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Shipping to Hong Kong: New U.S. Rules and Strategies for Compliance

BIS Clarifies New Requirements on Exports To, Through Hong Kong

Tuesday, April 04, 2017
Sandler, Travis & Rosenberg Trade Report

A regulatory requirement slated to take effect April 19 imposes new support documentation requirements on exports of specific controlled items to or through Hong Kong. The Bureau of Industry and Security recently provided additional information about these requirements.

Under a BIS final rule, 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, which may come in the form of a “no license required” notification) 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.

In addition, reexporters in Hong Kong must 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 states that 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. 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 license 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 license.

- Statements by a counter party to a transaction that an import license 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 reexported from Hong Kong are not required to obtain a copy of the Hong Kong export license.

- The copy of the Hong Kong import or export license is only required prior to shipment, not prior to applying for a BIS license.

- Shipments en route to Hong Kong prior to April 19 are not subject to the rule’s requirements.

- EAR99 items and items unilaterally controlled by the U.S. are not covered by this rule, although other requirements under the EAR should be considered (e.g., license requirements for an entity on the Entity List or Unverified List).

- An approval-in-principle letter issued by the Hong Kong government (a special program that expedites licensing processing times for frequent shippers) may be treated as a Hong Kong import license under this rule as long as the letter is valid when the shipment takes place and covers the items and parties relevant to the export or reexport. However, an AIP letter may not be used in place of the individual Hong Kong export license for reexports from Hong Kong of multilaterally controlled items subject to the EAR.

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

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