WASHINGTON, United States -- The United States is flouting international trade rules by labeling imports from Hong Kong as those from China, the World Trade Organization ruled Wednesday, an outcome that Washington rejects.

The WTO ruling addressed a decision under former president Donald Trump's administration after Beijing imposed a sweeping security law on the financial hub in 2020 to stamp out dissent.

Trump retaliated by removing special trading privileges for the city and US customs authorities later said goods produced there could no longer be stamped "Made in Hong Kong", sparking the complaint.

Hong Kong argued that such a move ignored its status as a separate member of the WTO, violating trade rules.

On Wednesday, a panel set up by the WTO's dispute settlement body said that the origin marking requirement was "not justified" under global trade rules.

It added that the US "has not demonstrated that the situation at issue constitutes an emergency in international relations".

The US's labeling requirement also gives Hong Kong products "less favorable" treatment than others, the panel said, adding that goods of other countries bear their own name rather than that of another WTO member.

The outcome drew a sharp rebuke from Washington Wednesday, with US Trade Representative spokesperson Adam Hodge saying the country "strongly rejects the flawed interpretation and conclusions" of the panel report.

The US was responding to China's "highly concerning actions", threatening US national security interests, Hodge said.

He added that the US does not plan to remove the marking requirement as a result of the latest report.

"Issues of national security cannot be reviewed in WTO dispute settlement, and the WTO has no authority to second-guess the ability of a WTO Member to respond to what it considers a threat," Hodge said.

'Discriminatory'

But Hong Kong's Secretary for Commerce and Economic Development praised the WTO ruling and called on Washington to reverse course.

"It was discriminatory and totally unreasonable and a serious breach of the WTO's rules," Algernon Yau told reporters, adding the change had "confused customers".

In the past, Washington treated imports from Hong Kong differently to goods from the rest of China, in recognition of its semi-autonomous status.

But Trump vowed that this would change after Beijing imposed the security law to quell huge and often violent pro-democracy protests in Hong Kong.

His administration decided Hong Kong was "no longer sufficiently autonomous to justify differential treatment" from China.

Once an outspoken city with distinct political freedoms, Hong Kong is fast becoming a mirror image of the authoritarian mainland.

Many democracy activists who advocated for Hong Kong to have more autonomy from China have been jailed or have fled overseas.

Authorities have been treading a fine line by insisting Hong Kong is a separate customs territory in international trade, but politically it is an "inalienable part" of China.

In 2020, authorities arrested three people for selling face masks labeled "Not made in China", saying they breached trade regulations on specifying a product's place of origin.