Asia, Business & trade, New in Lobbying, US-China tensions

Hong Kong’s US trade envoy moves to calm business jitters

The Donald Trump administration’s decision to roll back the special relationship with Hong Kong has left the territory’s US trade mission rushing to reassure an increasingly jittery international business community while trying to stay clear of the escalating feud between the United States and China.

In an exclusive interview with Foreign Lobby Report soon after Trump made his remarks Friday in the Rose Garden, the regional director of the Hong Kong Trade Development Council said his office had no plans to lobby the White House or Congress to back off. Rather, Ralph Chow said, the aim is to seek as much clarity as possible about Trump’s next steps while countering US messaging that Hong Kong has lost the “high degree of autonomy” that China promised when it retook control from the British in 1997.

“Starting with the trade war, and then sanctions on high-tech and even the financial sector against China, this is part of US foreign policy. So there is very little we can do against it, because Hong Kong is a very small city,” Chow said. “We are not able to influence the politicians in the US. So what we can do is perhaps just try to reassure the confidence of the international business community on Hong Kong, to make sure that they are fully informed about the situation in Hong Kong and also the background of the national security law to be established in Hong Kong.”

“The Hong Kong government has to do more educational work for the international business community,” he added. “From the media sentiment and what the US government has expressed, they are always emphasizing that the autonomy and also the freedom in Hong Kong will be affected. But if you look into more details, this may not be the case.”

Chow said much of the council’s focus in the coming days and weeks would be to glean more details about the specifics of Trump’s announced plan to curtail Hong Kong’s special status under US law, which covers everything from trade to travel. “[The president] left a lot of the questions unanswered,” Chow said. A roll-back was expected after Secretary of State Mike Pompeo determined earlier in the week that Hong Kong was no longer autonomous from China, which had justified its special treatment.

Chow downplayed the potential loss of preferential tariffs if the US stops treating Hong Kong as a customs territory separate from China. Domestic exports, he said, only constitute about 0.1% of Hong Kong’s total exports to the United States, with the rest made up of re-exports already subject to country-of-origin tariffs.

“Most of the exports from Hong Kong to the US are re-exports, either from China or the rest of Asia,” Chow said. “So the economic impact is very minimal.”

As for access to high-technology imports from the US, he said, “I think the US has always exercised stringent controls when they exported to China or even to Hong Kong. So again, we don’t see change between now and the future.”

“We are not able to influence the politicians in the US. So what we can do is perhaps just try to reassure the confidence of the international business community on Hong Kong.”

Ralph Chow, Americas Regional Director at Hong Kong Trade Development Council

The risk of potential sanctions against officials in mainland China and Hong Kong that the US sees as responsible for stifling its autonomy may be cause for more concern.

“The economic impact seems to be quite minimal at this moment, unless there will be other measures that are directly affecting our economic activities in Hong Kong,” Chow said. “So far we do not hear any further from the US government, so we have to monitor the situation and see exactly what kind of measures they are going to take.”

Helping the council with that mission are a half-dozen Washington lobbying and consulting firms: Akin Gump Strauss Hauer & Feld, BGR Group, Venable, Jacobs Global Trade & Compliance and Legislative Strategies.

Despite his sanguine attitude, Chow acknowledged the “psychological effect” of the US moves, noting that Hong Kong’s Hang Seng Index had tumbled over the past week. Echoing Chinese and Hong Kong officials such as Chief Executive Carrie Lam and security minister John Lee, he argued that Beijing was well within its rights to approve the national security law that has triggered the US response and insisted that the rights of Hong Kong’s residents and business community were not under attack.

The skeptical reaction to the security law in Washington and abroad suggest Chow and his team have their work cut out for them. From world capitals to the pages of leading business publications including The Economist, observers are wondering if the end of Hong Kong’s unique character has finally arrived.

“This fundamentally changes the landscape for both the rule of law and for the rights and freedoms of Hong Kong,” Hong Kong-based lawyer Anthony Dapiran told the Washington Post. “This law will mean whatever Beijing wants it to mean, and that has serious implications.”