About HKTDC | Media Room | Contact HKTDC | Wish List Wish List () | My HKTDC |
繁體 简体
Save As PDF Email this page Print this page
Qzone

BIS Could Rescind Certain Documentation Requirements for Exports of Controlled Items Through Hong Kong

The U.S. Bureau of Industry and Security’s Regulations and Procedures Technical Advisory Committee recently submitted to new BIS officials Mira Ricardel, under secretary of commerce for industry and security, and Richard Ashooh, assistant secretary for export administration, a number of recommendations for updating regulations and improving efficiency and processes. These recommendations include the elimination of the new support documentation requirements for exports of specific controlled items to or through Hong Kong. 

Under this regulation, exporters or re-exporters must first obtain a copy of a valid Hong Kong import license (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.

When the U.S. announced this regulation in its Federal Register in January 2017, it was mentioned that “BIS is taking this action to provide greater assurance that U.S. origin items that are subject to the multilateral control regimes noted above will be properly authorized by the United States to their final destination, even when those items first pass through Hong Kong.”

Other recommendations issued by the Regulations and Procedures Technical Advisory Committee include the following.

Practices and Procedures

  • create and implement licence exception ICT (intra-company transfer) or another type of authorisation (e.g., trusted exporter programme) that would provide a licencing alternative for deemed exports for companies that have robust export internal control programmes
  • initiate a dialogue among BIS, the Directorate of Defense Trade Controls and the Defense Technology Security Administration in an effort to improve the efficiency of the dual-use export licence review and approval process and accelerate export licencing cycle times
  • provide that if BIS or another agency feels a letter of assurance is needed to support an approved export licence, the need to obtain an LOA should be included in a licence condition as opposed to asking applicants to delay the licence application process while they wait for a consignee to provide a signed LOA
  • move Vietnam from country group D:1 to country group B in the EAR
  • transfer the management and enforcement of the anti-boycott laws, which are only tangentially related to exports, from the Commerce Department to the Treasury Department, which would require an act of Congress
  • simplify licence exception AVS to clearly allow U.S. aircraft overflight and temporary landing as long as there is no change of ownership
  • allow exporters to meet with the BIS Office of Export Enforcement in settlement discussions rather than just communicating through counsel, which “violates due process and fundamental fairness” and prevents those with the most knowledge about the case from getting together

Encryption

  • eliminate or significantly streamline pre-shipment inspection, as it is “a major problem for those manufacturing overseas to bring new products to the United States for inspections that do not seem very meaningful”
  • eliminate reporting except for encryption licencing arrangements
  • increase control levels, which are not keeping up with changes in individual usage or markets
  • remove outdated controls at regular intervals given that technological change continues to eclipse regulatory schemes
  • clarify the application of BIS definitions for technology transfers, as it is “very difficult in practice for developers jointly working on a product to determine where a line is crossed to require a licence”
  • allow self-classification of chips, chipsets, etc. similar to software products, as these are typically for mass market items in widespread use and formal classification may slow product adoption
  • revise the treatment of open source and open object items to EAR99 rather than control them under export control classification number 5D002
  • move the classification of mass market and EAR 740.17(b) ENC unrestricted items to EAR99, as the classification of mainstream software products is no longer warranted
  • eliminate the open cryptographic interface restriction, which “unfairly discriminates against proprietary software and gives a competitive advantage to open source products”

High-Performance Computers

  • raise the control threshold, which has remained static for more than 20 years and threatens sales of U.S. computers, and index it to future increases in the Wassenaar Arrangement control threshold
  • clarify that export licences are not required if a product is being used for administrative uses unrelated to sanctioned activity

Other Controls

  • modify the EAR and the International Traffic in Arms Regulations to enable BIS licencing of EAR-jurisdiction items that are part of foreign military sales cases
  • create a harmonised definition of technology or technical data to relieve companies working with EAR, ECCN 600 series and ITAR items from having to unnecessarily control and licence large parts of their technology
Content provided by Picture: HKTDC Research
Comments (0)
Shows local time in Hong Kong (GMT+8 hours)

HKTDC welcomes your views. Please stay on topic and be respectful of other readers.
Review our Comment Policy

*Add a comment (up to 5,000 characters)