Client Alert
BIS Suspends EAR License Exceptions for Hong Kong
July 2, 2020
By:
Effective Tuesday, June 30, 2020, the Department of Commerce’s Bureau of Industry and Security (BIS) suspended all License Exceptions in the Export Administration Regulations (EAR) for exports and re-exports to Hong Kong, and in-country transfers within Hong Kong, that are not available for exports, re-exports, or in-country transfers to the People’s Republic of China (PRC).
Put differently, Hong Kong shall be treated as part of the PRC under the EAR and, consequently, any item that requires a license for export, re-export, or transfer to the PRC shall now require a license for movement to or transfer within Hong Kong. Any License Exceptions that previously applied to Hong Kong but not the PRC are suspended, with the following exceptions:
1. Any items affected by this rule that were on dock for loading, on lighter, laden aboard an exporting or transferring carrier, or en route aboard a carrier to a port of export or re-export on June 30, 2020, which were actually destined for export to Hong Kong, may proceed to Hong Kong under the previous License Exception eligibility.
2. Deemed export and re-export transactions involving Hong Kong nationals that were authorized under a License Exception affected by this rule and that commenced prior to June 30, 2020, will continue to be authorized until August 28, 2020. According to BIS, companies relying on this authorization should retain documentation demonstrating that the Hong Kong nationals were hired and provided access to technology eligible for Hong Kong nationals prior to June 30, 2020.
Forwarders should review any License Exceptions for shipments destined for Hong Kong to determine whether those License Exceptions would also authorize a shipment to the PRC. Notably, Tuesday’s action could affect shipments to Hong Kong that were previously authorized under License Exceptions APP (15 CFR Section 740.7); RPL (Section 740.10); GOV (Section 740.11); and APR (Section 740.16).