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New Requirements on Exports To, Through Hong Kong Could Pose Challenges

Thursday, January 26, 2017

A new U.S. regulatory requirement slated to take effect April 19 imposes new support documentation requirements on exports of specific controlled items to or through Hong Kong. While this rule aims to provide greater assurance that covered goods will be properly authorized to their final destination even when they first pass through Hong Kong, compliance could be burdensome for both U.S. and non-U.S. exporters.

Sandler, Travis & Rosenberg’s Export Controls and Sanctions Practice will be conducting a webinar Feb. 22 to discuss the requirements and implications of this new rule and will be joined by professionals from ST&R’s Hong Kong office who will provide information on obtaining the required licenses and various proactive strategies.

Under a final rule issued by the Bureau of Industry and Security, exporters or reexporters must first obtain a copy of a valid Hong Kong import license (or a written statement from the Hong Kong government that an import license is not required) before exporting or reexporting to Hong Kong any item subject to the Export Administration Regulations and controlled on the Commerce Control List for national security, missile technology, nuclear nonproliferation, or chemical and biological weapons reasons. The exporter or reexporter must have the copy in its possession and the license must not have expired at the time of the shipment.

This rule also requires reexporters in Hong Kong to first obtain a Hong Kong export license (or a statement from the Hong Kong government that an export license is not required) before reexporting 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 license is issued, the shipment must be in accordance with the terms and during the validity period of that license.

BIS expects that in nearly all instances this rule will require only that a party in Hong Kong obtain a license that is already required under Hong Kong law. In those instances, no new action is required by persons reexporting from Hong Kong. However, the rule will require companies to establish new processes for obtaining a copy of a Hong Kong import license prior to shipping controlled items to Hong Kong. 

For more information, please contact Steve Brotherton at (415) 490-1430 or Sally Peng at 852.9535.6034.

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