote
Yau argued the city’s domestic exports to the US, equivalent to HK$7.4 billion (US$949.4 million), accounted for only 0.1 per cent of the total figure last year, but it was still necessary to maintain the “Made in Hong Kong” label.

Quote
Beijing’s foreign ministry office in Hong Kong also weighed in, saying it welcomed the ruling and supported Hong Kong in maintaining its status as a separate customs territory

“[The US relabelling] is just an attempt to slander the ‘one country, two systems’ principle, which is also typical power politics and hegemonic logic,” a spokesman said in a statement, adding that the Hong Kong government’s complaints were aimed at upholding the basic principles of international law and the multilateral trading system

 

[jhungary]

Yes. No one can force the US to do anything. Might makes everything right, that's the whole point of it. Guess you still don't get it.

Dude, it's not about might, this is about individualism. Even if Uganda want to see Hong Kong and China are the same, they will see it regardless of what WTO said.

There is no law in place on WTO level on how a country dictate their trading rules, that's up to individual country to make.

Guess it's you still don't get it

 

[Zsari]

Dude, it's not about might, this is about individualism. Even if Uganda want to see Hong Kong and China are the same, they will see it regardless of what WTO said.

There is no law in place on WTO level on how a country dictate their trading rules, that's up to individual country to make.

Guess it's you still don't get it

‘The World Trade Organization ruled that the US government’s requirement that Hong Kong-made goods be labeled “Made in China” is unwarranted and violates international regulations.’

So you are accused the WTO of making things up?

 

[lightning F57]

So if I am reading correctly US " We follow international rules and conventions when it suits us"

 

[jhungary]

‘The World Trade Organization ruled that the US government’s requirement that Hong Kong-made goods be labeled “Made in China” is unwarranted and violates international regulations.’

So you are accused the WTO of making things up?

Make what up??

 

[Zsari]

There is no law in place on WTO level on how a country dictate their trading rules, that's up to individual country to make.

‘The World Trade Organization ruled that the US government’s requirement that Hong Kong-made goods be labeled “Made in China” is unwarranted and violates international regulations.’

Next, you'll be arguing regulation is not law.

 

[jhungary]

‘The World Trade Organization ruled that the US government’s requirement that Hong Kong-made goods be labeled “Made in China” is unwarranted and violates international regulations.’

Next, you'll be arguing regulation is not law.

Dude, that's a dispute.

Do you even know the different between a "Dispute" and a "Violation". Now tell me in which way WTO can hold US accountable to this and ENFORCE said judgement??

And no, Regulation is NOT a law. Regulation is an interpretation of any Law, in some jurisdiction, it was known as By-Law.

Difference Between Law and Regulation | Compare the Difference Between Similar Terms

Law vs Regulation In every society or culture, law is devised as a system of written rules enforceable by courts to ensure compliance to actions and

www.differencebetween.com

On the other hand, as I said, even if US comply to the request WTO made, how's that different when US keep "Made in Hong Kong" and then take the Hong Kong Special Excise Status for Hong Kong and align it to China, which is why I said it wouldn't make a different in the first place, because WTO can solve dispute but they CANNOT force people to make their own trade rule.

 

[Zsari]

Dude, that's a dispute.

Do you even know the different between a "Dispute" and a "Violation". Now tell me in which way WTO can hold US accountable to this and ENFORCE said judgement??

And no, Regulation is NOT a law. Regulation is an interpretation of any Law, in some jurisdiction, it was known as By-Law.

‘The World Trade Organization ruled that the US government’s requirement that Hong Kong-made goods be labeled “Made in China” is unwarranted and violates international regulations.’

The WTO ruling on the dispute is based on existing regulations, and the WTO did say it "violates international regulations." A clear statement that you are denying. But no, I already stated that no one can enforce any ruling against the US, not the WTO, the ICJ or any other international body.

As to ridiculous argument on law and regulations, remember the statement was on the so-called rule-based order, not law-based order. You are not only one bringing law into the discussion.