CACN - Canada-Hong Kong Bilateral Relations (Global Affairs Canada) - Nov 16, 2020
Background
Canada has had a special partnership with Hong Kong due to extensive commercial, institutional and people-to-people ties. Canada and Hong Kong have no bilateral trade irritants and continue to cooperate in several key areas, including trade and investment, cultural industry promotion, alumni affairs, and public health. Multilaterally, Canada and Hong Kong cooperate in such international organizations as the Asia-Pacific Economic Cooperation (APEC) forum and the World Trade Organization. Hong Kong is also a member of the Financial Stability Board and attends regular meetings to exchange views on potential vulnerabilities in the international financial system.
Accountable Governance, Democratic Development and Human Rights
Human rights, namely civil and political rights, freedom of expression and assembly, have significantly and steadily declined in Hong Kong in recent years, noticeably since the Occupy Central Movement in 2014. Increasingly, those deemed associated with “localist” political views have been barred from formal political participation, and there is significant concern that the trend will continue or worsen. On November 6, 2018 Canada raised its first recommendation on human rights in Hong Kong as part of China’s Universal Periodic Review: “Ensure the right of Hong Kong people to take part in government, without distinction of any kind”.
Protests
Large-scale protests erupted in June 2019 in response to the Hong Kong Government’s proposed extradition bill that would have allowed case-by-case extradition to all jurisdictions, including mainland China. Many saw the law as holding the potential to target political dissidents and a significant threat to Hong Kong’s high degree of autonomy and judicial independence. The bill was suspended on June 15 and fully withdrawn on October 23, 2019. Despite this, protests continued throughout 2019, slowing only due to the Covid-19 outbreak in January 2020. Political discontent remains widespread. As the movement escalated, and public upset at the Hong Kong Government’s response grew, five demands from protesters were outlined: 1) withdrawal of the extradition bill, 2) independent investigation into police conduct, 3) all charges against protesters dropped, 4) categorization of protesters as rioters dropped, and 5) universal suffrage.
Anxiety over the loss of Hong Kong’s autonomy and its basic freedoms and lack of trust in Beijing has sustained the movement (see separate note “Hong Kong Political Unrest”). While protest numbers fell as Covid-19 spiked in the SAR, it is uncertain whether large-scale demonstrations will occur again due to significant fear of the new National Security Law (NSL). There are no political resolutions on the horizon to relieve broad political tensions. In recent months, protests have been largely stifled due to the Covid-19 pandemic and enhanced police crackdowns following the NSL.
The protest movement in Hong Kong generated intense attention from the international community, including statements and comments from major political figures in the U.S., the UK, the EU, France and Germany. Canada has issued 3 statements regarding the political unrest in the Special Administrative Region: on May 30, 2019 in a joint statement with the UK, on June 12, 2019 in a standalone statement and on August 17, 2019 in a joint statement with the EU.
COVID-19 Response
On January 25, the Hong Kong Government declared the Covid-19 outbreak an emergency and responded with countermeasures. Hong Kong saw a second significant wave in late March. Hong Kong fared well until a third, and most serious, wave began in July, which largely subsided in September and October. Social distancing regulations, such as work-from-home, mandatory mask wearing and restriction on gatherings to no more than two people were applied, with broad public support. Restrictions have since become less severe.
National Security Legislation
On June 30, 2020, the Standing Committee of the National People’s Congress imposed the controversial “Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative region.” It was immediately promulgated by Hong Kong’s Chief Executive Carrie Lam and came into effect one hour before the 23rd anniversary of Hong Kong’s handover to the People’s Republic of China. The law was not made public until implemented and was drafted without inclusive consultation and through a process that circumvented Hong Kong’s Legislative Council. The law criminalizes secession, subversion, terrorism and colluding with foreign forces. The law also granted jurisdiction over some cases to mainland authorities, meaning some cases may be tried and served in the mainland. Widespread fear and uncertainly around the law spread immediately around Hong Kong with shops removing protest movement slogans and a drastic decline in public participation in demonstrations.
On May 22, Canada, Australia and the UK released a joint statement to express common concerns. On May 28, Canada, the U.S., UK and Australia released another statement, reiterating those concerns, and a joint statement with the G7 countries was released on June 17.
On June 30, Canada joined 27 other countries in releasing a statement expressing ongoing concerns with the national security legislation imposed on Hong Kong at the UN Human Rights Committee’s 44th session. At the UN General Assembly’s Third Committee on October 6, Canada co-signed, along with 38 other countries, a joint statement expressing concerns about the human rights situations in Xinjiang and Hong Kong.
On July 3, Canada announced a series of measures in response to the national security law, including export control measures, the suspension of the extradition treaty with Hong Kong and an update on the travel advice for Hong Kong. Prime Minister Trudeau pledged ongoing evaluation of the implications of the law and further responses, including immigration measures. Since July 3, the UK, U.S., Germany, France, New Zealand and Australia have also suspended extradition treaties with Hong Kong. Several EU countries are reviewing theirs. The UK has also called the NSL a breach of the Sino-British Joint Declaration.
On July 31, Hong Kong Chief Executive Carrie Lam announced that she would invoke emergency powers to postpone legislative elections for one year, saying that such measures were necessary in response to a recent rise in COVID-19 infections. On August 9, Canada jointly released a statement of concern alongside the rest of the Five Eyes partners, calling on the Hong Kong government to reconsider its move to postpone elections. Based on its application to date, the NSL is likely to undermine confidence in the integrity of the One Country, Two Systems framework and the rule of law in Hong Kong, and could negatively impact Hong Kong's attractiveness as a global trade and financial hub.
People-to-people Ties
Hong Kong boasts one of the largest Canadian communities abroad, with an estimated 300,000 Canadian citizens and some 200 Canadian companies. The estimate of Canadian citizens in Hong Kong is drawn from a 2010 survey by the Asia Pacific Foundation. This community, along with some 185,000 Canadian-educated Hong Kong residents, plays a key role in the bilateral relationship. The involvement of 1,975 Canadian soldiers in the Battle of Hong Kong in 1941, 550 of whom gave their lives, is commemorated in a major ceremony each December at the Sai Wan War Cemetery. Canada and Hong Kong also share a Commonwealth heritage, with a historical commitment to shared values, including the rule of law and freedom of expression, which constitute essential components of the Special Administrative Region’s (SAR) stability and prosperity.
Trade and Investment
Merchandise Trade
Total Hong Kong-Canada bilateral merchandise trade in 2019 amounted to $4.4 billion, a 3.5% increase from $4.2 billion in 2018. In 2019, Hong Kong was Canada’s 21st largest trading partner and the 6th largest in Asia (after Taiwan). Canada exported $4.0 billion in merchandise to Hong Kong in 2019, making it Canada’s tenth largest export market, while Canada’s imports from Hong Kong were $378.9 million in 2019.
Canada’s exports to Hong Kong in the first eight months of 2020 (January to August) totalled $1.3 billion, representing a steep 56.3% decline from the same period in 2019 ($3.0 billion). Imports from Hong Kong for the same period totalled $372.6 million, up 43.4% from $259.8 million a year earlier.
Services Trade
Canadian service providers excel in a diverse range of sectors such as finance, engineering, information technology and professional services. In 2019, Canada’s services exports to Hong Kong declined to $1.8 billion (from $2.2 billion in 2018), while services imports from Hong Kong totalled $5.3 billion. In the first half of 2020, services exports to Hong Kong were $755 million, an 18.9% decline versus the same period in 2019 ($931 million).
Investment
In 2019, Hong Kong’s total stock of foreign direct investment (book value) in Canada was $20.9 billion. This represented a decrease of 3.2% versus the 2018 stock of $21.6 billion. The stock of Canadian direct investment in Hong Kong was $11.7 Billion in 2019.
The combined impact of the COVID-19 pandemic and protests that began in May 2019 but had largely died down by Summer 2020, the China-U.S. trade dispute and, more recently, Beijing’s imposition of a new National Security Law on June 30 have driven Hong Kong’s economy into its most serious recession in years. The IMF (October 2020) forecasts that Hong Kong’s economy will shrink 7.5% in 2020. Hong Kong has launched three rounds of measures to assist the affected industries and the public, totalling HK$287.5 billion, or 10% of the city’s GDP.
Hong Kong’s economic policy response post-COVID containment will be to continue to promote Hong Kong’s integration with mainland China with an increasing role in Beijing-driven themes such as the Greater Bay Area (GBA) initiative and the Belt and Road Initiative (BRI).
Universities
There are many institutional links between Canadian and Hong Kong universities in areas such as health research, information technology, engineering, and general dual-degree programs. Five Canadian universities have full time offices in Hong Kong, which is an important location for alumni fundraising, student recruitment and academic partnerships. Data from Immigration, Refugees and Citizenship Canada (IRCC), shows that a total of 2,445 study permits were approved in 2018 for students from Hong Kong. There are twenty-nine active Canadian university alumni chapters in Hong Kong, which also continues to be a significant source of international students. With virtually no community virus spread in May and June many universities were hoping to re-open in-person classes in the fall. With a spike in local cases starting in July, there remains significant uncertainty. Due to the unpredictability of the protest movement in 2019, many universities had already turned to online classes, and in this respect were somewhat prepared for the challenges of the virus.
The Consulate General of Canada
With close to 150 employees, the Consulate General is one of Canada’s largest missions abroad. It is the Government of Canada’s largest passport and citizenship service delivery operation outside of Canada. The Royal Canadian Mounted Police and the Canada Border Services Agency both maintain offices at the Consulate General, working actively with local, regional and allied counterparts on anti-crime cooperation and migration integrity issues. Canada had treaties for extradition and mutual legal assistance in criminal matters with Hong Kong, however in response to the implementation of the NSL, Canada suspended its extradition treaty with Hong Kong on July 3, 2020. In response, on July 28, 2020, the Hong Kong government suspended the mutual legal assistance treaty. The Alberta and British Columbia governments have standalone offices in Hong Kong, and a Quebec office is collocated with the Consulate General.
