State Department’s certification sets the stage for Trump to determine Hong Kong’s future status

On Wednesday, the US Secretary of State Mike Pompeo surprised the world by announcing that he had certified to the Congress that Hong Kong no longer autonomous from China. The news sets off widespread discussion regarding whether the US will remove Hong Kong’s special status or not. Below are some of the possible scenarios that could happen:

Question: What are the next steps following the State Department’s certification that Hong Kong no longer retains the autonomy from China?

Julian Ku: This is the requirement under the Hong Kong Human Rights and Democracy Act, which requires the State Department to certify to Congress that Hong Kong continues to warrant the same treatment as it has always received. The certification was new, as it wasn’t in the 1992 Hong Kong Policy Act.

The obligation is a bunch of specific questions that he has to answer in order to determine whether Hong Kong remains autonomous or not. It is a much detailed requirement. The certification doesn’t immediately change anything, and the president will have the authority to determine which statute and treaties that are permanently applied to Hong Kong would change.

The step of certification doesn’t change Hong Kong’s treatment, but it sets the stage for the President to come in and determine how to treat Hong Kong. This is the first step to that process.

Question: Judging from the development of the US-China relations over the last few months, what are some of the most possible changes that will happen to Hong Kong’s status from Washington’s perspective?

Julian Ku: Trump has a lot of options. I assume he is going to start with tariffs, because now Hong Kong is treated as a separate entity. That will be relatively easy for him to do, so he might consider treating everything from Hong Kong as if it was coming from China.

He might also consider adjusting export control regulations regarding Hong Kong. Trump could treat Hong Kong the same as China when it comes to exporting technology. Stuff that can’t go to China would also not be able to go to Hong Kong anymore. This is probably the easiest thing for him to do.

It may not affect things dramatically, but since there are a few things that go to Hong Kong but don’t go to China, he might still consider doing it. Ultimately, the actual impact is hard to gauge, but these are the legal things that he could do which should be relatively straightforward.

The final thing that should be pretty easy to do is to terminate the extradition treaty with Hong Kong. These are the three things that I can imagine Trump doing.

I think there is also some tax treaties as well as some currency agreement that are not at the treaty level, so there are other things that he can do down the road. The key thing for the legal purposes is that this is not an all or nothing situation, so he can pick and choose what he decides to suspend.

Question: What about the impact that this announcement is going to have on Hong Kong?

Julian Ku: I think the impact is going to be more political than economic in the beginning, because it’s a big political step, as laws have been around since 1992, and there hasn’t been any chances for big changes. So I think the political symbolism of this move is a big deal.

American People’s perception of Hong Kong will also change and it creates doubt for foreign companies that want to continue to maintain their businesses in Hong Kong. But the actual economic impact will depend on the agreements that are terminated.

As a big picture, I can imagine any company planning to expand their operation to Hong Kong might want to rethink the decision.

Question: Will the State Department’s announcement set off another round of tit-for-tat between China and the US?

Julian Ku:There doesn’t seem to be any direct negotiation or any backchannel talks between Washington and Beijing. Rhetorically, it looks like the trade deal between the US and China would be unlikely to be fulfilled. China has some leverage to pull as well. I expect China will react and this back and forth will continue.

This is relatively a big deal, because it was never something that we would consider until recently. Everything changes so quickly over the last few months, so I’m not even shocked by this. I also wouldn’t be shocked if China said “it’s all over” for the trade deal tomorrow. I can see this go down the road with more back and forth.

I imagine Trump is going to play this out a little bit, but I don’t think he will pull the trigger yet. This will give China some time to back down a little bit. I don’t see this as the end of it, but it’s a little bit like he certifies it but it doesn’t mean he is going to immediately take action. The timing of that it’s pretty much up to him. However, I don’t think this is a great situation for Hong Kong and I don’t know how they will get out of this one.

This interview appeared in Mandarin on DW’s Chinese website.