The merging of Hong Kong with China with respect to Hong Kong’s treatment under the Export Administration Regulations (“EAR”) is now reflected in the Department of Commerce’s Bureau of Industry and Security’s Hong Kong recordkeeping guidance. On February 19, 2021, BIS updated its Hong Kong recordkeeping FAQs to make that guidance consistent with the final rule BIS issued on December 23, 2020 implementing Executive Order 13936 (the “E.O.”). The E.O. was signed in the wake of U.S. objections to Chinese government national security legislation imposed on Hong Kong in 2020, which outlaws any act of “secession,” “terrorism,” or “collusion” with a foreign power.
Since April 19, 2017, exporters of items to Hong Kong and reexporters of items from Hong Kong have been required to comply with an additional recordkeeping requirement if the items are controlled multilaterally for Chemical Biological (“CB”), Missile Technology (“MT”), Nuclear Proliferation (“NP”), or National Security (“NS”) reasons. Documentation demonstrating compliance with Hong Kong import and export licensing requirements must be obtained prior to all such export activities and kept on file. When no Hong Kong import or export license is required, the exporter or reexporter must retain a “NLR Notification” from the Hong Kong government or “website information” confirming the No License Required (“NLR”) status of the item to be imported to or exported from Hong Kong. The Hong Kong export/import licensing recordkeeping requirement does not apply to EAR99 items and items unilaterally controlled by the U.S.
The recent updates to the Hong Kong FAQs were not unexpected. The updates appear to implicitly take into account recent developments such as Hong Kong’s removal from the Country Chart (because it is now considered a China destination) and Hong Kong’s now suspended preferential treatment under various license exceptions, which BIS recently changed via final rule on December 23, 2020.
The Hong Kong-specific export/import licensing recordkeeping requirement is in addition to the EAR’s other substantial recordkeeping requirements for all export activities detailed in 15 C.F.R. Part 762. Should you have any questions or concerns regarding the EAR’s Hong Kong recordkeeping requirements or other export controls matters, please contact Cortney Morgan or Grant Leach of Husch Blackwell’s Export Controls & Economic Sanctions team.