Departing US Consul-General Michael Klosson has warned of damage to the rule of law if an anti-subversion law leads to another reinterpretation of Basic Law provisions by Beijing.
Mr Klosson said the world would watch closely the legislative plan on Article 23 in the Basic Law, which says the SAR should enact its own law to prohibit any act of treason, secession, sedition or subversion against the central government.
Questions could be raised on the status of groups such as Falun Gong, which is banned on the mainland but remains legal in Hong Kong.
'If the result of this new legislation is to reduce scope for sensitive activities, the international community will ask questions,' Mr Klosson said.
'Politically sensitive activities mark a difference between Hong Kong and China. It will be seen as a litmus test of the integrity of the arrangements [under 'one country, two systems'].
'It may be unfair, but that's what it is. If the result of Article 23 is to circumscribe politically sensitive activities, people in the international community will be asking what happens to 'one country, two systems',' he said.
Mr Klosson, who succeeded Richard Boucher in 1999, has been nominated by President George W. Bush to become US Ambassador to Cyprus. He is due to leave Hong Kong next Tuesday.
