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The United States: Market Profile

Major Economic Indicators

Table: Major Economic Indicators (the United States)
Table: Major Economic Indicators (the United States)

Recent Developments

  • Goods brought into the US are often subject to import duties, but import licences are generally not required. There are no foreign exchange controls over payments for imports.
  • As a founding member of the Trans-Pacific Partnership (TPP) Agreement, the Office of the US Trade Representative on 5 November 2015 released the text of the TPP, which was formally signed by its 12 signatories in February 2016 although the new US president Donald Trump signed an executive order formally withdrawing the country from the trade deal in January 2017.
  • The US is Hong Kong’s second-largest export market. Hong Kong’s total exports to the US increased by 0.4% to US$30.9 billion in the first three quarters of 2017, while its imports from the US grew by 5% to US$19.7 billion.
  • The inflows of foreign direct investment (FDI) to the US exceeded US$391 billion in 2016, with China contributing US$17 billion. As of the end of 2016, China’s total stock of FDI to the US topped US$60.5 billion, up from US$1.9 billion in 2007.
  • The US was the 7th-largest source of FDI in Hong Kong after British Virgin Islands, the Chinese mainland, Cayman Islands, the Netherlands, Bermuda and Singapore, with a total stock of US$40.6 billion (or HK$314.6 billion) as at the end of 2015. Meanwhile, the US was the 7th-largest FDI destination of Hong Kong’s FDI in 2015, with a total stock of US$11.1 billion (or HK$ 85.7 billion).
  • Established by Executive Order of the US President in 2011, SelectUSA is a US government-wide effort to encourage, facilitate, and accelerate business investment in the US by both domestic and foreign firms. It provides enhanced coordination to existing resources and functions within the US Department of Commerce and across all federal departments and agencies with operations relevant to business investment. It works in partnership with state, regional, and local economic development organisations to promote and facilitate overall US business attraction, retention, and reshoring. 
  • To stay competitive and maintain its status as a premier location for new business investment, the US has developed an extensive web of investment incentives, ranging from federal business incentives such as energy-efficient appliance manufacturing tax credit, employment & training administration grants, renewable energy investment tax credit and EB-5 Visa for Immigrant Investors to nearly 2,000 state business incentive programmes. More information on the investment environment and the relevant regulations can be found at SelectUSA.

Current Economic Situation

Economic growth in the US has been energetic. Private consumption, the main engine of the US economy, has remained strong thanks to low unemployment and higher wages, although the decrease in non-residential fixed investment and the downturn in federal government spending caused a setback in the growth pace in 2016.

Soft energy prices, tame inflation, reduced fiscal drag, strengthened household, corporate and bank balance sheets, and an improving housing market will remain in place for robust economic performance.

The unemployment rate was 4.2% in September 2017 (lowest since February 2001) and is expected to fall further in 2018. Following the steady recovery, however, there have been further signs of benign price pressures, with the all-items index rose 2.2% for the 12 months ending September.

Externally, exports will likely benefit from a weak dollar and further stabilisation of the world economy. Yet monetary tightening, domestic and foreign politics facing the Trump administration, the aftermath of Hurricanes Irma and Harvey and such sustained geo-political tensions as on the Korean peninsula can cause hiccups. Taken together, the US economy is forecast to grow at a quicker pace of 2.2% in 2017 and similar magnitude next year.

Trade Policy Developments

When China joined the WTO in 2001, its accession protocol allowed other WTO members to treat it as a non-market economy (NME) in anti-dumping (AD) proceedings and use a third country's prices to assess whether Chinese goods were being sold below cost, which has typically resulted in higher AD duties. But while that part of the protocol expired on 11 December 2016, the US has yet to treat China as a market economy and ease their calculations of AD duties on Chinese goods.

Earlier in a landmark decision that confirmed a major reversal of US trade remedy policy for NME countries, the Department of Commerce (DOC) issued on 30 March 2007 a preliminary affirmative determination of countervailing (CV) duty investigation of coated free sheet paper from China. Although the US government ultimately decided not to impose any CV duties in this proceeding, the investigation is significant in and of itself because it marked the reversal of a 20-year-old DOC policy against assessing CV duties on products from NME countries. Following this landmark decision, the US International Trade Commission (USITC) issued on 20 June 2008 a final affirmative injury determination in its anti-dumping and countervailing duty investigations of circular welded carbon-quality steel pipe from China, marking the first CV duty order on China over 20 years. This demonstrates the emergence of CV actions as a key weapon against allegedly subsidised mainland Chinese products.

In April 2017, the Office of the US Trade Representative (USTR) issued its annual “Special 301” report, evaluating the intellectual property rights (IPR) protection policies and enforcement measures in 100 trading partners. The report continues to place China on the Priority Watch List by highlighting longstanding and new IP concerns, including coercive technology transfer requirements, structural impediments to effective IP enforcement, and widespread infringing activity such as trade secret theft, rampant online piracy, counterfeiting and high levels of physical pirated and counterfeit exports to markets around the globe. In addition to China, The priority watch list includes Algeria, Argentina, Chile, India, Indonesia, Kuwait, Russia, Thailand, Ukraine and Venezuela.

The USTR initiated on 18 August 2017 a Section 301 investigation pursuant to Section 302(b)(1)(A) of the Trade Act of 1974 into the Chinese mainland’s acts, policies and practices related to technology transfer, intellectual property and innovation. The USTR has requested bi-lateral consultations with the Chinese mainland concerning the issues under investigation and will normally determine within 12 months from the date of initiation (estimated to be by 17 August 2018) whether any actionable acts, policies or practices exist, and if that determination is affirmative, what action, if any, the US should take.

The US has adopted various security initiatives since 9/11, including the introduction of the Container Security Initiative (CSI) in January 2002. The CSI purports to push the US cargo screening process outward to reduce the risk to US ports and cities. To date, CSI is operational at 50 ports, representing the point of origin of more than 80% of the cargo shipped to the US. Other than cargo screening, the Transportation Security Administration (TSA) met the August 2010 deadline for screening 100% of cargo transported on domestic and outbound flights of passenger aircraft originating within the US, while the statutory mandate of 100% screening of all inbound air cargo went into effect on 3 December 2012.

Another cargo security initiative, the Customs-Trade Partnership Against Terrorism (C-TPAT), has been in force since November 2001. Through this initiative, CBP requests US companies to ensure the integrity of their security practices. Participants of C-TPAT are entitled to the convenience of fast-track clearance through US Customs. As such, major US importers have signed up to the programme, and request overseas suppliers to adopt measures in response to the C-TPAT requirement.

Regarding high-tech exports, the US Bureau of Industry and Security (BIS) created a Validated End-User (VEU) programme in June 2007 to facilitate civilian trade by reducing administrative and logistical hurdles for certain exports to pre-screened mainland Chinese companies. About four months later the BIS announced an initial list of five mainland Chinese companies approved to receive exports, re-exports and transfers of certain controlled goods and technology under the programme. Since then, several lawmakers and government watchdogs who are concerned that sensitive items exported without federal review could find their way to the Chinese military have called on the BIS to halt the VEU programme. In late January 2009, the BIS announced the full implementation of the VEU programme for China. As of December 2014, there were 12 authorised companies and more than 40 eligible facilities under the VEU programme for the Chinese mainland.

In his first State of the Union address on 27 January 2010, US President Obama unveiled the National Export Initiative (NEI) to boost exports and support new jobs. This was the first time the US has a government-wide export-promotion strategy with focused attention from the president and his cabinet. In addition, the Obama administration launched the NEI/NEXT in May 2014, which is a new customer service-driven strategy to help US companies reach more overseas markets by improving data, providing information on specific export opportunities, working more closely with financing organisations and service providers, and partnering with states and communities to empower local export efforts.

Established by Executive Order of the US President in 2011, SelectUSA is the first US government-wide effort to encourage, facilitate, and accelerate business investment in the US by both domestic and foreign firms. It provides enhanced coordination to existing resources and functions within the US Department of Commerce and across all federal departments and agencies with operations relevant to business investment. It works in partnership with state, regional, and local economic development organisations to promote and facilitate overall US business attraction, retention, and reshoring. 

As a founding member of the 12-strong Trans-Pacific Partnership (TPP) group of countries – Australia, Brunei-Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam – the USTR on 5 November 2015 released the text of the TPP after a landmark agreement to liberalise trade in nearly all goods and services reached on 5 October 2015. The text, containing 30 chapters, was subsequently agreed and signed on 4 February 2016 although the new US president Donald Trump signed an executive order formally withdrawing the US from the trade deal in January 2017.

Trade Rules and Regulations

Goods brought into the US are often subject to import duties, but import licences are generally not required. There are no foreign exchange controls over payments for imports.

Imports are usually subject to ad valorem and/or specific import duties. Regular rates are applied on imports from locations enjoying normal trade relations (NTR) or formerly most-favoured-nation status, including Hong Kong and the Chinese mainland. Products from some countries receive preferential import treatment via the US Generalised Scheme of Preferences (GSP). CBP has final authority on tariff classification for duty rates purposes.

The US rigorously enforces laws on dumping. When the DOC determines that a class of foreign goods is being, or is likely to be, sold to purchasers in the US at less than its fair value, an antidumping duty investigation may be conducted. The USITC is responsible for conducting the final injury investigation. If all the determinations are affirmative, the DOC will issue a duty order. On the other hand, the US also enforces laws on countervailing. When the DOC determines that a class of foreign goods receives countervailable foreign government subsidies, a countervailing duty investigation may be conducted. As a standard practice, the USITC is responsible for conducting the final injury investigation. If all the determinations are affirmative, the DOC will issue a duty order against the subject imports.

Imported goods are usually required to be marked with the country of origin in English. The marking has to be permanent, legible and conspicuous. Additional labelling is required on food, cosmetics, textiles and apparel, selected household products and flammable fabrics.

Certain imported products must be approved by the proper US authority. For example, certification by the Underwriters' Laboratory or ETL Testing Laboratories must be obtained for electrical appliances, gas equip­ment and fire prevention apparatus.

Signed into law in August 2008, the Consumer Product Safety Improvement Act (CPSIA) forms part of a comprehensive effort by the US government to enhance the safety of imported consumer goods, which could create additional hurdles for the entry of items such as toys and other children’s products. Manufacturers of children's products must subject their products to third party testing of safety standards compliance 90 days after the publication of the applicable accreditation rule by the Consumer Product Safety Commission (CPSC).

As a proactive effort in raising Chinese manufacturers and importers’ compliance with the US product safety standards, the US’s CPSC set up its first overseas office in Beijing in January 2011. Also, the CPSIA was revised in May and signed into law on 12 August 2011 to include several important amendments. For example, the legislation includes a provision that implements the new 100 parts per million lead content standard for products designed or intended primarily for children 12 years of age or younger on a prospective rather than a retrospective basis. As a result, the new lead standard will apply to products manufactured on or after 14 August 2011 and not to products in inventory or on store shelves as of that date. On the other hand, the legislation creates a “functional purpose” exception for products, classes of products, materials or component parts that cannot meet the lead limits if the lead content serves a functional purpose, provided they are not likely to be placed in the mouth or ingested and reasonably foreseeable exposure to the product will not result in elevated blood lead levels.

Under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the US requires specific documents for fur imports. In addition, to close a loophole in the Fur Product Labelling Act (FPLA) that exempts fur-trimmed garments from the labelling requirements, President Obama signed the Truth in Fur Labeling Act of 2010 into law on 18 December 2010. This legislation amends the Fur Products Labeling Act to require labelling of all fur garments, regardless of value.

Hong Kong’s Trade with the US [1]

The US is Hong Kong’s 2nd-largest export market, behind only the Chinese mainland. Hong Kong’s total exports to the US grew by 0.4% to US$30.9 billion in the first nine months of 2017, after decreasing by 5% to US$41.5 billion in 2016. Major export items in January-September 2017 included telecommunications equipment & parts (shared 16% of the total), computers (6%), pearls, precious & semi-precious stones (6%), articles of apparel, of textile fabrics (5%), jewellery (5%), electrical apparatus for electrical circuits (4%), parts & accessories of office machines/computers (4%), electrical machinery & apparatus (4%), semi-conductors and electronic valves & tubes (4%), toys, games & sporting goods (4%), electrical power machinery & parts (4%), women’s or girl’s wear of textile fabrics, not knitted (4%), watches and clocks (3%) and travel goods & handbags (3%).

On the other hand, the US is Hong Kong’s 6th-largest source of imports. Hong Kong’s total imports from the US were up by 5% to US$19.7 billion in the first nine months of 2017, after decreasing by 2% to US$26.5 billion in 2016. Leading import items in January-September 2017 included telecommunications equipment & parts (shared 16% of the total), semi-conductors and electronic valves and tubes (13%), pearls, precious and semi-precious stones (9%), jewellery (7%), fresh or dried fruit and nuts (not including oil nuts) (4%), fresh, chilled or frozen meat & edible meat offal (4%), non-electric engines & motors & parts (3%), measuring, checking, analysing & controlling instruments & apparatus (3%) and electrical apparatus for electrical circuits (3%).

Table: Hong Kong Trade with the US
Table: Hong Kong Trade with the US

US Involvement in the Hong Kong Economy

More than 1,400 US firms operate in Hong Kong, concentrated in trading, banking and finance, and transport. As of 1 June 2017, there were 283 regional headquarters and 443 regional offices of US companies in Hong Kong.

The US is one of the major sources of foreign direct investment in Hong Kong. According to the latest Hong Kong official statistics, the US was the 7th-largest source of foreign direct investment in Hong Kong after British Virgin Islands, the Chinese mainland, Cayman Islands, the Netherlands, Bermuda and Singapore, with a total stock of US$40.6 billion (or HK$314.6 billion) as at the end of 2015.

Most major US banks, insurance firms, transportation companies, and multinational corporations operate in Hong Kong. Among them are Citigroup, Federal Express, Exxon, Marriott International, Microsoft, IBM, Hewlett-Packard Company, American Express International, 3M, Starbucks, Coach, Samsonite, Forever 21, Gap, J. Crew, InVue Security, Direxion Asia Ltd (DAL), East-West Property Advisors, LuxTNT.com, PRA Global and Woodside Wine & Spirits.

Hong Kong invests in the US in various areas, such as hotel and manufacturing. The stock of Hong Kong's direct investment in the country amounted to US$11.1 billion (or HK$ 85.7 billion) as at the end of 2015. Hong Kong companies having presence/investment in the US include the Peninsula Group (hotel), the Bank of East Asia (banking), OOCL and Kerry Logistics (logistics), CK Hutchison (energy, finance and investment), Lee Kum Kee and Vitasoy (food and beverage manufacturing).

US nationals represent one of the most significant foreign presence in Hong Kong. An estimated 85,000 US citizens live in Hong Kong, while nearly 1.3 million US citizens visited or transited Hong Kong in 2016.


[1] Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the full picture of the export business managed by Hong Kong companies.

Content provided by Picture: Louis Chan
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