As promised, in response to a new Chinese security law, the administration June 30, 2020, suspended its preferential treatment to Hong Kong, including the availability of license exceptions for exports and reexports to and transfers (in-country) within Hong Kong of items subject to the Export Administration Regulations (EAR).

The Senate June 25 turned up the heat on China’s new security law in the territory by unanimously passing legislation (S. 3798) that would impose mandatory sanctions on both people and corporations siding with the Chinese Communist Party (CCP) bill. The president threatened potential actions, including export controls, from the Rose Garden in May.

“Shipments of items that are removed from eligibility for a License Exception as a result of this action and were on dock for loading, on lighter, laden aboard an exporting or transferring carrier, or en route aboard a carrier to a port of export or reexport on June 30, 2020, pursuant to actual orders for export to Hong Kong, reexport to Hong Kong, or transfer within Hong Kong, may proceed to their destination under the previous License Exception eligibility,” the Bureau of Industry and Security (BIS) said in its notice.

“Similarly, deemed export/reexport transactions involving Hong Kong persons authorized under a License Exception eligibility prior to June 30, 2020 may continue to be authorized under such provision until August 28, 2020, after which such transactions will require a license. Exporters, reexporters, or transferors (in-country) availing themselves of this 60-day savings clause must maintain documentation demonstrating that the Hong Kong recipient was hired and provided access to technology eligible for Hong Kong under part 740 prior to June 30, 2020,” the agency added.

“As Beijing moves forward with passing the national security law, the United States will today end exports of U.S.-origin defense equipment and will take steps toward imposing the same restrictions on U.S. defense and dual-use technologies to Hong Kong as it does for China,” Secretary of State Mike Pompeo said in a statement.

Chinese Foreign Ministry Spokesperson Zhao Lijian said China will take “necessary retaliatory measures to resolutely safeguard its national interests” during a press conference June 30. “It is China’s internal affair and no foreign country has any right to interfere. The Chinese government is determined in safeguarding national sovereignty, security and development interests, in implementing the ‘one country, two systems’ policy, and in opposing external forces’ interference in Hong Kong affairs. Intimidation does not work on China,” he warned.

Senate Approves Hong Kong Sanctions Bill

The Hong Kong Autonomy Act comes days after both houses passed legislation (S. 3744), which Trump reluctantly signed, supporting the minority Uyghur community in China. The Senate bill now needs support in the House before Trump signs or vetoes it.

Sen. Chris Van Hollen (D-Md.), the bill’s lead cosponsor, said the legislation is intended to send a clear message to China that it undermines Hong Kong’s freedom at its own peril. “We urge the Government of China to abandon their ongoing efforts to repress freedoms in Hong Kong. There will be a price to pay if they continue down that path. I appreciate Senator Toomey’s partnership on this crucial legislation, and I urge my colleagues in the House to take it up without delay,” the senator said.

Sen. Pat Toomey (R-Pa.) said, “Today, the Senate stood up to the communist regime in Beijing and stood with the people of Hong Kong. The mandatory sanctions established in this bill will punish those in China who seek to undermine Hong Kong’s autonomy or erode the basic freedoms promised to Hongkongers,” he said.

The bill could have passed a week earlier, but was blocked by cosponsor Sen. Kevin Cramer (R-N.D.), who reportedly paused the legislation on a presidential request. “I am grateful my colleagues and the Treasury Department were able to work together to improve the bill, bettering its chances of becoming law. It affirms our support for the people of Hong Kong who are fighting for their freedom. I urge the House to take it up and send it to the President’s desk,” Cramer said after the vote.

In addition, the bill has secondary sanctions on banks by blocking U.S. actors as well as funds going to them. The legislation also would permit Hongkongers, in a time of crisis, to become eligible for lawful entry into the U.S. if they are facing persecution or violence from Beijing. Similarly, the United Kingdom (UK) threatened China that it would grant entry to more than three million Hongkongers if it proceeded with the security legislation.

Rep. Eliot L. Engel (D-N.Y.) July 1 introduced bipartisan legislation (H. Res. 1033) condemning Beijing for the new law. “Time after time, Congress has stepped in to support Hong Kong and push back on Beijing’s aggression. Last year, we passed legislation with overwhelming bipartisan support giving the President and his Administration a set of strong policy tools to hold Beijing accountable. But President Trump has refused to use these options-instead, he has actively supported China’s heinous actions hoping for a trade deal to boost his chances at reelection,” he said in a statement.

G7 Ministers Denounce Bill

The Chinese security law went into effect June 30. Although the contents of the bill are still unclear, it is intended to install a pro-China police agency, prosecute political crimes and override Hong Kong’s judicial system. G7 leaders pleaded with China not to embark on the security legislation but Beijing rejected their request.

Before meeting with Yang June 17, Pompeo and other G7 members called on China to stop the Hong Kong legislation as it was an affront to democratic values. “The proposed national security law would risk seriously undermining the ‘One Country, Two Systems’ principle and the territory’s high degree of autonomy. It would jeopardize the system which has allowed Hong Kong to flourish and made it a success over many years,” the G7 foreign ministers said in a joint statement.

China’s Foreign Ministry Spokesperson Zhao Lijian addressed the statement at his regular press conference June 18. “We strongly deplore and firmly oppose the G7 Foreign Ministers’ Statement on Hong Kong, which wantonly comments on Hong Kong affairs. We have repeatedly emphasized that Hong Kong affairs are purely China’s internal affairs that allow no interference by any foreign government, organization or individual,” he said.

Committee Rejects U.S.-Hong Kong Cable

Moreover, a U.S. government committee June 17 recommended that the Trump administration deny approval for an underwater data cable linking the U.S. to Hong Kong. The concern is China’s stealing IT data. The project is the brainchild of U.S. IT companies and is been built by the Pacific Light Cable Network (PLCN) intended to boost data speed and capacity. This is the first underwater cable that the U.S. has rejected on national security concerns.

“PLCN’s high capacity and low latency would encourage U.S. communications traffic crossing the Pacific to detour through Hong Kong before reaching intended destinations in other parts of the Asia Pacific region. The Committee’s recommendation specified that it was not in U.S. national security or law enforcement interests to approve subsea cables landing in PRC territory when the PRC government has previously demonstrated the intent to acquire U.S. persons’ data,” Justice said in a press release.

“The recommendation also explained that PLCN’s proposed Hong Kong landing station would expose U.S. communications traffic to collection by the PRC. Such concerns have been heightened by the PRC government’s recent actions to remove Hong Kong’s autonomy and allow for the possibility that PRC intelligence and security services will operate openly in Hong Kong,” it added.

“PLCN’s proposed Hong Kong connection was only one of several pending applications seeking direct connections between the United States and Hong Kong, which would raise similar concerns,” Justice said.