Briefing With Assistant Secretary for East Asian and Pacific Affairs David R. Stilwell On PRC National People’s Congress Proposal on Hong Kong National Security Legislation

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MS ORTAGUS:  Thank you so much.  Good afternoon, everybody.  Thank you so much for dialing in this afternoon.  We are going to have an on-the-record briefing today by the head of our Bureau for East Asian and Pacific Affairs, Assistant Secretary Dave Stilwell, who you all know really well.  I’m sure many of you or probably all of you by now have seen today’s statement by Secretary Pompeo on the PRC National People’s Congress proposal on Hong Kong national security legislation.  The bottom line is that in response to the rapid erosion of Hong Kong’s autonomy since last March, brought to a head by the PRC’s announcement last week that it will unilaterally and arbitrarily impose national security legislation on Hong Kong, the Secretary has certified that Hong Kong does not continue to warrant treatment under United States laws in the same manner as U.S. laws were applied to Hong Kong before July 1997.

Assistant Secretary Stilwell will open with brief remarks to explain the PRC actions which underpin the Secretary’s decision.  He will also seek to explain the ramifications of this action.  We will then of course take time to answer your questions.  Please go ahead and get yourself in the queue, press 1 and then 0 to ask a question.  Just a reminder that while this call is on the record that the contents of this briefing are embargoed until the end of the call.

David, go ahead.

ASSISTANT SECRETARY STILWELL:  Thank you, Morgan, and thank you all for joining.  Let me just quickly give you the runup since you don’t stare at this these things like we do all day for the last year that’s gotten us to this position.

What the Chinese are trying to do, what Beijing is trying to do here, is paint this situation with Hong Kong and the rest of all Chinese actions here as contest strictly between the U.S. and China, painting the U.S. as the hostile side.  Beijing likes this arrangement.  It makes it much easier to deal with one on one, and it used them – it helps them use economic levers on others who aren’t involved in the fray to keep them on the sidelines.  And we’ve seen that go on where economic threats – most recently with Australia, I believe you’ve seen – are told that beef, barley, wine, other imports would no longer be welcome should they continue down this path.

The fact is that it’s not just U.S. and China, it’s basically the world is finally recognizing that China’s pushing – Beijing is pushing a form of government that many only now are beginning to recognize as problematic.  And this most recent step from the National People’s Congress in walking away from its obligations with respect to Hong Kong only demonstrate that more clearly.

The way they’ve done that is they are the Chinese Communist Party, but they know what that communist word – the baggage it brings, and so you hear them speaking a lot about socialism with Chinese characteristics.  It just sounds nicer.  But we need to get past the nice language and face what we’re up against.

This administration has worked very hard to make the language and the reality match, so we’ve chosen our words carefully.  This is an authoritarian system.  It prefers to negotiate with others on a position of strength using a might makes right stance both domestically with its own people and internationally, as I mentioned before, with economic levers and other things.

Anyone older than 50 years old remembers this sort of contest, and it – we believe the right side came out on top.  And since 1991, as Francis Fukuyama says, it was the end of history.  We believe that democratic processes and we still believe democratic processes are really the only way to go, right – you have to give your people a voice and a choice to moderate government behavior.  Government works for the people, not vice versa.

So recent events now have shown that Beijing seeks more global prominence, and they want that to go with this newfound wealth and economic help that they’ve been using.  In the process, though, they’ve gained additional scrutiny.

In October 2017, the 19th Party Congress Work Report said that China will move closer to the center of the global stage.  This process has moved their authoritarian system closer to the limelight as well, where many now have come to see what Xi Jinxping’s, quote, governance idea looks like, and increasingly people don’t really like what they’re seeing.

So we’re all faced with a authoritarian government that we thought had been relegated to history.  If you look at the 2018 Economist Magazine cover, the title is “How the West got China wrong.”  I think it’s worth looking at because it identifies the recognition and the reckoning that many have arrived at as we see what this thing really is.

So given the massive dislocations that have been brought on globally by China’s mishandling of what should have been a minor public health issue in Wuhan, the world right now is focused on survival, not focused on Hong Kong.  It appears that Beijing has used this opportunity to accelerate its agenda going into its next political season.

Over the last two weeks, Beijing has really picked up the pace.  They’ve made hints that this National People’s Congress would be different, and they’ve been hinting that Hong Kong’s status might change.  But in the last two weeks, and even as early as – soon as yesterday, they’ve made very strong comments that they do not plan to honor the joint declaration they made with the UK in 1997.

And so they do intend to impose national security legislation on Hong Kong.  The agreement says that Hong Kong itself will determine what Article 23 national security legislation looks like.  Beijing has apparently ran out of patience and will – and has made very clear it plans to do so, and will probably announce that tonight, late tonight, as an outcome of the National People’s Congress.

So in response, as you know, the Secretary’s statement says that we have determined that Hong Kong no longer enjoys a high degree of autonomy.  We are designing our responses to be sure to help Beijing understand that as a nation of law, we will invoke the law that the Congress passed in the Hong Kong Policy Act and Human Rights and Democracy Act.  But at the same time, we will do our best to ensure the people of Hong Kong are not adversely affected to the best we can.

But I will note that this decision was made by the government in Beijing and not by the U.S.  And so the – our approach is to mitigate the impact globally on the Hong Kong people while at the same time helping Beijing understand our concerns.

And with that, I will conclude.

MS ORTAGUS:  Thanks so much, Dave.  We have a pretty lengthy queue already for questions.  We are going to try to get to as many of you as possible, so please, if you can, try to ask one question so that we can get through all of your colleagues on the queue please.  First up is Matt Lee, Associated Press.

QUESTION:  I realize that you probably can’t talk about or won’t want to talk about what’s the range of options that you’re considering to take, but can you at least give us an idea of what the scope of what – what it could include, regardless of whether or not the President or the administration has actually made up their mind on what to do?  Thank you.

ASSISTANT SECRETARY STILWELL:  Right.  Matt, thank you for noting, of course, that the President will determine exactly what steps the U.S. Government takes on this one.  I did note broadly that the actions will be considered, and they will be as targeted as possible to change behavior.  We’re not hopeful that Beijing will reverse itself, but that is one of the options.  And then hopefully they’ll take that.  But as you know, it can be across the spectrum.  It can be personnel, it can be visa sanctions as determined in the Hong Kong Policy Act and the Human Rights and Democracy Act.  Obviously, there’s economic sanctions and other things that we can do.

But to preview those, I certainly wouldn’t want to get ahead of the White House on this one.  And so I’m not going to get ahead of them.  The President now has the opportunity to determine what we do in response.  Over.

MS ORTAGUS:  Thank you.  Now we’ll go to Nike Ching, VOA.

QUESTION:  Thank you so much for the call.  Secretary Pompeo mentioned this decision gave him no pleasure.  Would this certification hurt the people of Hong Kong and U.S. firms operating there?  Are there ways to avoid the side effect?  And would the U.S. allow Hong Kong to maintain economic and trade offices with diplomatic status in Washington, D.C. and other major U.S. cities?  Thank you.

ASSISTANT SECRETARY STILWELL:  Yeah, Nike, thank you for that.  Yeah, no pleasure, exactly.  I’m seeing reports already on this where they’re noting that basically the administration is the actor in this one, where we’re responding to decisions not just from this last week, either.  I mean, this has been ongoing for a while.  If you recall, for instance, NGOs.  American NGOs were there to simply help Hong Kong people that were banned from operating in Hong Kong.  They’re no longer allowed to set up shop in Hong Kong and do what they did.  When the PRC kicked out journalists from reputable American outlets, they also threatened the same journalists in Hong Kong.

And so the point is that that special status that Hong Kong enjoyed – that wall, maybe, if you want to put it that way – is being penetrated and Beijing is no longer acknowledging its special status.  And so it’s not just the presidential determination, the actions he chooses to take, but I think businesses and others would notice these facts as well and make prudent choices as far as whether they – whether the environment in a year from now is going to be conducive to fair business, transparent operations, and all the rest that they’ve enjoyed to date.  And so the administration will take action.  I would expect others also seeing Chinese actions would respond to those.  Over.

MS ORTAGUS:  Thanks so much.  Next up is Rich Edson, Fox News.

QUESTION:  Hi.  Just want to follow a bit on Matt’s question, try to get a little bit more.  As you do design your response and options for the President to decide, are those responses limited specifically to the conditions of the special economic and trade benefits, or are there consequences under consideration outside the revocation of those privileges?  And is there anything you can possibly say about a time frame that we could expect for all of this?  Thank you, sir.

ASSISTANT SECRETARY STILWELL:  You bet.  The – again, not getting ahead of the White House, but the White House benefits from the inputs from all agencies, not just from State Department.  And so the Hong Kong Policy Act, Human Rights and Democracy Act are in the purview of the Secretary, but what the President chooses to do in the determination is – it’s a whole-of-government approach, certainly an administration approach.  And so I’m not going to forecast or limit what it could be, but there’s a very long list of things that the President could do in response.

As far as the timing, again, I’m not going to forecast.  It’s – this – the Chinese approach has been ongoing over this last year, which made going into the 31 March deadline for the report to Congress difficult.  And as you know, the Secretary noted that and said that given the forecasting, the preview that is coming out of Beijing, that we would hold off on submitting the report, knowing that the Chinese were already telegraphing that they were going to do this.  And so that pace has accelerated and our response, I believe, certainly in releasing this report, was accelerated as well.  Over.

MS ORTAGUS:  Thank you.  Andrea Mitchell, NBC.

QUESTION:  Thank you very much.  Can you explain how this – how you can craft something that sends the right signal and is painful – suitably painful to the PRC without hurting the people of Hong Kong and without hurting American economic interests as well?

ASSISTANT SECRETARY STILWELL:  I think the way I would paint that slightly differently is we’re not hurting anybody.  We’re simply responding to what the PRC is doing.  And so I’ll take your point on American interests.  Back to what China’s done in the two examples I gave to NGOs and to just free press in Hong Kong, who I think the PRC see as reporting facts that they would prefer stay silent or out of view, businesses should be seeing that exact same phenomenon.

The PRC I think has tried to paint this as they would respect the economic freedom in Hong Kong without feeling obligated to respect political freedom.  You can’t have one without the other.  We know that’s the case.  And so the U.S. will do what we can and thread that needle as best we can, but as we talk about this, we need to talk about the actor in this case, and that’s the PRC who is changing the status quo.  Thank you.

MS ORTAGUS:  Great, thank you.  Nick Schifrin, PBS.  Nick Schifrin?

QUESTION:  (Inaudible.)  Can you hear me?

MS ORTAGUS:  Nick, yeah, sorry.  Yeah, please – I would start over.  Thanks.

QUESTION:  Oh, sorry.  Hey, Morgan.  Thanks.  And hey Dave, thanks for doing this.  I’m sorry to ask this for a fourth time but I’m going to ask it kind of in a philosophical way and see if you can engage with this.  So there’s a debate that I’m hearing about how to respond, and one is based on the idea that Hong Kong’s special status is already lost and that the PRC needs to feel pain both in terms of personally – visa sanctions on senior officials – but also target Hong Kong’s special status and that will hurt Beijing because Beijing still benefits from Hong Kong.  And then the other argument is Hong Kong is not lost, and so we have to be very precise and try and encourage anti-democracy activists to stay, don’t punish them at all in terms of visas, and don’t punish U.S. businesses at all that are in Hong Kong.  So can you talk about that philosophical idea about whether Hong Kong is lost and therefore PRC needs to feel as much pain as possible, or no, Hong Kong is not lost and things can be more precise?  Thanks.

ASSISTANT SECRETARY STILWELL:  As I said in the beginning, internationally – it’s not just the U.S. and the PRC, although we’ve been the most vocal, and in the same way it’s not just Hong Kong being some pawn in the middle.  Obviously, the Hong Kong people have a voice as well and they used that voice to great effect last summer when a watered-down version of this national security legislation was attempted to be foisted on them in the form of the extradition treaty, and they protested.  There was – it was characterized as riots by Beijing, but they were simply protesting something that was in violation of an agreement and in violation of the rule of law that they had come to expect over time.

So how we help them is by doing this, is by being very clear as to our intent, by working with them and hearing what they have to say, also by helping Beijing understand in ways that simple conversation did not have an effect and so we’re taking action to help Beijing understand that what they’re doing not only hurts American businesses, American interests, but it affects the American interest in things like stable democracies and rule of law and in living up to your word and living up to your commitments, and not just signing paper with no intent to follow things like the joint declaration.

And so I can’t get into a whole lot of details on that, but I do – I firmly believe that there are things we can do that do not necessarily directly – and that in fact support the folks who are out there working hard to maintain the democratic processes they had.  Over.

MS ORTAGUS:  Thanks.  Nick Wadhams, Bloomberg.

QUESTION:  Hi, thanks, Dave.  I just wanted to pin you down a little bit on something you said.  Regardless of what the administration does, do you believe that Hong Kong’s status as this – a unique case where investors, businesses, companies from around the world can feel safe with the regulatory and legal environment, do you believe that’s all been shattered?  Thank you.

ASSISTANT SECRETARY STILWELL:  Well, you can imagine I probably wouldn’t take – commit to a strong word like “shattered,” but I have friends in the consulting business.  We will – all the China folks have been talking lots back and forth, and these are the people that companies in China and in Hong Kong reach out to and listen to for advice.  And their advice has been that what the PRC here is doing is making what you remember the – what Hong Kong was, which was the sort of trading entree into the PRC, the place where you could get a fair deal and where rule of law thrived.  What is happening here, the choices being made in Beijing are injuring that.  And so it’s not just us that are taking action, it’s people who know and who provide advice to American and other companies that would like to continue operating in Hong Kong but if the risk is too high they’re going to have to look at other options.  Thank you.

MS ORTAGUS:  Okay, Joel Gehrke, you’re up next.

QUESTION:  Hi, thank you both for doing this.  Sort of adjacent to the Hong Kong issue, on the sidelines of this NPC congress the defense minister over the weekend said that Sino-U.S. strategic confrontation had gone through “a period of high risk,” and “We must strengthen our fighting spirit, be daring to fight and be good at fighting, and use fighting to promote stability.”  And the defense ministry spokesman added that with particular reference to Taiwan, quote, “The situation against separatism is getting grimmer.”

So as they make – as the PRC makes this move to assert more control over Hong Kong, do you have any concern of a follow-up vis-a-vis Taiwan?  Or if not, what do you make of that rhetoric from the defense minister about high-risk confrontation with the U.S. and using fighting to promote stability?

ASSISTANT SECRETARY STILWELL:  So that’s a really good question, and in my previous life, I focused on that very clearly.  I would just note that Taiwan has taken notice as well, and the one country, two systems construct – all these things are based on trust and being able to believe what you’re being told.  And when you’re told that we’re going to use a system called “one country, two systems” that allows for variance in approaches to governance, and then you seemingly walk back from that, this is going to resonate not just in Hong Kong, but elsewhere.

And so I think the defense minister is noting that these actions they’re taking are going to have impact, and not just in – across the straits.  It’s going to have impact in Southeast Asia, it’s going to have impact with its neighbor India, and others.  This newly muscular and aggressive approach is going to make the defense minister’s job a lot harder.

MS ORTAGUS:  Thanks.  Okay.  Let’s see.  Tracy Wilkinson, LA Times.  Tracy?

OPERATOR:  I’m not showing her line in queue.

MS ORTAGUS:  Okay.  Jennifer Hansler, CNN.

QUESTION:  Hi, thanks.  Have you briefed members of the business community on this decision and possible outcomes?  And are you telling them that it is, in fact, too risky to continue their business there?  And then are you anticipating any sort of coordinated response with allies to what’s going on in Hong Kong?  Thank you.

ASSISTANT SECRETARY STILWELL:  As I mentioned earlier, it’s not just the State Department and not just my bureau that is capable of doing risk assessment and helping people understand what’s out there – and yes, we are engaged.  The State Department writ large is talking to American businesses and others, but we also know that they are – everyone’s reading the writing on the wall.

And so as far as involving others, as I mentioned before, the PRC wants to paint this as the U.S. is having an issue with this.  The more the world is – stand up and is counted and says you need to live up to your commitments and follow through on agreements, obviously the more impactful this action will have.  And yes, that’s our job at the State Department, is to do things that coordinate with like-mindeds and get them to – those who share our ideas to stand up, be counted.  Thank you.

MS ORTAGUS:  Okay, thanks.  We’re going to try to squeeze in one or two more if we can.  Humeyra Pamuk from Reuters up next.

QUESTION:  Hi there.  I wanted to ask:  How concerned is the administration about this whole thing with Hong Kong on the fact that it might seriously jeopardize its trade deal?  I know Larry Kudlow said the President is very miffed that he cares maybe a little bit less about the trade deal than fixing this.  But the trade imbalance story was a campaign promise, and it would look increasingly unfulfilled.  How worried are you about that?  Thank you.

ASSISTANT SECRETARY STILWELL:  Well, I’d say fortunately I’m not worried personally because I’m going to push that one over to USTR and to Secretary Lighthizer’s folks.  I’m not going to comment on that one.  Thank you, though.

MS ORTAGUS:  Thanks.  Okay, Jessica Donati, Wall Street Journal.

QUESTION:  Some of the analysts that we’ve been talking to say that it’s unclear whether this will be enacted as a sort of one sweeping decision or whether it will be a drip, drip of revoking parts of the special status.  Without giving away what exactly you’re going to be doing, do you anticipate this being a one-stop impact or proceeding over the next months?

ASSISTANT SECRETARY STILWELL:  That’s a good question.  It’s actually a one-two action, one being the State Department making the assessment that Hong Kong no longer enjoys a high degree of autonomy, and then of course the determination by the White House as to exactly – as how we’re going to respond.  So obviously the note today, the Secretary’s message today, has – as you see, it’s gotten a lot of attention, but there is – there are other actions that will take place.  I know many people are eager to find out what those are.  I am not going to get ahead of the White House on that one, though.

MS ORTAGUS:  Okay, team, I apologize, but this is going to have to be the final question.  We have a hard out here.  But we do have another briefing on Iran at 5:30 that I hope all of you can join.  Apologies for these being the end of the day.  Katrina Manson, FT, last question.

QUESTION:  Thanks so much for that.  I just wondered if you’d calculated how much Hong Kong would suffer financially if special privileges were to be removed, if that special status were in some way affected.

ASSISTANT SECRETARY STILWELL:  Well, the process that got us to this point was – the deliberations were comprehensive.  And of course, there would – there is going to be, there would be, an impact in some way, both for the U.S. and for the PRC.

I’ll go back to my original statement that the decision to do this is not the U.S.’s.  We’re given by the Congress a list of criteria against which to measure Hong Kong autonomy, and it was – clearly the Chinese were – had no interest in even maintaining a shell that they were going to allow that.  And so you’re right, the financial impacts are worth noting, but they will be linked to the actions that the determination that comes out of the White House will impose.

And as I said, we’re going to do this in a smart way, in a way that takes care of the things and the people we care about, while at the same time letting Beijing know that what they’re doing is – contravenes what they agreed to do back in ’97.  Thank you.

MS ORTAGUS:  Thanks, everybody.  Apologies that we have to run, but hopefully we’ll talk to most of you at 5:30 for the briefing on Iran.  Thank you, Dave.

ASSISTANT SECRETARY STILWELL:  Thanks.  Bye.

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