Questions Remain the Rule in Hong Kong

Amy Yeung made a reservation months ago to fly here on June 20. The Alhambra real estate agent is one of nearly 400,000 people expected to descend on this tiny British colony in the weeks before it reverts to Chinese control.

The main reason: Yeung and other Hong Kong expatriates fear that only by being on the island at the time of the June 30 hand-over can they be assured of maintaining their right to live in their homeland.

“I just cannot comprehend how we can have so many people on that small island without

sinking it,” said Yeung, a senior vice president with Centaline Realty, one of Hong Kong’s largest real estate companies.

The problem arises because Beijing authorities haven’t formally stated what Hong Kong natives living abroad must do to retain their “right to abode” after the transition, an announcement that could be delayed by Wednesday’s death of China’s paramount leader, Deng Xiaoping. And that is just one of many thorny commercial and legal issues still being debated in the months remaining before the hand-over.

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In the Sino-British accord on Hong Kong signed more than a dozen years ago, Britain agreed to return the colony to Chinese control as of this summer. China agreed to allow Hong Kong to retain a separate political and economic system for at least 50 years after the hand-over.

But that was the easy part. Actually creating “one country, two systems”--establishing the legal framework to maintain a capitalist system within the world’s largest Communist regime--has proved problematic indeed. A kind of legal limbo hangs over the colony, creating huge headaches for Hong Kong expatriates and U.S. business people, among others.

“The joint agreement says one country, two systems, but how will they combine the two systems?” asked one Hong Kong businessman living in Southern California. “To be honest with you, a lot of Hong Kong residents here don’t put a lot of faith in that by itself.”

A recent court ruling in Boston highlights the confusion. A U.S. federal judge refused to extradite Jerry Lui Kin-hong, a former executive of British American Tobacco Co., to Hong Kong to face criminal charges related to cigarette smuggling. The judge agreed with Lui’s claim that he faced possible execution because his trial would not be completed until after Hong Kong becomes a part of China.

Though Hong Kong has banned capital punishment, executions are still common on the mainland.

Hong Kong and U.S. government officials protested the judge’s ruling, pointing out that China has guaranteed that Hong Kong will keep a separate legal system. They fear the court ruling raises unwarranted doubts about Hong Kong’s judicial independence and encourages other alleged criminals seeking to avoid extradition to Hong Kong.

It’s not as if the world’s governments didn’t anticipate such conflicts.

In 1992, Congress passed the U.S.-Hong Kong Policy Act stating America’s intention to recognize Hong Kong’s unique status as a special administrative region of mainland China starting this July. It also gives the president permission to repeal part or all of the law if the United States determines that Hong Kong’s independence has been breached.

Thus the Boston ruling contradicts not only the Sino-British accord but also U.S. law, says a Clinton administration official who asked not to be named.

“We think the [court] opinion was based on a misinformed idea of the joint declaration principles and Hong Kong’s future autonomy,” the official said.

Indeed, the United States and Hong Kong have finalized an extradition treaty to replace the U.S.-British agreement that expires June 30. Hong Kong and the United States have also negotiated agreements on air travel, mutual legal assistance and prisoner exchange in recent months and are close to completing a bilateral investment treaty.

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But these have hardly answered all the questions.

For the estimated 110,000 Hong Kong natives living in the United States, immigration issues remain a chief concern. The big question is the status of permanent Hong Kong residents with foreign passports, who are believed to number between 500,000 and 750,000. The Chinese have indicated that those living in Hong Kong can stay, but they will have to choose between foreign or Chinese citizenship.

What is unclear is exactly what those Hong Kong natives living elsewhere will need to do to retain their right to legal residency if they want to someday return to Hong Kong.

Christopher Jackson, a senior Hong Kong’s trade official in the United States, said it appears those Hong Kong expatriates will not be required to be present in Hong Kong on July 1 to protect their “right of abode.” But he said the Chinese government has not yet formally announced its position on the issue.

On the bright side, non-Chinese foreigners can get “right of abode” in Hong Kong after July 1 if they meet several qualifications, including having lived in the colony for seven years and declared Hong Kong as their permanent residence.

Even if the legal issues are ironed out, many Hong Kong natives living in the United States--particularly those whose families fled the Communists when they took over the mainland in 1949--fear they might find themselves trapped in some kind of legal snare if they return.

For the travel industry, the uncertainty has created a ticketing nightmare.

Most Hong Kong flights from the West Coast are booked solid for the two weeks leading up to the transfer, with the exception of a few pricey business and first-class seats. People trying to make reservations are told that most airlines aren’t even taking additional names on their waiting lists.

But while the reservation computers show flights full, travel industry officials fear they may have a high percentage of last-minute cancellations if an agreement is reached making it unnecessary for Hong Kong natives to be back in the colony at the transition.

Airline policies for dealing with such a potential mess are in flux. Canadian Airlines, Air Canada and Cathay Pacific required Canadian passengers to pay in full by mid-December for travel to Hong Kong between May 24 and July 15. Hong Kong tickets booked now must be purchased within seven days, and they carry a hefty penalty for changes or cancellation, according to a Canadian Airlines spokeswoman.

Jon Austin, a Northwest Airlines spokesman, said his company is monitoring the situation but has not decided to take any special measures to weed out multiple bookings or no-shows.

“This is an unprecedented event in the history of aviation,” he said. “There is no historical model for this, so even trying to estimate what’s going to happen there is tough.”

Many seasoned travelers and businessmen have decided to steer clear of Hong Kong during the transition, even if it means missing a historic moment.

“I am not going for the hand-over,” said William Mow, chairman of the Simi Valley-based Bugle Boy apparel company, a major importer of goods from Hong Kong. “I made reservations, but the reality is you’re not going to be able to get around the city and there will be no business to be done.”

Confusion exists on other scores as well, such as how Hong Kong immigration issues will be handled in the United States after the hand-over.

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After July 1, U.S. residents will still not need visas to travel to Hong Kong for fewer than 30 days. But if they are staying longer, or need other immigration assistance, they must contact authorities in Hong Kong or go to the Chinese Embassy or consulates here, according to Melinda Parsons, a New York spokeswoman for the Hong Kong Economic and Trade Office. The Chinese will forward the documents to Hong Kong for processing.

Hong Kong residents traveling in the United States will also have to go to the Chinese if they lose their travel documents, land in prison or need other official help.

Dealing with Chinese government offices overseas can be a frustrating experience, in part because officials in Beijing still maintain tight control in sensitive areas. In addition to the added bureaucratic and linguistic hurdles, having the Chinese involved in issues such as immigration or criminal matters is worrisome for some, given the mainland government’s history of retaliating against its critics and suppressing the media.

In international trade, Hong Kong will continue to be treated as a separate entity by the United States, according to the Clinton administration official. That includes such issues as trade statistics and licenses used to control apparel and textile imports.

But critics say the transfer of control creates new opportunities for trade mischief.

Textile and apparel imports remain a major irritant in U.S.-Hong Kong relations.

Last year, the Clinton administration accused companies based in China of illegally trans-shipping millions of dollars’ worth of apparel and textile products from the mainland through Hong Kong, where apparel import licenses are less expensive and more easily acquired.

After acrimonious discussions, Hong Kong officials agreed to allow the United States to step up factory inspections and require Hong Kong exporters to provide additional documentation on products headed for the U.S.

Jim Langlois, executive director of the National Apparel & Textile Assn. in Reston, Va., said U.S. importers fear those border controls may slip after the hand-over, increasing the potential for illegal transshipments.

“If the U.S. decided that China was somehow abusing the relationship with Hong Kong, using Hong Kong as a way to circumvent U.S. law, there could be a real disruption in the trade with Hong Kong,” he said. “Hong Kong could be an innocent victim of that.”

Langlois said U.S. companies need reassurance from all players--the Clinton administration, Hong Kong and China--that Hong Kong’s efficiency as a transportation center and regional headquarters will not be compromised by politics or corruption.

“The worst thing about what we’re headed into is the uncertainty,” Langlois said.

An early test of just how Chinese control will affect Hong Kong’s dealings with the world financial community will occur in September, when the former colony hosts 15,000 international delegates for a meeting of the World Bank and the International Monetary Fund.

Merrell Tuck, a World Bank representative, said the bank is still sorting out logistical questions, such as how the visa requirements might change. Among the nations represented are such problematic ones as Afghanistan, Albania, Cambodia and Cuba.

Media from Taiwan, which the mainland considers a renegade province, will be allowed to attend the Hong Kong meeting, Tuck said. But China has requested that journalists agree not to use “Republic of China” when referring to Taiwan.

Bank officials are also bracing themselves for public confrontations at the Hong Kong meeting, given the widespread criticism of China’s human rights and environmental record.

Activists have used IMF/World Bank meetings to stage high-visibility protests in the past. In 1994, a Greenpeace member used a press pass to sneak into the banks’ Madrid meeting and hang a huge protest banner from the rafters during an appearance by the king of Spain.

Tuck has assured Chinese and Hong Kong officials that only legitimate members of the news media will be allowed into the meeting, lessening the possibility of an embarrassing confrontation. She said she is not sure how Hong Kong authorities plan to handle protests outside the meeting.

The governments of both China and Hong Kong and the two banks have a lot riding on this meeting, which will be the first major international event held in Hong Kong post-transition. China is the World Bank’s largest borrower.

“I’ll be honest--we have a contingency plan,” Tuck said. “I have to be prepared if something happens.”