Government Contracts & Investigations

Departments of State and Commerce Announce Policy Changes to US Export Laws in Response to Hong Kong National Security Law

By | | July 10, 2020

On June 30, 2020 at 11:00 PM Hong Kong time, the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region (HK National Security Law) took effect. The HK National Security Law was adopted by the Standing Committee of the National People’s Congress of the People’s Republic of China (PRC), listed in Annex III of the Basic Law (the mini-constitution) of the Hong Kong Special Administrative Region (HKSAR), and promulgated by the government of the HKSAR.

In response to the then-expected HK National Security Law, on June 29, 2020 the Department of State announced that the U.S. would immediately end exports of U.S.-origin defense equipment to Hong Kong and would take steps to treat Hong Kong in the same manner as the PRC for U.S. defense and dual-use technologies. This means that the Directorate of Defense Trade Controls (DDTC) will not issue export licenses to Hong Kong for defense articles and defense services subject to the International Traffic in Arms Regulations (ITAR). Effective June 30, 2020, the U.S.  Department of Commerce Bureau of Industry and Security suspended license exceptions for exports and reexports to Hong Kong, and transfers (in-country) within Hong Kong. Those license exceptions allowed for Hong Kong to receive preferential treatment as compared to the PRC for items subject to the Export Administration Regulations (EAR). U.S. companies relying on any EAR license exception to export items to Hong Kong should immediately confirm whether that license exception remains available for shipments to the PRC. Otherwise, an export license will be required.

This situation is developing and it is expected that the U.S. will take further actions in response to the HK National Security Law.

Contact Elsa Manzanares or Michael Grigsby for more information.