The United States-Hong Kong Policy Act of 1992

Official relations between the United States and Hong Kong are governed by the United States-Hong Kong Policy Act of 1992 (“Policy Act”), which recognizes Hong Kong as an entity distinct from Mainland China for the purposes of U.S. law. In practical terms, the Policy Act recognizes Hong Kong as a separate territory when it comes to trade and economic relations. Accordingly, Hong Kong receives its own export controls treatment, customs treatment, and is treated separately under U.S. laws and policies governing financial transactions and immigration.

Hong Kong’s unique status under U.S. law depends on the reality of Hong Kong’s autonomy. This recognition provided under the Policy Act rests on both the “one country, two systems” policy established in the Sino-British Joint Declaration, and the high degree of autonomy provided to Hong Kong under the Basic Law. The Policy Act (22 USCS 66 § 5772(a)) allows the U.S. President to unilaterally suspend or change Hong Kong’s status through an Executive Order. Such an Executive Order could also be rescinded by the U.S. President if Hong Kong “regained sufficient autonomy” to again warrant separate treatment (22 USCS 66 § 5772(d)).

Is Hong Kong’s autonomy under threat?

Increasingly, Mainland China and Hong Kong authorities’ commitment to the “one country, two systems” framework is being called into question, given actions that could be seen to undermine Hong Kong’s rule of law and autonomous governance. Significant examples include the 2003 introduction (later recalled) of a national security bill that could have been used to suppress dissent, the 2014 State Council White Paper asserting that all Hong Kong officials, including judges, must display loyalty to China, the 2014 National People’s Congress Standing Committee decision to allow universal suffrage only if Chief Executive candidates are approved by China, the apparent 2015 detentions in Mainland China of several Hong Kong residents because of their activities as booksellers, and statements from Beijing directly calling into question the continued validity of the Sino-British Joint Declaration. The recent attempt by Hong Kong’s leadership to pass a bill that would allow extradition to Mainland China is just the latest example.

The former U.S. Consul General to Hong Kong, Kurt Tong, highlighted “a number of unfortunate ‘firsts’” that occurred in 2018 with respect to Hong Kong’s autonomy – “Hong Kong’s first banning of a political party; the first foreign journalist ejected from the city; and the first time Hong Kong has disqualified a large number of political candidates for their political views.” These incidents are catalogued in greater detail in the U.S. State Department’s 2019 Hong Kong Policy Act Report, which ultimately concluded that “as a general matter, Hong Kong maintains a sufficient — although diminished — degree of autonomy … to justify continued special treatment by the United States.”

What does this have to do with trade and investment?