November 21, 2019 / 5:38 AM / 17 days ago

Explainer: U.S. legislation on Hong Kong: what does it mean?

WASHINGTON (Reuters) - The U.S. Congress has passed legislation to back protesters in Hong Kong and threaten China with possible sanctions on human rights, which sources say President Donald Trump is expected to sign into law in coming days.

Mass protests for more democracy and autonomy have rocked Hong Kong for more than five months, with escalating violence and fears that China will ratchet up its response to end the unrest.

The “Hong Kong Human Rights and Democracy Act,” which the Senate and House passed this week, would put the special treatment the former British colony enjoys under U.S. law under tighter scrutiny linked to the extent of Hong Kong’s autonomy from Beijing.

A second bill, also approved by both chambers, would ban the export of crowd-control munitions, including tear gas, rubber bullets, stun guns and tasers, to the Hong Kong police force.

WHAT NEXT?

After their final passage by Congress on Wednesday, which was angrily condemned by China, the two bills were headed to the White House, and sources familiar with the matter have said Trump is expected to sign them into law.

The president has 10 days, excluding Sundays, to sign a bill passed by Congress, unless he opts to use his veto powers, which can be overridden only by a two-thirds vote in both the Senate and the House. According to the Senate website, Trump has used his veto powers only six times in his presidency.

If the bills become law, the State Department would be required to certify at least once a year that Hong Kong retains enough autonomy to justify the favorable U.S. trading terms that have helped it maintain its position as a world financial center.

Officials responsible for human rights violations in Hong Kong could also be subject to sanctions, including visa bans and asset freezes.

While many see the acts as symbolic, they have the potential if implemented to completely upend relations between the United States and Hong Kong and change the territory’s status to that of any other Chinese city.

At the heart of matter is Beijing’s promise to allow Hong Kong a “high degree of autonomy” for 50 years when it regained sovereignty over the city in 1997, which has formed the basis of the territory’s special status under U.S. law. Protesters say freedoms have been steadily eroded.

BEIJING ANGERED

China denounced the legislation as gross interference and violation of international law. If the bills become law, tensions between Washington and Beijing are likely to increase and could affect negotiations to end a damaging trade war that Trump has made a top priority.

Some analysts say any move to end Hong Kong’s special treatment could prove self-defeating for the United States, which has benefited from the business-friendly conditions in the territory.

If Hong Kong becomes just another Chinese port, this could hurt not just the city and China, but U.S. businesses too, and companies that rely on the territory’s role as a middleman, or for trans-shipping, would likely take their business elsewhere.

Even if Trump tried and failed to veto the bills, they contain strong waivers that would allow him to block their provisions on national-security and national-interest grounds.

At the same time, even without the bills, the president can already suspend elements of Hong Kong’s special status by executive order if he determines that the territory is “not sufficiently autonomous” from Beijing.

HOW IMPORTANT IS HONG KONG’S SPECIAL STATUS?

From a business perspective, one of the most important elements of Hong Kong’s special status has been that it is considered a separate customs and trading zone from China.

That has meant, for instance, that trade-war tariffs don’t apply to exports from Hong Kong.

According to the State Department, 85,000 U.S. citizens lived in Hong Kong in 2018 and more than 1,300 U.S. companies operate there, including nearly every major U.S. financial firm.

FILE PHOTO: A protester walks inside the besieged Hong Kong Polytechnic University (PolyU) in Hong Kong, China, November 20, 2019. REUTERS/Adnan Abidi/File Photo

The territory is a major destination for U.S. legal and accounting services and in 2018 the largest U.S. bilateral trade-in-goods surplus was with Hong Kong at $31.1 billion.

Trade between Hong Kong and the United States was estimated to be worth $67.3 billion in 2018, with the United States running a $33.8 billion surplus - its biggest with any country or territory, according to the Office of the U.S. Trade Representative.

The American Chamber of Commerce in Hong Kong has said that anything that changes the status of the territory “would have a chilling effect not only on U.S. trade and investment in Hong Kong but would send negative signals internationally about Hong Kong’s trusted position in the global economy.”

Reporting by John Ruwitch in Shanghai and David Brunnstrom, Patricial Zengerle and Matt Spetalnick in Washington; Editing by Robert Birsel and Jonathan Oatis

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