Restrict defense and high-tech exports

Pompeo moves to restrict defense and high-tech exports to Hong Kong

The U.S. government approved the export of $2.4 million worth of controlled defense articles and services to Hong Kong in 2019.

By DOUG PALMER

The United States will halt exports of U.S.-origin defense equipment to Hong Kong and take steps to impose new restrictions on shipments of dual-use technologies because of actions Beijing has taken that erode the former British colony's limited self-rule, top Trump administration officials said Monday.

"The Chinese Communist Party’s decision to eviscerate Hong Kong’s freedoms has forced the Trump Administration to re-evaluate its policies toward the territory," U.S. Secretary of State Mike Pompeo said in a statement.

The U.S. Commerce Department also is suspending regulations affording preferential treatment to Hong Kong over China, including the availability of export license exceptions," Secretary Wilbur Ross said separately.

"Further actions to eliminate differential treatment are also being evaluated. We urge Beijing to immediately reverse course and fulfill the promises it has made to the people of Hong Kong and the world," Ross added.

The U.S. government approved the export of $2.4 million worth of controlled defense articles and services to Hong Kong in 2019, a State Department official said. About $1.4 million of that was actually shipped.

U.S. Commerce Department data shows the United States exported more than $75 million worth of military equipment to Hong Kong last year. That include $64 million worth of engines and turbines for military equipment, $7.8 million of military parts and $3.5 million under a line item marked "tanks, artillery, missiles, rockets, guns and ammunition."

It was not immediately clear the value of dual-use technology the United States exported to Hong Kong last year. That category covers high-tech civilian equipment that could be used by the military.

Background: The U.S. action comes as Beijing continues to press forward with a new national security law aimed at exerting more control over Hong Kong, thereby threatening the "one country, two systems" policy that has governed relations between the mainland and the city since the 1997 handover from Britain.

"The United States is forced to take this action to protect U.S. national security," Pompeo said. "We can no longer distinguish between the export of controlled items to Hong Kong or to mainland China. We cannot risk these items falling into the hands of the People’s Liberation Army, whose primary purpose is to uphold the dictatorship of the CCP by any means necessary."

On Friday, Pompeo announced that the United States was restricting the visas of certain current and former Chinese Communist Party officials it holds responsible for eroding Hong Kong's autonomy. However, it did not identify any individuals or give an overall tally.

Beijing responded today Monday by announcing visa restrictions on U.S. individuals who “behave egregiously” in relation to Hong Kong affairs, the South China Morning Post reported.

What's next: The new U.S. moves follow President Donald Trump's announcement in late May that he had instructed his administration to begin the process of ending Hong Kong's special trade status under 1992 U.S.-Hong Kong Policy Act.

That provision has made the city an attractive haven for American companies that want to sell to China and the rest of the surrounding region.

An estimated 85,000 U.S. citizens live in Hong Kong, many of them working for the more than 1,300 U.S. companies that have operations there. Nearly every major U.S. financial firm has a presence in Hong Kong, with hundreds of billions of dollars in assets under management, according to a 2019 State Department report.

"The United States is reviewing other authorities and will take additional measures to reflect the reality on the ground in Hong Kong," Pompeo said.

Trump has said that could include ending Hong Kong's treatment as a separate customs area under the 1992 Act, as well as subjecting foreign investments from Hong Kong to a more rigorous national security review.

U.S. Trade Representative Robert Lighthizer told Congress earlier this month that the administration was continuing to look at what it would mean for the United States to treat Hong Kong as part of the same customs territory as China.

But Lighthizer seemed to indicate some reservations over the move because the United States traditionally has run a large trade surplus with Hong Kong, unlike with the rest of China.