People from across the globe know of the ongoing trade war between the U.S. and China, which resulted from many prior disagreements. Both countries have been raising taxes and other measures on each other’s goods since 2018. Although China, in general, has been affected by this conflict, Hong Kong has held a special status with the U.S. since 1992.
Hong Kong is an autonomous territory despite technically being a part of China. According to the U.S.-Hong Kong Policy Act of 1992, the U.S. government considers Hong Kong to be a separate region to mainland China which means that they are not liable to the same tariffs that the U.S. imposes on products and exports from mainland China. However, this may all change once the Hong Kong government passes the Extradition Bill.
The Extradition Bill is known entirely as The Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation (Amendment) Bill 2019. This Bill was proposed to establish a mechanism wherein fugitives would be transferred to a different jurisdiction located outside of Hong Kong.
As soon as Hong Kong passes the Bill, they will lose their full autonomy status and will not be able to keep their exclusive trade agreement with the U.S. Then, their products and goods would be subject to the same tariffs as those from mainland China. Allowing this to happen could significantly affect the business economy of the country.
The reason why the U.S. is keen on eliminating the special status Hong Kong has is that Hong Kong gives them a disadvantage in the trade fight. Many Hong Kong firms pay their factories located in mainland China with regular tariffs on the original price. Going through a third-party would allow China to avoid higher taxes. Having Hong Kong retain its status could give China a loophole they could take advantage of to stay on top of this struggle.
Over 25 percent of Hong Kong’s population has taken to the streets to protest the Extradition Bill this week.