Hong Kong warned WTO challenge to potential US trade sanctions could be ‘counterproductive’
- The US has raised the possibility of revoking Hong Kong’s special status due to the proposal for a national security law being approved by China’s National People’s Congress
- Hong Kong could then be subjected to the same trade war tariffs imposed on Chinese exports to the US
Hong Kong has hinted at a potential legal challenge to sanction threats from the United States, stating that it would be “a violation of international law”, as the fallout from China’s decision to implement a national security law in the city continued.
Should the US revoke Hong Kong’s special trading status, the special administrative region could be subjected to the same trade war tariffs imposed on Chinese exports to the US, or even unilateral tariffs against Hong Kong specifically, as well as export controls and potentially greater scrutiny of its financial and payments landscapes, experts said.
In the case of tariffs, analysts said it is “factually possible and legally correct” that Hong Kong could bring a WTO case against the US, given that it retains its own WTO membership and should be treated on a “most-favoured nation” basis, which punitive tariffs would violate.
Hong Kong is really limited in what it can do. Taking a WTO case would be symbolic, and even if Hong Kong prevails, the damages would be very low
But analysts believe any such future action would be “counterproductive”, since even if Hong Kong was to win a case, it could be permitted to introduce retaliatory tariffs on the US, which would harm Hong Kong’s economy and image as a beacon of free trade.
Furthermore, it is unlikely that a WTO case, which would take years to process, would resonate in a White House which is openly scornful of the Geneva-based trade body.
“Hong Kong is really limited in what it can do. Taking a WTO case would be symbolic, and even if Hong Kong prevails, the damages would be very low. So if Hong Kong decides to put tariffs on the US – which would be a first – what does it target? Consumer products or food? What kind of message does that send about Hong Kong? Who is that really hurting?” said Bryan Mercurio, a professor covering the WTO at the Chinese University of Hong Kong.