TWN Info Service on WTO and Trade Issues (Nov20/04)
5 November 2020
Third World Network

Hong Kong-China initiates dispute over US origin marking measures
Published in SUNS #9226 dated 5 November 2020

Geneva, 4 Nov (Kanaga Raja) – Hong Kong, China has initiated a dispute at the World Trade Organization over marks of origin requirements imposed by the United States on goods produced in Hong Kong, China.

As an initial step, Hong Kong, China has sought consultations with the United States. The request was circulated to WTO members on 3 November.

If consultations fail to settle the dispute within 60 days, or if during the 60 days, the consulting parties jointly consider that the consultations have failed, the complaining party may request the establishment of a panel.

In its communication to the DSB (WT/DS597/1), Hong Kong, China said on 11 August 2020, the US Customs and Border Protection (USCBP) published a notice that, after 25 September 2020, goods produced in Hong Kong must be marked to indicate that their origin is “China” for the purposes of the origin marking requirement set forth in Section 304 of the Tariff Act of 1930, 19 U.S.C. S 1304.

By subsequent notice, the USCBP extended the date for compliance with this requirement to 10 November 2020.

Section 304 of the Tariff Act of 1930 requires articles of non-US origin imported into the United States to be marked “in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article”,” said Hong Kong, China.

Prior to the imposition of the revised origin marking requirement as announced in the notice published on 11 August 2020, the United States has required, and therefore permitted, goods produced in Hong Kong, China to be marked to indicate that their origin is “Hong Kong”, it said.

The prior treatment by the United States of goods of Hong Kong, China origin was consistent with the fact that the United States generally permits goods originating within the territory of other WTO Members, including separate customs territory Members, to be marked with the English name of that territory, it added.

According to Hong Kong, China, the USCBP published the notice on 11 August 2020 pursuant to the “Executive Order on Hong Kong Normalization” signed by the President of the United States Donald J. Trump on 14 July 2020.

The Executive Order suspends the application of Section 201(a) of the United States-Hong Kong Policy Act of 1992, 22 U.S.C. S 5721(a), to a variety of US statutes, including Section 304 of the Tariff Act of 1930, said Hong Kong, China.

It added that under Section 201(a) of the United States-Hong Kong Policy Act of 1992, the laws of the United States apply to Hong Kong, China in the same manner as those laws applied to Hong Kong prior to the resumption of the exercise of sovereignty by the People’s Republic of China on 1 July 1997, unless the President of the United States determines and issues an Executive Order that Hong Kong, China “is not sufficiently autonomous to justify treatment under a particular law of the United States … different from that accorded the People’s Republic of China”.

The suspension of Section 201(a) of the United States-Hong Kong Policy Act of 1992 as it applies to Section 304 of the Tariff Act of 1930 is the legal basis upon which the USCBP ordered that goods produced in Hong Kong “may no longer be marked to indicate “Hong Kong” as their origin, but must be marked to indicate “China”.”

According to Hong Kong, China, the measures at issue include:

1. Section 304 of the Tariff Act of 1930, 19 U.S.C. S 1304;

2. The USCBP regulations implementing Section 304, set forth in 19 C.F.R. Part 134;

3. Title II of the United States-Hong Kong Policy Act of 1992, 22 U.S.C. S 5721-5724;

4. The “Executive Order on Hong Kong Normalization” signed by the President of the United States Donald J. Trump on 14 July 2020;

5. US Customs and Border Protection, “Country of Origin Marking of Products of Hong Kong”, 85 Fed. Reg. 48551 (11 August 2020).

Hong Kong, China said that it is concerned that the measures described above are inconsistent with the US obligations under multiple provisions of the covered agreements, including, inter alia:

1. Article I:1 of the GATT 1994, because in respect of the rules and formalities of importation pertaining to marks of origin, the United States does not extend to products of Hong Kong, China origin immediately and unconditionally the same advantages, favours, privileges, or immunities that the United States extends to like products originating in the territory of other countries;

2. Article IX:1 of the GATT 1994, because the United States does not accord to the products of Hong Kong, China treatment with regard to marking requirements no less favourable than the treatment that the United States accords to like products of other countries;

3. Article X:3(a) of the GATT 1994, because the United States does not administer its origin marking requirements in a uniform, impartial, and reasonable manner;

4. Article 2(c) of the Agreement on Rules of Origin, because in respect of products produced in Hong Kong, the United States requires the fulfilment of a certain condition not related to manufacturing or processing, as a prerequisite for the determination of the country of origin;

5. Article 2(d) of the Agreement on Rules of Origin, because the United States discriminates between Hong Kong, China and other Members in respect of the rules of origin that it applies to imports;

6. Article 2(e) of the Agreement on Rules of Origin, because the United States does not administer its rules of origin in a consistent, uniform, impartial, and reasonable manner;

7. Article 2.1 of the Agreement on Technical Barriers to Trade, because the origin marking requirements that the United States applies to imports are technical regulations and, in respect of those technical regulations, the United States does not accord to products imported from Hong Kong treatment no less favourable than the treatment that it accords to like products originating in other countries.

In addition, and as a consequence of the foregoing, the measures at issue appear to nullify or impair the benefits accruing to Hong Kong, China directly or indirectly under the cited agreements, it said.