BIS Suspends License Exceptions for Hong Kong

Aug 28, 2020

Hong Kong National Security Law & Trade Compliance

Doing business in a global marketplace requires companies to be diligent in understanding the rapidly changing rules and regulations that each region imposes on allowing goods into and out of countries around the world. As a value-added system integrator, UNICOM Engineering strives to keep our customers up-to-date on the most recent information concerning topics such as international trade compliance. On June 30, 2020, the U.S. Bureau of Industry and Security issued a notice suspending any license exceptions for exports to Hong Kong. Below is an excerpt of the notice.

Suspension of License Exceptions for Hong Kong

"Effective June 30, 2020, BIS is hereby suspending any License Exceptions for exports to Hong Kong, reexports to Hong Kong, and transfers (in-country) within Hong Kong of items subject to the Export Administration Regulations (EAR), 15 CFR Parts 730-774, that provide differential treatment than those available to the People’s Republic of China.  BIS is taking this action pursuant to Section 740.2(b) of the EAR, 15 CFR § 740.2(b), which provides that all License Exceptions are subject to revision, suspension, or revocation, in whole or in part, without notice.

A License Exception is an authorization contained in Part 740 of the EAR that allows exports, reexports, or transfers (in-country) under stated conditions, of items subject to the EAR that would otherwise require a license.  As a result of this suspension, no items subject to the EAR may be exported to Hong Kong, reexported to Hong Kong, or transferred within Hong Kong based upon an authorization provided by a License Exception except for transactions that would otherwise be eligible for a license exception if exported to the People’s Republic of China.  A license must instead be sought and obtained whenever a license requirement applies for an export to, a reexport to, or a transfer within, Hong Kong.

However, shipments of items that are removed from eligibility for a License Exception as a result of this action and were on dock for loading, on lighter, laden aboard an exporting or transferring carrier, or en route aboard a carrier to a port of export or reexport on June 30, 2020, pursuant to actual orders for export to Hong Kong, reexport to Hong Kong, or transfer within Hong Kong, may proceed to their destination under the previous License Exception eligibility.

Similarly, deemed export/reexport transactions involving Hong Kong persons authorized under a License Exception eligibility prior to June 30, 2020 may continue to be authorized under such provision until August 28, 2020, after which such transactions will require a license.  Exporters, reexporters, or transferors (in-country) availing themselves of this 60-day savings clause must maintain documentation demonstrating that the Hong Kong recipient was hired and provided access to technology eligible for Hong Kong under part 740 prior to June 30, 2020."

Updated August 31, 2020:
The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) published the final rule in the Federal Register amending the Export Administration Regulations (EAR) to suspend all License Exceptions for Hong Kong on July 31, 2020. Please find further details of the final amendments to the EAR.

In this final rule, BIS amends the Export Administration Regulations, 15 CFR parts 730-774 (EAR), to suspend the availability of the License Exceptions for exports and reexports to Hong Kong, and transfers within Hong Kong of all items subject to the EAR that provide differential treatment from the license exceptions available to the PRC.

BIS is taking this action pursuant to § 740.2(b) of the EAR (15 CFR 740.2(b)), which provides that all License Exceptions are subject to revision, suspension, or revocation, in whole or in part, without notice. The following License Exceptions are suspended to the extent they allow exports or reexports to or from Hong Kong, or transfers within Hong Kong, when they may not be used for exports or reexports to the PRC, or transfers within the PRC:

(1) Shipments of Limited Value (LVS) (§ 740.3);

(2) Shipments to Group B Countries (GBS) (§ 740.4);

(3) Technology and Software under Restriction (TSR) (§ 740.6);

(4) Computers, Tier 1 only (APP) (§ 740.7(c));

(5) Temporary Imports, Exports, Reexports, and Transfers (in-country) (TMP) (§ 740.9(a)(11), (b)(2)(ii)(C, and (b)(5));

(6) Servicing and Replacement Parts and Equipment (RPL) (§ 740.10(a)(3)(viii), (a)(4), (b)(1) except as permitted to Country Group D:5, and (b)(3)(i)(F) and (ii)(C));

(7) Governments (GOV) (§ 740.11(c)(1)—Cooperating Governments only));

(8) Gift Parcels and Humanitarian Donations (GFT) (§ 740.12);

(9) Technology and Software Unrestricted (TSU) (§ 740.13);

(10) Baggage (BAG) (§ 740.14) (except as permitted by § 740.14(d));

(11) Aircraft, Vessels, and Spacecraft (AVS) (§ 740.15(b)(1), (b)(2), (c));

(12) Additional Permissive Reexports (APR) (§ 740.16(a) and (j)); and

(13) Strategic Trade Authorization (STA) (§ 740.20(c)(2)).

Reexports of items subject to the EAR from Hong Kong under License Exception APR § 740.16(a) are also restricted.

In this final rule, BIS also amends paragraph (a) of § 740.2—Restrictions on all License Exceptions—by adding a new paragraph (a)(23) to identify the suspension of the availability of these License Exceptions for exports to Hong Kong, reexports to and from Hong Kong, and transfers within Hong Kong of all items subject to the EAR.

A License Exception is an authorization contained in Part 740 of the EAR that allows exports, reexports, or transfers (in-country) under stated conditions of items subject to the EAR that would otherwise require a license. This includes License Exception APR which was previously also available for reexports from Hong Kong.

For more information and a complete list of AES License Type codes and reporting instructions for these types, click here.

Accelerate Global Growth with UNICOM Engineering Global Trade Compliance Expertise

With a team of compliance experts on your side, your business is able to more fully understand the issues that impact international trade. The regulatory changes affecting Hong Kong is just one recent example of how factors outside of your control are likely to have an effect on your business when you ship to customers on a global level.

UNICOM Engineering’s Trade Compliance team of highly trained experts can assist with your international export concerns and keep you well informed of policy updates. Our customers benefit from this by further understanding complex trade situations as well as streamlining the complicated paperwork process that regulatory agencies demand. Learn more by visiting our Trade Compliance and Logistics page, by phone at (800) 977-1010, or by email.



Category: Trade Compliance


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