Taking Trump out of the equation, a Hillary Clinton administration can be a blessing for big companies but not so much for liberal advocates here in Hong Kong.
(Photo credit: DonkeyHotey via flickr.com)
With early voting about to begin in some states, two remaining debates between Hillary Clinton and Donald Trump, and less than fifty days until election day, U.S. voters in Hong Kong are faced with the difficult decision between two candidates whose policy positions might be inconsistent with their interests as U.S. citizens who live and work in Hong Kong. Trump’s incendiary language about China and other countries in Asia, opposition to the Trans Pacific Partnership, and unclear position on FATCA make him undesirable to Hong Kong-based Americans. Clinton’s record in pubic service and the period after her tenure as Secretary of State provide no shortage of good, bad and ugly outcomes for the American voter in Hong Kong to consider.
The Good: No Stranger to Multinational Companies, Financial Industry
A large number of U.S. voters who live in Hong Kong work in financial, legal, consulting and other services supporting Hong Kong’s role as a regional hub for Greater China, Hong Kong and Asian operations of multinational companies. Clinton’s combined experience as a senator from New York, a Secretary of State, and interactions with (the) private industry after leaving government arguably gives her a broader knowledge base than Trump with his focus on real estate and licensing. As secretary of state, more than her predecessors, Clinton argued that commercial diplomacy and the promotion of trade, long the neglected stepchildren of the foreign policy establishment, are central to U.S. strategic interests. Clinton’s many lucrative speeches to multinational companies and trade associations after she departed government exposed her to a broad number of business issues. An unnamed attendee at a Clinton speech to a Goldman Sachs conference in 2013 commented that Clinton sounded more like a Goldman Sachs managing director (Goldman Sachs’ recently banned executives from donating to Trump).
As David Neuville, a Hong Kong based partner in Simmons and Simmons’ financial markets group who plans to vote in November’s election and who has worked on transactions throughout Asia remarked, Personality and character issues aside, one of the biggest problems Hillary Clinton has been having with opponents on both sides of the aisle is that she insists on viewing the world pragmatically, rather than taking the perhaps easier (at least this year) path of adopting popular but unworkable positions. This disadvantage in electoral politics would likely work to the benefit of global markets (including those in Asia) during a Hillary Clinton presidency, by emphasising economic development and market factors, especially in emerging markets, rather than other, perhaps less relevant, concerns.”
Republicans have little basis to criticise, as they objected to President Barack Obama’s successful demonization of Mitt Romney’s career in finance, and Jeb Bush and John Kasich’s tenures at investment banks were not factors in primary voters’ rejection of their candidacies. Earlier, Sarah Palin famously made a speech to a 2009 investment bank conference in Hong Kong at the outset of her post-government career as a speaker and commentator.
The Good: Hong Kong Visit in 2011, China Experience
Unlike Trump who unsuccessfully sued his Hong Kong business partners, alienating local business leaders, Clinton visited Hong Kong in July 2011. It is rare for a Secretary of State to visit Hong Kong, which, despite its economic importance, is typically not even a second choice, after Beijing, when cabinet level officials visit China. In a speech titled “Principles for Prosperity in the Asia-Pacific”, Clinton praised Hong Kong for showing the world the value of an open, free, transparent, and fair society.
Unlike Trump’s limited experience in China, Clinton’s has decades of diplomatic experience in China, though the outcomes are not always positive (see below). In 2009, China and the Obama Administration launched the annual joint Strategic and Economic Dialogue, which merged and upgraded previous dialogue platforms. The S&ED seeks to achieve greater mutual congruence on matters of shared concern. It isn’t a forum for the United States and China to solve the world’s problems. Throughout her tenure, Clinton attempted to articulate a friendly policy towards China, stating in 2011 that the U.S. stands at a pivot point to Asia and in 2012 that the U.S. is not on the brink of a new Cold War with China and that a thriving China is good for America. Despite the many dialogues and friendly speeches, and Clinton’s optimism that trade and security policy differences could be resolved by the S&ED, China’s actions in areas such as dumping, intellectual property protection, cybercrime, North Korea, and aggressive actions in the South China Sea and Diaoyu, continued during and after her tenure.
While Senator Sanders pledged to “deter China’s military build-up” and impose sanctions on any individual or country that violates an arms embargo with China, the national security section of Clinton’s website offers a bland commitment to work with friends and allies to promote strong rules of the road and institutions in Asia, and encourage China to be a responsible stakeholder—including on cyberspace, human rights, trade, territorial disputes, and climate change—and hold it accountable if it does not.
One notable Clinton success in China was the U.S. pavilion at the 2010 Shanghai Expo, which showcased the virtues of U.S. civic-mindedness. The successful pavilion was despite the lack of public funding, as under U.S. law no public funding can be used. Clinton assisted in an ambitious fundraising campaign from the private sector (though observers noted the similarities to Clinton Global Initiative fundraising). Clinton’s successor, Secretary of State John Kerry, failed to raise sufficient amounts for the U.S. pavilion at the 2015 Milan World Expo.
The Bad: FATCA
U.S. tax filers resident in Hong Kong are increasingly burdened and threatened by FATCA’s onerous reporting requirements and penalties for non-compliance. Democrats Abroad sought Clinton and Sanders opinions on FATCA earlier this year. Sanders supported a Same Country Safe Harbor, an initiative to exempt from FATCA reporting requirements those accounts where the filer has bona fide residence. Whereas Senator Sanders position was clear (“Yes. I support the “Same Country Safe Harbor” proposal”), Clinton did not state her support for the Same Country Safe Harbor. Instead, she said “we should ease burdens on law abiding Americans living abroad” and that she is “committed to working with Americans living abroad and members of Congress to find the right solutions.” Following an outcry from expatriate Democrats, and days prior to Democrats Abroad’s global primary, Clinton issued an email to refine her position, stating that “I support working out an effective same country safe harbor proposal and finding a solution that works to give relief to law-abiding citizens, without weakening our rules against tax cheats.” Democrats Abroad primary voters, including in Hong Kong, were not fooled, and overwhelmingly voted for Sanders.
The Bad: Tax Policy
Clinton’s proposed changes to the tax code will certainly impact high net worth U.S. tax filers in Hong Kong. Her tax increases include higher rates on taxpayers making more than US$5 million per year, closing loopholes for carried interest, and raising estate tax rates.
The Bad: TPP Triangulation & Strangulation
Although not a signatory to the TPP, according to the Hong Kong Trade Development Council, as an economy where services account for more than 90 per cent of the GDP, Hong Kong is well-positioned to benefit from any FTAs in the region. The American Chamber of Commerce in Hong Kong suggested Hong Kong join the TPP in its submission to the Chief Executive’s Policy Address 2016. The Hong Kong Trade Development Council, in an analysis published after the 12 TPP members signed the agreement, stated that Hong Kong, as a regional service hub, should thrive on the additional business and investment activities stemming from TPP.
Unfortunately for Hong Kong, Clinton has changed her position on the TPP and now opposes it, even though negotiations commenced during her tenure as secretary of state and for years after she was a strong supporter. In her 2011 speech in Hong Kong, Clinton spoke out against tariffs and regulations that strangle trade and said the U.S. was hoping to unveil plans for “genuine free trade zone” in the Asia Pacific, the TPP, stating “We should aim for true regional integration, and that is the spirit of the Trans Pacific Partnership.”
Clinton claimed at a Democratic candidates’ debate last October 13th that “I did say, when I was secretary of state, three years ago, that I hoped it would be the gold standard”. In fact, in a 2012 speech in Australia, Clinton said that “This TPP sets the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field” and that she encouraged all nations “willing to meet 21st century standards as embodied in the TPP” to join the deal. She subsequently called the TPP exciting, innovative, ambitious, groundbreaking, cutting-edge, high-quality and high-standard.
The Ugly: Ethics Problems
Hong Kong residents hold SAR government officials to high standards of honesty and transparency, standards that Clinton has recently failed to meet. Recent poll results show that the public increasingly perceives Trump as more honest than Clinton, a result largely her own doing amid ongoing revelations about the use of a non-government, private email server to conduct State Department business, failures by Clinton’s State Department appointees to ensure the safety of U.S. diplomats in Benghazi resulting in their deaths, as well as State Department access granted Clinton Foundation and Clinton Global Initiative donors. Prior to endorsing Clinton, Sanders criticized her for being a sitting secretary of state while her husband’s foundation collected millions of dollars from foreign dictatorships. Usually friendly media such as The Washington Post awarded Clinton four Pinocchios when she claimed that FBI Director James Comey said her answers when questioned about her e-mail practices were truthful.
The Ugly: Fundraising Scandals Redux
In the 1990s, the Democratic National Committee collected illegal donations from donors in China, Hong Kong, Macau and Taiwan, with Bill and Hillary Clinton friends Yah Lin (Charlie) Trie and Johnny Chung (both born in Taiwan), John Huang (who grew up in Taiwan), and Maria Hsia (also born in Taiwan) convicted of campaign finance law violations. After his guilty plea, Chung claimed that a People’s Liberation Army Lt. Col. named Liu Chaoying, an executive with a state-owned aerospace company, gave him US$300,000 to donate to the Democrats’ 1996 campaign. Chung and Liu got to know each other in Hong Kong. Macau billionaire Ng Lap Seng, now awaiting trial in New York City on unrelated bribery charges, might be offered immunity to testify in front of Congress over accusations he arranged US$1 million in illegal donations to Bill Clinton’s 1996 reelection campaign. In the mid-90s the Clinton Administration made a number of policy decisions favorable to China with regard to exports of U.S. satellite technology and U.S. policy towards Taiwan, actions that were detrimental to U.S. national security as discussed in the bi-partisan Congressional Cox Report.
The Ugliest: Human Rights in China, Electoral Reform in Hong Kong
Although Clinton’s views towards electoral reform in Hong Kong are unknown, her 2011 speech in Hong Kong was criticized for its apparent deference to Beijing, as she avoided any reference to Hong Kong’s frustrated progress towards a more genuine democracy. Her approach to human rights in China is also informative. In her first visit to the mainland as secretary of state in February 2009, Clinton stated that discussions about human rights shouldn’t interfere with other issues on the U.S.-China agenda. Human Rights Watch immediately criticized Clinton for making a change to U.S. policy, especially as one of the long-standing themes across party lines has been U.S. support for the brave individuals who are working within China to try to improve their country’s rights environment. In his memoir, dissident lawyer Chen Guangcheng relates a very different version of how Clinton and her aides handled his escape from house arrest to the U.S. Embassy in Beijing in 2012 and eventual departure for the United States. Chen accuses Clinton of mischaracterising several aspects of the negotiations and applying pressure on him to accept an arrangement that could lead to further harm to his family. Human Rights Watch recently observed that the trend in China human rights is decidedly negative. Hong Kong based observers have also framed the potential collapse of the TPP as negative for democracy in China and electoral reform in Hong Kong, as it will obviate the need for China to adhere to international norms domestically or in multilateral agreements.
At the end of Bill Clinton’s presidency, a Washington D.C.-based publication that follows Taiwan affairs opined that the Clinton Administration’s Taiwan policies were deeply disappointing to the newly-democratic Taiwan. A Hillary Clinton administration might similarly disappoint those who wish to see more robust U.S. support for electoral reform in Hong Kong.
D.C. International Advisory
Ross Feingold has extensive experience with international finance, regulatory, and policy issues.
Mr. Feingold worked in Hong Kong for The Royal Bank of Scotland supporting its Asia Sale Program, and was the project manager for the bank’s opening of a new office in Taiwan.
He has worked with Deutsche Bank (Hong Kong), J.P. Morgan (Singapore) and international law firm Russin & Vecchi (Taipei), and Jardine Fleming (Taipei).
Mr. Feingold presently serves on the global board and as Asia director of The Association of Americans Resident Overseas, a non-partisan advocacy organization that represents the interests of U.S. citizens living and working abroad. He advises on strategic communications and outreach efforts, and interacts extensively with Asian governments and numerous international organizations. He is admitted to practice law in New York and Washington DC
Asia Chairman, Republicans Abroad
Asia Chairman, Mitt Romney presidential campaign (Primary, 2008)
Asia Chairman, John McCain campaign (General Election, 2008) International finance committee, Mitt Romney Presidential Campaign (2012)
East Asian Studies and Political Science, cum laude, from Bucknell University
J.D.,American University’s Washington College of Law (Securities and Corporate Finance
Mr. Feingold studied Mandarin at National University of Singapore and National Taiwan Normal University.
Mr. Feingold speaks frequently about political and foreign policy issues, appearing on BBC, Bloomberg, CNBC, Channel News Asia, Voice of America and other networks.
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