Legal Risks to Free Trade and Racial Equality

SCMP April 7 2013

Influential groups in Hong Kong seem to have less and less idea of why the territory exists as a separate entity, what makes it distinct and what makes it thrive, for reasons that are hard to replicate elsewhere. This lack of understanding is not primarily the product of political correctness, fear of Beijing, or the need to demonstrate adhesion to someone else's idea of what constitutes patriotism. Most local people recognise that culture, nation and ruling party are separate identities.

Hong Kong's problem is the bigger one of leaders increasingly failing to realise that its long-term survival depends not on its harbour and deepwater port, crucial though they were in the past and important though they still can be. It does not even rest on the quality of its educational system, the standards of basic administration of law and order and its relative absence of corruption.

All these things are important, as too is freedom: of speech and media, of a legal system which is mostly trusted by the inhabitants, and of concepts that keep some space between executive, legislative and judicial authority.

But the absolute bedrock is none of these. It is the one principle that has existed from the beginning and survived in the face of hostility from the sovereign power - once London, and now Beijing. That is the almost total freedom of international commerce.

That is not just a theoretical principle extracted from a World Trade Organisation manual. It implies being a centre for commercial activity that would be illegal in many other jurisdictions. For sure, the opium trade helped to make such freedom the subject of much criticism - despite it not being illegal in many countries and having a very long history in China itself.

More significant than opium is all the other trade that passed through or originated in Hong Kong which was illegal in other places. What is freedom to trade for many is smuggling to others. Free-trading ports, be they Hong Kong and to some extent Singapore today, or Venice or the Hanseatic states of the Baltic in the past, were ever thus.

In a previous column, I mentioned the gross injustice of sentencing low-paid mules in supposed money laundering schemes to long prison terms. This reflected a curious belief that it is Hong Kong's job to prosecute persons for possible crimes that took place somewhere else. The principle of freedom of movement of money, central to the city from the beginning, has been trashed by lawyers whose ignorance of history is stunning.

Now we are also being informed that steps are being taken to stem smuggling out of Hong Kong. Why? It is the mainland's business to stop illegal imports from Hong Kong just as it is the job of the Philippines, not China, to stem the massive flow of illegal imports from China to that country, or of Indonesia to stem the flow from Singapore.

A supposedly free port which assumes responsibility for enforcing others' un-free rules, whether trading goods or currency, will soon be just like anywhere else.

It has been bad enough that, for several years now, Hong Kong has banned parallel imports in order to protect, not intellectual property, but oligarchic product distribution rights. Such barriers to free trade bear some responsibility for the recent absurd situation over baby milk powder.

How could a free port fail for months on end to meet demand for a product that was easily available on world markets? Don't blame the mainlanders, blame a Hong Kong system that encourages artificial shortages.

But don't expect Hong Kong's judiciary to help in striking down obstacles to free trade. It may recognise the absurdity and cruelty of the money laundering sentences. But it is hard to have any faith in the Court of Final Appeal after its verdict that a domestic helper on repeated two-year contracts has not the same rights under the Basic Law to apply (not be granted) for permanent residence as any other foreigner employed on such terms. The government's case seemed based mainly on race - in practice, part of the definition of all helpers.

The court's unanimous decision to contrive a distinction between helpers and others seems a self-interested one designed to save the judges the indignity of having a decision based on reasonable interpretation of plain language overturned by the National People's Congress, to which the government had indicated it would appeal if it lost in Hong Kong.

Most helpers probably spend a far greater proportion of the year "ordinarily resident" in Hong Kong than most of its lawyers and judges - and work far longer hours than almost any other group.

I have been wary of the court's reasoning behind its conclusions on several occasions. Perhaps most outrageous was the way it quashed a corruption verdict on a Hong Kong banking luminary, Ewan Launder, who was a key player behind the vast Carrian financial fraud of the 1980s and a refugee from Hong Kong justice for many years thereafter, on the flimsiest of grammatical points.

Journalists, for all their faults, are accustomed to using non-technical language in the way in which it is normally understood. Judges who find it politically inconvenient are masters at explaining why a word does not means what it says, but what they want it to mean.

ends