The United States is violating international trade rules by labeling imports from Hong Kong as imports from China, the World Trade Organization ruled.
Wednesday’s WTO ruling concerned a decision by the administration of former US President Donald Trump to strip the Chinese-ruled city of special trade privileges.
Trump made the decision — which meant that goods made in the city could no longer be stamped “Made in Hong Kong” — after Beijing imposed a comprehensive security law on the financial center in 2020 to stamp out dissent.
Until 2020, the US had treated Hong Kong, which is semi-autonomous and an independent WTO member, in the same way as before when it escaped British control in July 1997.
A three-member WTO panel found that the US had breached an obligation with Hong Kong by treating the country less favorably than other WTO members when it came to the origin labelling of its products.
The US said it had introduced an exemption that provides for measures to protect a country’s “essential security interests.”
The panel acknowledged that tensions between the US and Hong Kong had increased but stated that there was no “emergency in international relations,” the threshold required to apply the exemption.
The panel concluded its 96-page report by saying that the US should bring its measure into line with global trade rules.
The verdict was sharply reprimanded by Washington on Wednesday. US Trade Representative spokesperson Adam Hodge stated that the country “firmly rejects the erroneous interpretation and conclusions of the panel report.”
The US responded to China’s “extremely worrying measures” and threatened US national security interests, Hodge said.
He added that as a result of the latest report, the US is not planning to lift the labeling requirement.
“National security issues cannot be considered as part of the WTO dispute settlement, and the WTO has no authority to question a WTO member’s ability to respond to a threat,” said Hodge.
Hong Kong’s Minister of Trade and Economic Development praised the WTO ruling and called on Washington to reverse course.
“It was discriminatory and completely inappropriate and a serious violation of WTO rules,” Algernon Yau told reporters, adding that the change had “confused customers.”