Hong Kong warns exporters on end-use controls

Hong Kong is under global pressure to close back channels to facilitating exports used in weapons of mass destruction programs in sanctioned countries.    The Hong Kong government’s Trade and Industry Department is urging overseas companies that use the special administrative region of China to stage their goods for later export to “know the customer, end user and end use.”
   “For each and every business transaction/order/inquiry, traders must make their best efforts to check and get to know their customer, the end user and the intended end use of the articles/documents,” said the government agency, which operates separately from the Chinese government, in a recent circular to the trade.
   Hong Kong has been under global pressure, especially from the U.S., to close back channels to facilitating exports of technology used in weapons of mass destruction programs in sanctioned countries, including China.
   The Trade and Industry Department said that if there’s any business transaction, order or inquiry that’s suspected for use in weapons programs, then the company must submit an export license application to the agency for consideration. 
   Failure to comply with Hong Kong’s export control regulations could result in a fine of HK$500,000 and potential prison time of two years, as well as other export prohibitions, if convicted.
   Hong Kong’s export controls mirror those of the U.S. Commerce Department’s Bureau of Industry and Security (BIS) Enhanced Proliferation Control Initiative (EPCI), which prohibits the export without a license of any dual-use commodities, software or technology that would contribute to chemical or biological weapons development, long-range missile applications or nuclear proliferation.
   The Trade and Industry Department’s export enforcement circular takes particular aim at the numerous overseas companies that have affiliates in Hong Kong that stage imports for later re-export to other parts of the world.
   BIS said that when inquiring about the end user of an item procured through a Hong Kong company, the exporter should consider these compliance factors:
   • Whether the company is registered with the Hong Kong Companies Registry and has an actual business there.
   • Whether the company has received an import/export license issued by Hong Kong for a control list item or is aware of Hong Kong license requirements.
   • Whether there is a legitimate consumer or company in Hong Kong for the product.
   • Whether the consignee knows the end user and end use are in Hong Kong.
   • Where the Hong Kong importer is not the end user, whether the importer is willing to provide the purchase order or confirmation for the end user’s purchase.
   • Whether documents, especially end-use statements, are incomplete or contain suspicious details, such as nonexistent addresses and first names only for contact persons.
   • Whether the location of the end user’s point of contact is in Hong Kong, based on a review of the country code of the contact’s telephone number (Hong Kong’s country code is 852).
   “Exporters must not self-blind and ignore relevant information in any export transaction and need to be particularly sensitized to exports to [and re-exports from] Hong Kong,” BIS said.