Donald Trump says Hong Kong law he just signed could complicate any trade deal with China

Owen Churchill

US President Donald Trump said Monday that a new law authorising the US to sanction Chinese officials over human rights abuses in Hong Kong could complicate his administration's efforts to secure a trade deal with Beijing.

"It doesn't make it better," Trump acknowledged when asked if the Hong Kong Human Rights and Democracy Act " which he signed into law last week just before Thanksgiving " would make a deal with China harder to achieve.

In addition to punitive action against officials found to be responsible for the undercutting of freedoms guaranteed in the Basic Law " Hong Kong's mini-constitution " the law also requires the US Secretary of State to make an annual certification that the city enjoys sufficient autonomy from the mainland to warrant maintaining the special trade status it enjoys in Washington.

Trump had previously lobbied his Republican allies in the Senate to slow-walk the bill, and claimed last week that some of its provisions would "interfere" with his ability to "state the foreign policy of the United States". But bipartisan support for the act was considered so strong in both houses of Congress that a presidential veto would have been overridden.

Last week Trump also signed into law the Protect Hong Kong Act, which prohibits US companies from exporting non-lethal crowd-control munitions, including tear gas and rubber bullets, to city authorities amid allegations of disproportionate force by the city's police.

Sparked by a now-shelved extradition bill, six months of unrest in Hong Kong " and US support for the pro-democracy movement there " have become a flashpoint in bilateral tensions between Washington and Beijing, though both sides have tried to keep the issue separate from trade negotiations.

Seventeen months into their trade war, and with a further US tariff hike looming, the US and Chinese governments remain locked in talks aimed at securing an incremental agreement to defuse the dispute.

Trump dodged a question on Monday about whether that "phase-one deal" would happen before the end of the year, instead pivoting to familiar messaging that Beijing was more enthusiastic about pursuing a deal than he was.

"The Chinese are always negotiating," Trump said, speaking outside the White House before departing for a Nato summit in Britain. "I'm very happy where we are ... But the Chinese want to make a deal. We'll see what happens."

Trump and Chinese President Xi Jinping were initially expected to sign the deal at the Asia-Pacific Economic Cooperation (Apec) meetings in Chile in mid-November. Since the economic summit was cancelled, neither side has indicated when the leaders will meet to ink the deal, though Trump said last week that negotiators were in the "final throes" of an agreement.

Adding urgency, however, is Trump's previous declaration that on December 15, the US will impose new duties, with a round of 15 per cent tariffs on some US$156 billion of Chinese imports, including consumer goods like smartphones, laptops and toys.

Whether or not the US administration holds back on those duties depended on "[Beijing's] behaviour between now and then", US Commerce Secretary Wilbur Ross said on Monday.

Suggesting that US negotiators were not yet satisfied with what Beijing had brought to the table, Ross told Fox Business that Chinese negotiators were "making progress, but it's one step forward, one step backward".

"We need an overall package that meets our requirements for the phase one," he said, adding that agricultural purchases would be a prominent element in the deal, while structural issues would be largely pushed to a later phase.

Global Times, a Chinese state media tabloid, reported on Saturday that Beijing sought more than just a cancellation of future tariff hikes, and viewed a rollback of all existing tariffs as a prerequisite of the agreement.

US Commerce Secretary Wilbur Ross said on Monday that negotiations for a phase-one trade deal were still "one step forward, one step backward". Photo: AP alt=US Commerce Secretary Wilbur Ross said on Monday that negotiations for a phase-one trade deal were still "one step forward, one step backward". Photo: AP

In a research note on Monday, the investment consulting firm Veda put the possibility of both sides agreeing on a phase-one deal within the next two weeks at just 15 per cent.

The Trump administration's trade talks with China have proceeded as an increasingly hawkish Congress has pushed for a tougher response to Beijing's actions on a number of non-trade fronts, including human rights.

Despite the sensitivity of such matters, however, Chinese leaders have been reluctant to allow such matters to bleed into the trade talks. The announcement of a phase-one strategy in October, for example, came just days after the US declared a suite of sanctions against Chinese officials, government agencies and companies over their alleged involvement in human rights abuses in China's Xinjiang Uygur autonomous region.

In response to Trump's signing of the Hong Kong Human Rights and Democracy Act, the Chinese government announced earlier on Monday that it was suspending US Navy port calls to Hong Kong and had sanctioned several US non-governmental organisations for their alleged support of pro-democracy protests in the city.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.