Hong Kong runs the risk of losing its special customs status with the U.S. if its autonomy is seen to be eroded with the contentious extradition bill, according to one analyst.
Under the U.S.-Hong Kong Policy Act of 1992, Washington treats Hong Kong as a separate region from mainland China even after the former British colony transferred to Chinese rule in 1997. That includes treating Hong Kong as a separate customs territory.
With the U.S.-China trade fight in full swing, however, "the risk is that is seen by the U.S. as a weak link in the economic and technology conflict," wrote Olcott. Under the "first sale rule," tariffs are payable on the original price — which in this case, is what the Hong Kong-based company pays the factory in China, instead of the price paid by the American buyer.
The extradition bill is posing a risk to Hong Kong — in large part due to its timing, Olcott said, as the U.S. is currently "reappraising its China policy."
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