Today, President Trump issued a long-awaited Executive Order as a response to the passage of the National Security Law in China that restricted the autonomy of the Hong Kong Special Administrative Region (SAR). OFAC has already created a Hong Kong-related sanctions program.
There are many elements in the Executive Order removing any preferential treatment Hong Kong used to enjoy (as opposed to China). Here is the OFAC-related section (Section 4):
Sec. 4. All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in:
(a) Any foreign person determined by the Secretary of State, in consultation with the Secretary of the Treasury, or the Secretary of the Treasury, in consultation with the Secretary of State:
(i) to be or have been involved, directly or indirectly, in the coercing, arresting, detaining, or imprisoning of individuals under the authority of, or to be or have been responsible for or involved in developing, adopting, or implementing, the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Administrative Re- gion;
(ii) to be responsible for or complicit in, or to have engaged in, directly or indirectly, any of the following:
(A) actions or policies that undermine democratic processes or institu- tions in Hong Kong;
(B) actions or policies that threaten the peace, security, stability, or autonomy of Hong Kong;
(C) censorship or other activities with respect to Hong Kong that prohibit, limit, or penalize the exercise of freedom of expression or assembly by citizens of Hong Kong, or that limit access to free and independent print, online or broadcast media; or
(D) the extrajudicial rendition, arbitrary detention, or torture of any person in Hong Kong or other gross violations of internationally recognized human rights or serious human rights abuse in Hong Kong;
(iii) to be or have been a leader or official of:
(A) an entity, including any government entity, that has engaged in, or whose members have engaged in, any of the activities described in subsections (a)(i), (a)(ii)(A), (a)(ii)(B), or (a)(ii)(C) of this section; or
(B) an entity whose property and interests in property are blocked pursuant to this order.
(iv) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to this section;
(v) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this section; or
(vi) to be a member of the board of directors or a senior executive officer of any person whose property and interests in property are blocked pursu- ant to this section.
(b) The prohibitions in subsection (a) of this section apply except to
the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and notwithstanding any contract entered into or any license or permit granted before the date of this order.
This is a big deal – I suspect the removal of the preferential treatment for Hong Kong will have the larger geopolitical impact (especially since I can see other nations following suit), but any designations under Section 4 are likely to draw retaliatory measures that don’t have to be with regard to sanctions.
Hang on to your hats – the ride is going to be very bumpy for a while….