A First Step: BIS Eliminates Certain Hong Kong Export License Exceptions

Today the Bureau of Industry and Security (BIS) announced that it is suspending license exceptions for exports, re-exports, or transfers to or within Hong Kong that provide differential treatment than license exceptions available for shipments to mainland China. In other words, if a license exception is not available for shipments to China, then it can no longer be used for shipments to Hong Kong. The rule change comes in response to new national security restrictions imposed on the territory by China. If your company uses license exceptions to make shipments to Hong Kong, you must carefully review this rule to determine whether the license exception remains valid. Several common license exceptions, including Additional Permissive Reexports (“APR”) and Temporary Imports, Exports, Reexports, and Transfers (“TMP”), among others, are affected.

The new rule is effective today, but there is a savings clause that authorizes the use of license exceptions for shipments that were on the dock for loading, already loaded, or already en route by today. Certain deemed exports and deemed re-exports are also authorized under existing license exceptions until August 28, 2020.

This rule did not change the Export Administration Regulations’ (EAR) Country Chart, which means that all items that could be exported, re-exported, or transferred to Hong Kong without a license or the use of a license exception may still be shipped. However, it is likely that further restrictions on exports to Hong Kong are coming, given recent statements from the Commerce and the State Departments and proposed legislation under consideration in the Senate. Continued monitoring of these issues will be necessary to ensure compliance in this rapidly changing landscape.