The World Trade Organization (WTO) has ruled that a US ban prohibiting the labeling of imports as 'Made in Hong Kong' is discriminatory and breaches global trade rules.
A panel set up by the organization's dispute settlement body found in favor of an appeal from Hong Kong, which argued that the move ignored the territory's status as a member of the WTO in its own right.
The dispute dates back to 2020, when Beijing imposed new security laws on the special administrative region as part of an effort to crack down on dissent. In response, the administration of then-US president Donald Trump stripped the city of many of its trading privileges.
As part of this, US customer authorities declared new rules of origin for imports that required products to be labeled as 'Made in China' rather than 'Made in Hong Kong'.
Mr Trump had argued that, under the new laws, Hong Kong was "no longer sufficiently autonomous to justify differential treatment".
However, the dispute panel said that the justifications for the moves were not compatible with WTO rules and the US had failed to demonstrate the issue constitutes an emergency or a national security issue.
Washington has rejected the body's findings, with spokesman for the US Trade Representative's Office Adam Hodge criticizing the "flawed interpretation and conclusions", adding that the WTO does not have the authority to second-guess what one of its members deemed to be a matter of national security.
"The US action responded to highly concerning actions by the People's Republic of China to erode Hong Kong, China's autonomy and the democratic and human rights of its people, threatening US national security interests," Mr Hodge continued, adding that the country has no intention of changing its rules in response to the WTO decision.
This is not the first time in recent weeks a WTO dispute panel has found against the US, with the body also declaring the nation's tariffs on aluminum and steel imports unlawful in a ruling earlier this month.