On December 23, 2020, the Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule in the Federal Register that removes Hong Kong as a “separate destination” under the Export Administration Regulations (EAR). This rule follows U.S. Secretary of State Michael Pompeo’s May 2020 announcement that Hong Kong no longer warrants treatment under U.S. laws as autonomous from China, and implements President Donald Trump’s July 2020 Executive Order directing BIS “to suspend or eliminate different and preferential treatment for Hong Kong.” The final rule became effective on December 23, 2020.
Specifically, the final rule makes the following changes with respect to exports, reexports or in-country transfers of items subject to the EAR to Hong Kong:
- Removes the Hong Kong entry from the Commerce Country Chart (Supplement No. 1 to Part 738 of the EAR), such that “[l]icense requirements for Hong Kong will now be governed by the Commerce Country Chart entry for China;”
- Removes Honk Kong’s eligibility to receive different license exceptions from China; and
- Amends the Electronic Export Information (EEI) filing requirement for exports of items on the Commerce Control List to Hong Kong.
These changes are in addition to the removal of license exceptions for exports to Hong Kong made earlier this year by BIS in its July 31, 2020 final rule. For more information on those exceptions, please see update dated July 31, 2020.
Consequently, Hong Kong now will fall into Country Group D and is subject to national security, chemical and biological, missile technology and arms embargo restrictions in the EAR. Additionally, exports, reexports and in-country transfers of items subject the EAR to Hong Kong will also be subject to the new Military End User Rule (“MEU Rule”). For more information on the MEU Rule, please see update dated December 23, 2020.
The rule also includes a savings clause, which provides that all export and reexport shipments that may no longer be made under BIS’s No License Required (NLR) designation and were either 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 reexport on December 23, 2020 to Hong Kong, may proceed to their destination under NLR until January 22, 2021.