Trump ends Hong Kong preferential status, not interested in China trade talks


  • Economy
  • Wednesday, 15 Jul 2020

U.S. President Donald Trump on Tuesday shut the door on "Phase 2" trade negotiations with China, saying he does not want to talk to Beijing about trade because of the coronavirus pandemic.

WASHINGTON: President Donald Trump on Tuesday ordered an end to Hong Kong's special status under U.S. law to punish China for what he called "oppressive actions" against the former British colony.

Citing China's decision to enact a new national security law for Hong Kong, Trump said he signed an executive order that will end the preferential economic treatment Hong Kong has received for years - "no special privileges, no special economic treatment and no export of sensitive technologies," he told a news conference.

Acting on a Tuesday deadline, he also signed a bill approved by the U.S. Congress to penalise banks doing business with Chinese officials who implement the new security law.

"Today I signed legislation, and an executive order to hold China accountable for its aggressive actions against the people of Hong Kong, Trump said.

"Hong Kong will now be treated the same as mainland China," he added.

According to a White House fact sheet, the executive order includes revoking special treatment for Hong Kong passport holders.

Critics of the security law fear it will crush the wide-ranging freedoms promised to Hong Kong when it returned to Chinese rule in 1997, while supporters say it will bring stability to the city after a year of sometimes violent anti-government protests.

The security law punishes what Beijing broadly defines as subversion, secession, terrorism and collusion with foreign forces with up to life in prison.

U.S. relations with China have already been strained over the global coronavirus pandemic, China's military buildup in the South China Sea, its treatment of Uighur Muslims and massive trade surpluses.

The former British colony was returned to Chinese rule in 1997 with a law protecting freedoms of speech, assembly and the press until 2047.

The legislation Trump signed calls for sanctions on Chinese officials and others who help violate Hong Kong’s autonomy, and financial institutions that do business with those found to have participated in any crackdown on the city.

Trump's handling of the coronavirus pandemic has raised doubts about whether he can win re-election on Nov. 3 amid a surge of new infections. He has attempted to deflect blame onto China.

"Make no mistake. We hold China fully responsible for concealing the virus and unleashing it upon the world. They could have stopped it, they should have stopped it. It would have been very easy to do at the source, when it happened," he said.

Asked if he planned to talk to Chinese President Xi Jinping, Trump said: "I have no plans to speak to him."

DOUBLE-EDGED SWORD?

In rambling remarks, Trump spent much of his Rose Garden appearance criticizing Democratic presidential rival Joe Biden.

Both candidates are constrained from active campaign rallies by the virus and fears that participants could be infected.

Ending China’s special economic status could be a double-edged sword for the United States.

Hong Kong was the source of the largest bilateral U.S. goods trade surplus last year, at $26.1 billion, based on U.S. Census Bureau data. It is also a major destination for U.S. legal and accounting business. More than 1,300 U.S. firms have offices there.

Analysts say that completely ending Hong Kong’s special treatment could prove self-defeating for the United States, which has benefited from the territory's business-friendly conditions.

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.

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

The United States began eliminating Hong Kong's special status under U.S. law in late June, halting defence exports and restricting the territory's access to high-technology products as China prepared to enact the security legislation.

In May, Trump responded to China's plans for the security law by saying he was initiating a process to eliminate the special economic treatment that has allowed Hong Kong to remain a global financial centre.

He stopped short then of calling for an immediate end to privileges, but said the moves would affect the full range of U.S. agreements with Hong Kong, from an extradition treaty to export controls on dual-use technologies.

A U.S. official, speaking on condition of anonymity, said the administration was also preparing sanctions against Chinese officials and entities involved in the Hong Kong crackdown, including further U.S. travel bans and possible Treasury sanctions.

The timing remained unclear. The White House has previously threatened such sanctions but so far has only imposed restrictions on visas for an unspecified number of unnamed Chinese officials.

Also Tuesday

U.S. President Donald Trump on Tuesday shut the door on "Phase 2" trade negotiations with China, saying he does not want to talk to Beijing about trade because of the coronavirus pandemic.

"I'm not interested right now in talking to China," Trump replied when asked in an interview with CBS News whether Phase 2 trade talks were dead.

"We made a great trade deal," Trump said, of the Phase 1 agreement signed in January. "But as soon as the deal was done, the ink wasn't even dry, and they hit us with the plague," he said, referring to the novel coronavirus, which first emerged from the Chinese city of Wuhan.

For months, Trump has blamed China for sending the coronavirus to the United States, saying that China must be "held accountable" for failing to contain the disease. The pandemic has taken a stiff toll on the U.S. economy, endangering Trump's hopes for re-election in November. China pledged to increase purchases of U.S. farm and manufactured goods, energy and services by $200 billion over two years as part of the Phase 1 trade deal, but Trump has said the pandemic changed his views on the agreement.

At the White House, Trump announced that he signed legislation and an executive order to hold China accountable for the "oppressive" national security law it imposed on Hong Kong.

The measure approved by Congress, the latest in a series of moves aimed at ratcheting up pressure on Beijing, gives Trump's administration the authority to penalize banks doing business with Chinese officials who implement Beijing’s new national security law on Hong Kong.

Trump said he has no plans to talk with Chinese President Xi Jinping.

Even before the coronavirus pandemic began, few trade watchers in Washington were expecting https://www.reuters.com/article/us-usa-trade-china-phasetwo/no-phase-two-u-s-china-deal-on-the-horizon-officials-say-idUSKBN1XZ00H Phase 2 negotiations to bear fruit before the 2020 election.

While Phase 1 focused mainly on Chinese purchases of U.S. goods, improved U.S. access to China's financial services market and some intellectual property issues, Phase 2 was meant to tackle far more difficult issues associated with China's technology transfer policies, industrial espionage and government subsidies to state-owned enterprises. - Reuters

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