WTO backs Hong Kong in Trump-era ‘made in China’ dispute with US

The World Trade Organization said the US violated international trade rules when it required Hong Kong’s products to be labeled as “Made in China,” according to a ruling Wednesday.

The judgment marks the second time in a month that the Geneva-based trade body rejected the US argument that matters of national security were exempt from WTO review.

A panel of three WTO experts supported Hong Kong’s claim that the US labeling rules — which were imposed in the Trump administration’s final months — unfairly discriminated against goods originating from Hong Kong.

The panel said the US measures did not qualify for the WTO’s national-security exemption because the situation between the US and Hong Kong did not constitute an “emergency in international relations.” The panel urged the US to bring its measures in line with its WTO commitments.

US Trade Representative spokesman Adam Hodge said the US “strongly rejects” the ruling and “does not intend to remove the marking requirement,” according to a statement. 

“We will not cede our judgment or decision-making over essential security matters to the WTO,” Hodge said. “This report further underscores the need for fundamental WTO reform.”

The development comes just days after US Trade Representative Katherine Tai warned that the trade body was already “on thin ice” for ruling against America’s sovereign rights in a separate dispute over US tariffs on steel and aluminum.

Broken Appeallate Body

The US can now effectively veto the ruling by lodging an appeal at any point in the next 60 days. That’s because the US in 2019 blocked all appointments to the WTO appellate body, which previously had the final say in international trade disputes.

The labeling dispute dates back to 2020, when the Trump administration decided Hong Kong was “no longer sufficiently autonomous to justify differential treatment” from China.

That move followed the Chinese government’s passage of a national-security law that curtailed freedom of speech in Hong Kong in response to widespread anti-government protests.

At the time, the US argued its response to China’s actions was exempt from WTO oversight because Beijing’s moves to undermine Hong Kong’s autonomy “constitutes a threat to the essential security of the United States.”

The US claimed its measures were permitted under the WTO’s national-security exemption, which allows nations to take “any action which it considers necessary for the protection of its essential security interests.”

Washington said the WTO had no right to review the US’s “sovereign right to protect its essential security in the manner it considers necessary.”