In 1992, in anticipation of the 1997 reversion of the British Crown Colony of Hong Kong to communist Chinese rule, the United States Congress enacted the U.S.-Hong Kong Policy Act. The act made the findings that “the Hong Kong Special Administrative Region of the People’s Republic of China, beginning on July 1, 1997, will continue to enjoy a high degree of autonomy on all matters other than defense and foreign affairs” and that “there is provision for implementation of a ‘one country, two systems’ policy, under which Hong Kong will retain its current lifestyle and legal, social, and economic systems until at least the year 2047.” As such, the act stipulates “the United States should respect Hong Kong’s status as a separate customs territory.” This law also grants Hong Kong, the world’s fourth largest port and a major financial center, special economic and trade privileges, including with regards to import quotas and certificates of origin. It continues “to grant the products of Hong Kong nondiscriminatory trade treatment by virtue of Hong Kong’s membership in the General Agreement on Tariffs and Trade (GATT).”
However, Beijing’s increasingly blatant interference in Hong Kong’s customs operations raises some critical issues, including whether the Hong Kong Policy Act is outdated and in need of major revision. The latest example is Beijing’s manipulation of the Hong Kong customs authority to take punitive action against one U.S. strategic partner and to seek to further isolate another. This leads to a fundamental question: Has Hong Kong indeed lost most of whatever remaining autonomy it had under “one country, two systems” and become, in fact, just another Chinese port city like Shanghai?
The relevant facts on the incident involving Hong Kong customs were contained in a December 3 report in Hong Kong’s South China Morning Post, titled “How Singapore’s Military Vehicles Became Beijing’s Diplomatic Weapon.” Nine Singapore-owned Terrex infantry carrier vehicles (ICV) were seized by Hong Kong customs authorities on November 23as “strategic commodities” while en route from Taiwan’s port of Kaohsiung back to Singapore. The vehicles were reportedly involved in joint exercises related to Singapore’s “secret military links” with what Beijing views as one of its “core interests”—Taiwan.
The Chinese foreign ministry responded to the seizure by stating that the “Chinese government is firmly opposed to any forms of official interaction between Taiwan and countries that have diplomatic relations with us, military exchanges and cooperation included.” Beijing’s official mouthpiece, the Global Times, elaborated further in a November 27 opinion piece:
A September 2010 Center for Strategic and International Studies report, titled “Singapore’s Tightrope Walk on Taiwan,” provides background on the three decade-old Taiwan-Singapore military linkage:
While some commentators asserted that the customs seizure was due to overzealous Hong Kong officers, the Morning Post noted “that the action was an attempt to ‘kill two birds with one stone’—or, as Beijing might see it, to punish a former friendly [neighbor] while isolating a renegade province. According to these experts, Beijing hopes to teach the city state a lesson following a slew of what it sees as diplomatic slights, ranging from its ‘secret’ military links with Taipei to its stance on the South China Sea sovereignty disputes. Meanwhile, in stepping up the pressure on Singapore to sever those military links, Beijing hopes to cast Taipei further adrift internationally.”
Singapore has stated its intention to recover its military vehicles. Its minister of defense, Dr. Ng Eng Hen, said at a media briefing on November 29, “We aim to comply with all regulations and then exercise our full rights in recovering our assets.” He noted further, “People know where we train … and any training matters between us and other countries are bilateral. The Singapore Armed Forces will continue to train overseas based on existing agreements between countries.” He also said Singapore has been commercially shipping military equipment since it started overseas training stints, and without loss or detention, according to Channel News Asia.
A November 29 Morning Post article raised concerns that the Hong Kong Customs seizure of Singapore’s equipment would give China’s People Liberation Army (PLA) access to sensitive military information, much as Beijing’s seizure of a U.S. EP-3 signals intelligence aircraft on Hainan Island back in 2001 provided the PLA with U.S. intelligence secrets: Macau-based military expert Antony Wong Dong said the detained vehicles are AV-81s, the most advanced military vehicles Singapore has.
“I’m pretty sure experts with the People’s Liberation Army’s 617 Factory in Baotou, Inner Mongolia, and the China North Vehicle Research Institute based in Beijing have already examined the nine [armored] vehicles stuck in Hong Kong,” Wong said, adding that the vehicles were of an advanced type in Asia.
“As a result, the Singaporean military may have to change the entire communications system in the worst case scenario.”
Singapore’s importance as a non-treaty strategic partner of the United States was greatly enhanced after the U.S. Navy lost access to its Philippine bases adjacent to the South China Sea in the early 1990s. Singapore then filled the void by providing U.S. access to its Changi Naval Base for logistical support and resupply.
The Singapore Ministry of Defense announced that it was informed by the shipping firm APL that a third meeting with officials from the Hong Kong Customs and Excise Department, held on December 6, failed to provide formal reasons as yet for the detention of the Terrex Infantry Carrier Vehicles. Little progress was reportedly made in expediting the return of the equipment with no timetable for the return provided.
A Chinese source has indicated that Beijing is likely to direct its Hong Kong underlings to drag out the whole process in order to signal its displeasure with two of the United States’ leading strategic partners in the region. Beijing is reportedly upset with Singapore Prime Minister Lee Hsien Loong for calling last summer’s Permanent Court of Arbitration (PCA) ruling against Beijing’s territorial claims in the South China Sea a “strong statement” during a subsequent Washington visit. Singapore, as the leading port in Southeast Asia and the second busiest in the world, has a natural interest in facilitating trade and freedom of navigation. Still, the Chinese source opined that the current prime minister of Singapore lacks the finesse of his late father Lee Kuan Yew as “a balancer” between Beijing and Taipei. The source noted further that Beijing wishes to teach a lesson to new Taiwan President Tsai Ing-wen for her avoidance of restating an explicit commitment to the ’92 consensus language, upheld by her Kuomintang predecessor, on the “one-China policy.” As a result of these punitive, extralegal motivations, Beijing is expected to leave Singapore’s military equipment in lock-up in its Hong Kong port for some time to come.
This raises a salient point for American legislators. Beijing is shamelessly manipulating Hong Kong customs regulations in order to internationally isolate one of America’s strategic partners, Taiwan, whose relationship with Washington, including defensive arms sales, is codified in the Taiwan Relations Act. At the same time, Beijing seeks to punish another key strategic partner, Singapore, which has granted the U.S. Navy base access to carry out its mission of securing continued freedom of navigation in the vital sea lanes of the South China Sea.
Specifically, are the current actions of Hong Kong customs those of “a separate customs territory” as defined in the U.S.-Hong Kong Policy Act? If not, perhaps it is time for greater scrutiny and even a major overhaul of that act. Those trade and economic privileges granted to Hong Kong are based upon the assumption of its alleged separate identity and a continued high degree of autonomy. With Beijing blatantly pulling the strings behind the scenes in Hong Kong’s customs offices, “one country, two systems” appears to be little more than smoke and mirrors.
Dennis P. Halpin, a former adviser on Asian issues to the House Foreign Affairs Committee, is a visiting scholar at the U.S.-Korea Institute (SAIS) and an adviser to the Poblete Analysis Group.
