WTO Panel Rebuffs U.S. Move to Consider Hong Kong as China for Origin Marking

On December 21, 2022, the following statement was released by USTR Spokesperson Adam Hodge

"The United States strongly rejects the flawed interpretation and conclusions in the World Trade Organization (WTO) Panel report released today regarding Hong Kong, China’s challenge to the U.S. determination and action suspending differential treatment for marks of origin. The U.S. action responded to highly concerning actions by the People’s Republic of China to erode Hong Kong, China’s autonomy and the democratic and human rights of its people, threatening U.S. national security interests.

"The Biden Administration remains committed to preserving U.S. national security and protecting human rights and democracy, and taking action to protect national security is a right inherent to any sovereign nation and explicitly reflected in the WTO Agreement. The United States has held the clear and unequivocal position, for over 70 years, that issues of national security cannot be reviewed in WTO dispute settlement, and the WTO has no authority to second-guess the ability of a WTO Member to respond to what it considers a threat to its security.

"The Hong Kong panel report suggests that the United States cannot act to address China’s undermining of democratic and human rights and democracy in Hong Kong. To be clear, the United States does not intend to remove the marking requirement as a result of this report, and we will not cede our judgment or decision-making over essential security matters to the WTO. This report further underscores the need for fundamental WTO reform and the United States will continue to work constructively with Members to ensure that the WTO remains relevant to the lives of all people."

BACKGROND

On August 11, 2020, U.S. Customs and Border Protection published in the Federal Register (85 FR 48551) notice that in light of the President's Executive Order on Hong Kong Normalization, issued on July 14, 2020, suspending the application of section 201(a) of the United States-Hong Kong Policy Act of 1992 to the marking statute, section 304 of the Tariff Act of 1930, with respect to imported goods produced in Hong Kong, such goods may no longer be marked to indicate "Hong Kong" as their origin, but must be marked to indicate "China." Given the commercial realities, CBP is allowing a transition period to implement new marking. The transition period extends through September 25, 2020.