U.S. begins to pare back Hong Kong's special status amid scrutiny over security law

The U.S. began eliminating Hong Kong's special status under U.S. law on Monday, halting defence exports and restricting the territory's access to high technology products as China prepares new Hong Kong security legislation.

The U.S. move comes as the top decision-making body of China's parliament deliberates a draft national security law for Hong Kong that pro-democracy activists in the city fear will be used to eliminate dissent and tighten Beijing's control.

"The Chinese Communist Party's decision to eviscerate Hong Kong's freedoms has forced the Trump administration to re-evaluate its policies toward the territory," U.S. Secretary of State Mike Pompeo said.

The Chinese embassy in Washington did not immediately respond to a request for comment.

Last month, U.S. President Donald Trump responded to China's plans for the security law by saying he was initiating a process to eliminate special economic treatment that has allowed Hong Kong to remain a global financial centre since its handover by Britain in 1997.

Trump stopped short of calling for an immediate end to privilegesbut said the moves would affect the full range of U.S. agreements with Hong Kong, from an extradition treaty to export controls on dual-use technologies and more "with few exceptions."

The U.S. Commerce Department said it was suspending "preferential treatment to Hong Kong over China, including the availability of export-license exceptions."

Further actions to eliminate Hong Kong's status were being evaluated, the departmemt said.

In 2018, $432.7 million US of goods were shipped to Hong Kong under a Commerce Department exception, mostly relating to encryption, software and technology.

Pompeo said the United States, effective Monday, was ending exports of defence equipment to Hong Kong and will also take steps to end the export of dual-use technologies, which have both commercial and military uses.

Last year, the Department of State approved approximately $2.4 million US worth of controlled defence articles and services to Hong Kong government authorities, of which approximately $1.4 million US worth was shipped, according State Department records.

"The United States is forced to take this action to protect U.S. national security," Pompeo said. "We can no longer distinguish between the export of controlled items to Hong Kong or to mainland China."

The announcements come at a time of intensified U.S. rhetoric against Beijing as Trump campaigns for re-election in November. Opinion polls have shown voters increasingly embittered toward China, especially over the coronavirus, which began there.