Given that the United States concluded that Hong Kong is no longer autonomous from China, it should come as no surprise that the former is now subject to enhanced export controls that already applied to the latter. There are two simultaneous processes at work. China is being placed under a more restrictive export control regime, while Hong Kong has largely lost its “special status” and is being treated the same as China in many respects for export control purposes.
The consequence for exporters and reexporters of items “subject to the Export Administration Regulations” is that a number of previously-available license exceptions are gone. Whether or not export licenses will be issued in their place is an open question. Exporters and reexporters had best ensure they adapt to this new environment.
Specifically, the Bureau of Industry and Security suspended Hong Kong’s eligibility for any license exceptions that are not available to China. Previously, Hong Kong was eligible for license exceptions GBS (Shipments to Country Group B Countries), LVS (Shipments of Limited Value), STA (Strategic Trade Authorization), for national security-controlled items, and TSR (Technology and Software under Restriction). Because China is an ineligible destination for use of these license exceptions, Hong Kong now is, too. The recent changes to license exceptions CIV (Civil End Users) and APR (Additional Permissive Reexports), though primarily affecting China, will have a spillover effect on Hong Kong as well.
This new policy, effective on June 30, 2020, was adopted with no notice. Shipments already in process as of that date were permitted to proceed under a previously-applicable license exception. Deemed exports and reexports to Hong Kong persons remain authorized through August 28, 2020. Otherwise, licenses are now required.
Note that Hong Kong remains listed in Country Groups B (a prerequisite for GBS, LVS and TSR) and A:6 (a prerequisite for STA). These listings could cause confusion for those who haven’t looked at the BIS website’s suspension notice. Exporters and reexporters should be guided by that notice, notwithstanding that the EAR remain unchanged.
Meanwhile, the State Department has determined to “end exports of U.S.-origin defense equipment and will take steps toward imposing the same restrictions on U.S. defense and dual-use technologies to Hong Kong as it does for China.” Nothing’s yet posted on the Directorate of Defense Trade Controls website on this development, but I’m sure it’s coming soon and will keep you posted.
