On December 23, 2014, the US Department of Commerce, Bureau of Industry and Security (BIS) published an amendment to the Export Administration Regulations (EAR) imposing an export licensing requirement on Hong Kong for all National Security (NS) “Column 2” controlled items, which was effective immediately. BIS included the change at the end of a rule change related to expansion of export controls on microwave monolithic integrated circuits (MMICs) and did not elaborate on the reason for the increased export licensing requirement, which is undoubtedly related to China’s increased control over Hong Kong (NS Column 2 licensing requirements apply to China), other than providing the following statement:
- Notwithstanding Hong Kong’s comprehensive export control system, analysis of trade information indicates Wassenaar Arrangement controlled items exported from the United States to Hong Kong or reexported from abroad to Hong Kong are imported into Hong Kong and reexported from Hong Kong contrary to the requirements of Hong Kong’s export control system (which requires import and export authorization from the Hong Kong Government) and the EAR.
BIS also noted that:
- This rule is imposing this new license requirement to support the objectives of both the US Government and the Hong Kong Government to prevent diversion of sensitive items. This rule also aligns the treatment of Hong Kong under the EAR with other Wassenaar Arrangement members’ treatment of Hong Kong for items under Wassenaar controls.
Shipments to Hong Kong that were on dock for loading, on lighter, laden aboard an exporting carrier or en route aboard an exporting carrier to a port of export on December 23, 2014, pursuant to actual orders for export or reexport to Hong Kong may proceed without a license under the new requirement until January 23, 2015. “Deemed” exports of technology and source code are eligible for a grace period until February 23, 2015.
Companies exporting EAR-controlled items (commodities, software, technology) to Hong Kong should ensure that they update their export compliance programs accordingly.