13 April 2017
BIS Clarifies New Requirements on Exports To, Through Hong Kong
A regulatory requirement slated to take effect on 19 April imposes new support documentation requirements on exports of specific controlled items to or through Hong Kong. BIS recently provided additional information about these requirements.
Under a BIS final rule, exporters or re-exporters must first obtain a copy of a valid Hong Kong import licence (or a written statement from the Hong Kong government that an import licence is not required, which may come in the form of a “no licence required” notification) before exporting or re-exporting to Hong Kong any item subject to the Export Administration Regulations and controlled on the Commerce Control List for national security, missile technology, nuclear non-proliferation, or chemical and biological weapons reasons. The exporter or re-exporter must have the copy in its possession and the licence must not have expired at the time of the shipment.
In addition, re-exporters in Hong Kong must first obtain a Hong Kong export licence (or a statement from the Hong Kong government that an export licence is not required) before re-exporting from Hong Kong any item subject to the EAR and controlled for NS, MT, NP column 1 or CB reasons. If a Hong Kong export licence is issued, the shipment must be in accordance with the terms and during the validity period of that licence.
BIS states that this rule aims to provide greater assurance that covered goods will be properly authorised to their final destination even when they first pass through Hong Kong. However, compliance could be burdensome for both U.S. and non-U.S. exporters. BIS officials addressing a recent meeting of the agency’s Regulations and Procedures Technical Advisory Committee noted that there has been much discussion about this rule, as well as some opposition, from affected industry members. In response, BIS has posted to its website a list of frequently-asked questions that provides the following information.
- Exporters can determine whether items require a Hong Kong import or export licence using a tool on the Hong Kong Trade and Industry Department’s strategic trade controls website. However, this list is not comprehensive, so exporters should seek confirmation from HKTID as to whether an item not appearing on this list requires a licence.
- Statements by a counter party to a transaction that an import licence is not needed are not sufficient to allow exports to proceed; such statements must come from the Hong Kong government.
- Parties whose items have been exported to Hong Kong and are subsequently re-exported from Hong Kong are not required to obtain a copy of the Hong Kong export licence.
- The copy of the Hong Kong import or export licence is only required prior to shipment, not prior to applying for a BIS licence.
- Shipments en route to Hong Kong prior to 19 April are not subject to the rule’s requirements.
- EAR99 items and items uni-laterally controlled by the United States are not covered by this rule, although other requirements under the EAR should be considered (e.g., licence requirements for an entity on the Entity List or Unverified List).