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Department of Commerce Suspends License Exceptions for Hong Kong That Provide Differential Treatment Relative to China

On July 31, 2020, the Department of Commerce Bureau of Industry and Security amended the Export Administration Regulations to suspend the availability of all License Exceptions for Hong Kong that provide differential treatment relative to mainland China.

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Washington, DC at the White House and Lafayette Square.

On July 31, 2020, the Department of Commerce Bureau of Industry and Security (“BIS”) amended the Export Administration Regulations (“EAR”) to suspend the availability of all License Exceptions for Hong Kong that provide differential treatment relative to mainland China. Our blog post on prior steps taken to revoke preferential treatment for Hong Kong, including the initial announcement of these suspensions, is available here.

The following partial or full License Exceptions are no longer available for exports and reexports to Hong Kong, and transfers within Hong Kong, of all items subject to the EAR:

    1. Shipments of Limited Value (LVS) (§ 740.3);
    2. Shipments to Group B Countries (GBS) (§ 740.4);
    3. Technology and Software under Restriction (TSR) (§ 740.6);
    4. Computers, Tier 1 only (APP) (§ 740.7(c));
    5. Temporary Imports, Exports, Reexports, and Transfers (in-country) (TMP) (§ 740.9(a)(11), (b)(2)(ii)(C, and (b)(5));
    6. Servicing and Replacement Parts and Equipment (RPL) (§ 740.10(a)(3)(viii), (a)(4), (b)(1) except as permitted to Country Group D:5, and (b)(3)(i)(F) and (ii)(C));
    7. Governments (GOV) (§ 740.11(c)(1)—Cooperating Governments only));
    8. Gift Parcels and Humanitarian Donations (GFT) (§ 740.12);
    9. Technology and Software Unrestricted (TSU) (§ 740.13);
    10. Baggage (BAG) (§ 740.14) (except as permitted by § 740.14(d));
    11. Aircraft, Vessels, and Spacecraft (AVS) (§ 740.15(b)(1), (b)(2), (c));
    12. Additional Permissive Reexports (APR) (§ 740.16(a) and (j)); and
    13. Strategic Trade Authorization (STA) (§ 740.20(c)(2)).

In addition, reexports of items subject to the EAR from Hong Kong under License Exception APR § 740.16(a) are also restricted. The EAR’s Country Groups have not changed, and Hong Kong remains in the same groups as before. The suspension of the license exceptions has been implemented by adding a provision to the restrictions on all license exceptions in 15 C.F.R. Part 740.2.

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