Washington began eliminating Hong Kong’s special status under U.S. law on Monday, by stopping defense exports and restricting access to high technology products as Beijing is working on a new Hong Kong security legislation, CNBC reported.
The move comes as the top decision-making body of China’s parliament deliberates a draft national security law for Hong Kong. Pro-democracy activists in the city fear that the new legislation will be used to eliminate dissent and tighten Beijing’s control.
“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,” Secretary of State Mike Pompeo said.
Last month, President Donald Trump responded to Chinese plans for the security law by claiming he was initiating a process to eliminate special economic treatment that has allowed Hong Kong to remain a global financial center since its handover by Britain in 1997.
While Trump stopped short of calling for an immediate end to privileges, he said the moves would affect the full range of U.S. agreements with Hong Kong. These agreements range from an extradition treaty to export controls on dual-use technologies and more “with few exceptions.”
The Commerce Department said it was suspending “preferential treatment to Hong Kong over China, including the availability of export license exceptions,” adding that further actions to eliminate Hong Kong’s status were being evaluated.
In 2018, $432.7 million of goods were shipped to Hong Kong under a Commerce Department exception, mostly relating to encryption, software and technology, according to CNBC.
Pompeo said the United States, effective Monday, was ending exports of defense equipment to Hong Kong and will also take steps to end the export of dual-use technologies to the territory. Dual-use technologies have both commercial and military uses.
Last year, the Department of State approved approximately $2.4 million worth of controlled defense articles and services to Hong Kong government authorities, of which approximately $1.4 million worth was shipped, according to State Department records.