• ITVI.USA
    16,030.520
    117.340
    0.7%
  • OTLT.USA
    2.809
    0.016
    0.6%
  • OTRI.USA
    22.220
    -0.080
    -0.4%
  • OTVI.USA
    16,016.550
    115.560
    0.7%
  • TSTOPVRPM.ATLPHL
    2.950
    -0.570
    -16.2%
  • TSTOPVRPM.CHIATL
    3.610
    0.650
    22%
  • TSTOPVRPM.DALLAX
    1.370
    -0.240
    -14.9%
  • TSTOPVRPM.LAXDAL
    3.550
    0.210
    6.3%
  • TSTOPVRPM.PHLCHI
    2.320
    0.220
    10.5%
  • TSTOPVRPM.LAXSEA
    4.110
    0.250
    6.5%
  • WAIT.USA
    126.000
    0.000
    0%
  • ITVI.USA
    16,030.520
    117.340
    0.7%
  • OTLT.USA
    2.809
    0.016
    0.6%
  • OTRI.USA
    22.220
    -0.080
    -0.4%
  • OTVI.USA
    16,016.550
    115.560
    0.7%
  • TSTOPVRPM.ATLPHL
    2.950
    -0.570
    -16.2%
  • TSTOPVRPM.CHIATL
    3.610
    0.650
    22%
  • TSTOPVRPM.DALLAX
    1.370
    -0.240
    -14.9%
  • TSTOPVRPM.LAXDAL
    3.550
    0.210
    6.3%
  • TSTOPVRPM.PHLCHI
    2.320
    0.220
    10.5%
  • TSTOPVRPM.LAXSEA
    4.110
    0.250
    6.5%
  • WAIT.USA
    126.000
    0.000
    0%
American Shipper

Licensing countdown

New BIS license rules on exports to Hong Kong takes effect April 19

   A new export control regulation which requires U.S. companies with licensable exports and re-exports to obtain documented proof of import licenses from their Hong Kong customers before the goods be shipped takes effect April 19.
   The rule was published by the Commerce Department’s Bureau of Industry and Security in the Federal Register on Jan. 19 with a 90-day implementation period. It is intended to ensure that U.S. licensed exports entering Hong Kong comply with multilateral export control regimes, such as the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, the Missile Technology Control Regime, the Nuclear Suppliers Group, and the Australia Group.
   BIS said the rule will help prevent diversions of controlled exports from Hong Kong to those countries where certain entities aren’t eligible to receive them. Hong Kong is considered by BIS to be a common destination for the diversion and transshipment of items to China and other U.S.-sanctioned countries, such as Iran.
   The BIS rule not only requires U.S. exporters to obtain and keep on file a copy of the Hong Kong import licenses, but also Hong Kong government export licenses for when the Hong Kong importer eventually re-exports the items.
   “Any company that’s shipping to Hong Kong directly from the United States or re-exports to Hong Kong U.S. product that’s covered on the Commerce Control List, other than for antiterrorism purposes, they will need a copy of the Hong Kong import license or notification from the Hong Kong Importer that the product doesn’t require an import license,” said Paul DiVecchio, principal of export compliance consultancy DiVecchio & Associates in Boston. “They cannot ship the product until they have it.”
   BIS said a copy of a Hong Kong import or export license is not required when applying to BIS for an export license, but is necessary prior to shipment of the item to Hong Kong.
   The import licenses are granted to Hong Kong’s importers by the country’s Special Administrative Region. If the shipment doesn’t require an import license, then a statement to that effect from the Hong Kong government must still be obtained by the U.S. exporter.
   U.S. exports affected by the rule are those controlled for reasons of national security (NS), missile technology (MT), nuclear nonproliferation (NP column 1) and chemical and biological weapons (CB).
   BIS said it will work with the Hong Kong Trade and Industry Department (TID) to enforce the new documentation requirements.
   Many companies and export compliance experts were taken aback at first by the way BIS presented the rulemaking as final, with no period for comments, which is common in a proposed rulemaking.
   DiVecchio warned that U.S. exporters need to ensure that proper controls are in place within their operations to avoid premature exports to Hong Kong from taking place without a copy of the import license or notification that no license is required.
   “The rule likely will be disruptive for smaller companies, but most larger companies will be ready for implementation, particularly those companies that have taken advantage of the Hong Kong TID’s pre-classification procedure,” said Rozel C. Thomsen II, partner at Baltimore law firm Thomsen and Burke, and founder of the Alliance for Network Security.
   Thomsen said a “significant” compliance matter for some companies will be obtaining documentation when shipments are consolidated with other companies’ freight for export from Hong Kong to China.
   DiVecchio said it’s important for exporters to be aware that the entry of the validated Hong Kong import license numbers or exemptions will be transparent to BIS’s Office of Export Enforcement through the U.S. government’s Automated Export System (AES).
   “They will certainly be inclined to check whether the exporter has on record a correct copy of the Hong Kong import license or notification that a license is not required,” he said. “Not having this proof readily available puts a company at risk of export violations and penalties.”
   DiVecchio doesn’t foresee the April 19 effective date for the BIS rulemaking being delayed in the next two weeks, and the questions and answers section on the BIS website related to this rule are net yet complete.
   “Stay tuned,” he said.

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