For AmCham’s detailed position on the Hong Kong Human Rights and Democracy Act, please click here.
Frequently Asked Questions
1. What does the Hong Kong Human Rights and Democracy Act introduce or change?
The Hong Kong Human Rights and Democracy Act 2019 (HKDA) contains several provisions. Two provisions are more relevant for businesses operating in Hong Kong. First, it contains a requirement that the State Department annually review Hong Kong’s status under One Country Two Systems, across a number of different political, legal and economic categories and to certify whether Hong Kong continues to warrant separate treatment under US law. Second, it provides for the imposition of economic sanctions on individuals or companies responsible for gross violations of internationally recognized human rights in Hong Kong.
2. How does this Act differ from the 1992 United States-Hong Kong Policy Act?
The United States-Hong Kong Policy Act 1992 is still the US legislation governing the special US-HK relations – treating Hong Kong differently from mainland China in many economic and social aspects. The HKDA does not change or replace the HK Policy Act itself, and it does not change the unique, favorable trade relations between the US and Hong Kong.
3. Under what circumstances would sanctions or export controls be implemented? Would these affect American companies operating in the HKSAR and/or the PRC?
The HKDA does not make any changes to US export controls with respect to Hong Kong. The HKDA requires the Department of Commerce to prepare an annual report about the enforcement of US export controls in Hong Kong; it does not make legal changes.
For economic sanctions, starting in late May 2020, the President is required to compile a list of “foreign persons” (individuals or companies) that are responsible for (1) extrajudicial rendition, arbitrary detention, or torture of any person in Hong Kong; or (2) other gross violations of internationally recognized human rights in Hong Kong. If individuals or companies are included on that list, then they are subject to mandatory US visa bans and revocation and US asset freezes. The President retains the ability to waive these sanctions in the US national interest. It is not known at this time whether or who, if any one, would be included on this list.
4. What are the implications for US citizens or companies should they transact with parties sanctioned under this Act, such as Hong Kong/PRC government authorities?
According to the HKDA, if an individual or company is subject of sanctions, then US citizens, lawful permanent resident aliens, US incorporated companies and any company or individual located in the US is prohibited from transacting with a sanctioned person’s assets or interests in those assets.
The US Department of Treasury Office of Foreign Assets Control (OFAC) oversees implementation of US sanctions programs, and issues regulations, guidance, FAQs, and in some cases licenses to define the scope of what is and is not permissible transactions and interactions with a sanctioned person. OFAC maintains a website where this material is posted publicly and businesses can consult the website and legal counsel for guidance.
5. I do business with the PRC. How will this Act affect my ability to operate in Hong Kong and with business partners from the United States?
The HKDA does not prohibit businesses from operating in the PRC, Hong Kong and/or the US If economic sanctions are imposed on individuals or companies operating in Hong Kong and/or the PRC, that could restrict transactions and business dealings. As with question 4 above, businesses can monitor, consult the OFAC website and legal counsel for guidance.
6. Will this Act affect US companies hiring Hong Kong employees?
No, the HKDA does not prohibit the hiring of any person. If a person is listed and subject of economic sanctions, that could limit transactions and interactions, which could affect employment. As with question 4 above, businesses can monitor, consult the OFAC website and legal counsel for guidance.
7. Will this Act affect employees of US companies or their family members applying for visas in Hong Kong?
The HKDA does not have this affect.
8. Will this Act affect Hong Kong companies investing in the United States, applying US visas, or partnering with US companies?
No; the HKDA does not have this affect. The HKDA does not make legal changes to how the US treats Hong Kong companies.