Little impact on shipping expected from HK Human Rights Act
December 3, 2019 Category China News Round-up, Weekly
The passage of the Hong Kong Human Rights and Democracy Act will have little impact on Hong Kong’s transshipping sector in the short term, according to shipping and logistics industry experts. Roberto Giannetta, Secretary General of the Hong Kong Liner Shipping Association, which represents the interests of shipping companies and shipping agents, said that he does not expect an immediate impact on the shipping business in Hong Kong. “I do not expect that transshipment cargo coming through Hong Kong will be affected. Transshipment cargo does not depend on special tariff-free access to the U.S. market. As for direct cargo to and from Hong Kong, the act states that Hong Kong’s tariff-free status would need to be reviewed every year,” said Giannetta. Products transshipped through Hong Kong must still bear the country of origin designation, meaning products shipped from China through Hong Kong to the U.S. are still subject to applicable tariffs. Hong Kong enjoys special status with the U.S., thanks to the United States–Hong Kong Policy Act, passed in 1992, which treats Hong Kong as a special customs territory separately from mainland China.
The Hong Kong Human Rights and Democracy Act will allow the U.S. government to suspend Hong Kong’s special trading status based on an annual certification by the U.S. State Department on whether the city is sufficiently autonomous from China to justify its unique treatment. The law comes amid nearly six months of social unrest. The protests began in June sparked by a now-withdrawn extradition bill that would have allowed the transfer of criminal suspects to mainland China among other jurisdictions. Chris Chan, head of shipping at law firm Holman Fenwick Willan, noted that while there will be little short term impact on Hong Kong’s transshipping sector, longer term prospects remain to be seen as the U.S. presidential election in 2020 adds to the uncertainty.
Hong Kong’s shipping and logistics sector is a major employer and contributor to the city’s gross domestic product (GDP). The industry employed 474,758 people and accounted for 17.5% of GDP in 2017. In 2018, 12.1% of mainland China’s exports – about USD301 billion – and 13.8% of imports were handed via Hong Kong, while 57% of Hong Kong re-exports originated in the mainland, the South China Morning Post reports.
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