Regulatory intelligence for US exporters

Congress Passes Hong Kong Sanctions Bill

The Senate unanimously passed a bill July 2 that authorizes sanctions against Chinese officials and foreign banks associated with passing Hong Kong’s so-called national security law. The bill passed in the House July 1 without opposition and will now be sent to the White House to be signed by President Donald Trump. The Senate passed a similar bill last month (see 2006250043) but adopted the House version after technical changes were made.

Sen. Pat Toomey, R-Pa., who helped introduce the Senate version of the bill, said he is “very confident” Trump will sign the bill. He added that the bill was endorsed by the Treasury Department, which helped craft the sanctions language. “The administration has actually been quite involved,” Toomey told reporters on a July 2 conference call. “I have no doubt that it will be properly enforced.”

Sen. Chris Van Hollen, D-Md., said he hopes the president signs the bill “quickly” and follows through on implementation. He criticized the administration for taking “very tepid steps” to implement the last Hong Kong-related sanctions bill (see 2006040038). “I hope the President will immediately impose the sanctions required by this bill,” Van Hollen said during the call. “That is going to be a very important moment in terms of sending a signal to China.”

Both senators said China is unlikely to repeal its so-called national security law based on the bill’s sanctions, but said it hopes the measures caused Beijing to hesitate before implementing similar laws in the future. “If they realize that the United States is not going to stand by idly and allow them to commit these kinds of offenses without consequences, then ... maybe over time it affects their behavior,” Toomey said.

The lawmakers also said the bill’s provision that authorizes sanctions against banks will not hurt U.S. interests. “I'm very confident that the sanctions will not result in any destabilization of the financial system,” Toomey said. He said that although the sanctions will have less of an impact on small Chinese banks with no U.S. business, they should send a strong message to larger banks. “I think the reality is that Chinese banks are dependent on the United States’ financial system, not the other way around,” Toomey said. “Bigger banks are going to have a [difficult] decision to make.”