Export Update: New Hong Kong Restrictions

Export Update: New Hong Kong Restrictions

On June 29, 2020, the United States Department of Commerce announced significant changes to regulations applicable to U.S. exports to Hong Kong. These changes are in response to a new law passed by the Chinese Communist Party which impose new security measures on Hong Kong. These new security measures remove much of the autonomy Hong Kong has enjoyed since its return to Chinese control in 1997. As a result, the US government will no longer treat Hong Kong as a separate entity with special import and export regulations, due to the now increased risk of unauthorized access by China, North Korea, and Iran to controlled U.S. technology through Hong Kong.

Effective June 30, 2020, the U.S. Bureau of Industry and Security (“BIS”) is suspending all license exceptions1 for exports and reexports to Hong Kong, and transfers in-country within Hong Kong, of items that are subject to the Export Administration Regulations (“EAR”), which includes most commercial and consumer items. Shipments that “were on the 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” will be allowed to proceed. However, shipments to Hong Kong not meeting the foregoing criteria cannot proceed under a license exception.

In addition, this suspension affects “deemed exports” (i.e. transfers of technical information to Hong Kong nationals, wherever located). Deemed export/reexport transactions involving Hong Kong persons that were authorized prior to June 30, 2020, are authorized under the relevant license exception until August 28, 2020, after which an export license will be required. Those wishing to use rely on the foregoing must maintain documentation that the Hong Kong person(s) were hired and given access to relevant technology prior to June 30, 2020.

These changes will have a significant impact on US exporters and will impose license requirements on exports to Hong Kong that would have previously been authorized under a license exception.

For more information about this license exception suspension, you can read this statement by the US Department of Commerce and the order from BIS. For help navigating this and other international business regulations, please contact us at Sequoia Legal.

 

 

1See the following link for the text of the License Exceptions: https://www.bis.doc.gov/index.php/documents/regulations-docs/2341-740-2/file

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