Strategic Trade Controls Circular No. 11/2006

Import and Export of Digital Computers

This circular informs traders of the licensing requirement for the import and export of digital computers.

The Legal Basis

2. The legal basis for imposing licensing control over strategic commodities in Hong Kong is the Import and Export (Strategic Commodities) Regulations (to be referred as "the Regulations" hereafter) made under the Import and Export Ordinance, Chapter 60, Laws of Hong Kong. Articles contained in the Schedules to the Regulations are regarded as strategic commodities, the import and export of which must be covered by valid licences issued by the Director-General of Trade and Industry. The Regulations contain four Schedules. Schedule 1 is the full list of strategic commodities subject to licensing control when imported into and exported out of Hong Kong. Schedule 2 contains sensitive strategic commodities which are controlled even if they are in transit through Hong Kong. Schedules 3 and 4 are items and activities subject to end-use control in relation to Weapons of Mass Destruction (WMD).

Control on Digital Computers

3. Digital computers are controlled by the Wassenaar Arrangement (WA), an international non-proliferation control regime overseeing the controls over the transfer of both munitions items and dual-use goods and technology. They are controlled under Category No. 4A003b of the Dual-use Goods List. According to the latest revision adopted by the WA, digital computers having an "Adjusted Peak Performance" ("APP") exceeding 0.75 Weighted TeraFLOPS (WT) are subject to control. In implementing licensing control on strategic commodities, Hong Kong follows closely the highest international standards adopted by the international non-proliferation control regimes. Accordingly, import and export of computers above 0.75 WT are subject to licensing control under the Import and Export (Strategic Commodities) Regulations of Hong Kong.

Licensing Procedures for Paper Applications

(A) Application Forms

4. Licence applications for strategic commodities including digital computers should be made on Import Licence (Strategic Commodities) Application Form [TID 501 (Rev 2009)] (Annex A) (pdf fillable format) and Export Licence (Strategic Commodities) Application Form [TID 502 (Rev 2009)] (Annex B) (pdf fillable format). These forms are free of charge and available at the Customer Service Counter of Strategic Trade Controls Branch at Room 516B on 5/F, Trade and Industry Department Tower. They can also be downloaded from the Strategic Commodities Control System Website ("SC Website") at http://www.stc.tid.gov.hk. Applicants are required to attach a copy of the technical specifications/data sheets for each application to enable the Classification Section of Trade and Industry Department ("TID") to confirm whether the goods are strategic commodities. Licence applications should be submitted to the Strategic Trade Controls Branch at Room 516B on 5/F, Trade and Industry Department Tower. A numbered receipt will be issued for each licence application. Approved import and export licences are valid for six months and three months respectively. Specimen of completed import and export licence applications are at Annexes C (pdf format) and D (pdf format) respectively.

(B) Declaration and Supporting Documents

5. In addition to basic application particulars, the following information/documents will also be required to support a licence application covering digital computers:
   
   
   1. the name and full address of end-user;
      
      
   2. the specific end-use of the goods concerned;
      
      
   3. if the shipment is supported by an export/re-export authorisation issued by the supplier (originating) country, essential details of the licence; and
      
      
   4. Other supporting documents:
      
      
      1. a copy of the export licence issued by the supplier (originating) country/place of the goods giving explicit approval to the export/re-export concerned;
         
         
      2. the technical specifications and/or the completed questionnaire for computers (Annex E) (pdf fillable format) . Such documents should be submitted for every application unless pre-classification of the product has been made;
         
         
      3. the original End-user Statement duly completed by the end-user: Annex F (pdf fillable format) for import licence application and Annex G (pdf fillable format) for export licence application; and

   Depending on the circumstances of individual case, the following documents may also be required :

   4. a copy of the valid business registration certificate of the applicant or local end-user; and/or
      
      
   5. original of the High Performance Computer Undertaking duly completed by the end-user (Annex H) (pdf fillable format) ; and/or
      
      
   6. original of the letter issued by the computer manufacturer confirming its knowledge of the intended shipment; and/or
      
      
   7. original of the Importer/End-user Statement for supporting import licence applications covering the goods (for imports from the UK only) (Annex I) (pdf fillable format) ; and/or
      
      
   8. an International Import Certificate or import permit/authorization issued by the relevant authorities of the importing countries (for supporting export licence applications).

Blank forms for Annexes E to I can be downloaded from the SC website at http://www.stc.tid.gov.hk/english/download/by_formno.html.

6. A table outlining the requirements for applications covering computers is provided at Annex J (pdf format) for traders' easy reference.
   
   
7. As there are cases covering digital computers of US-origin, a note highlighting the essential US controls over computers and the corresponding licensing requirements imposed by this Department are at Annexes K (pdf format) and L (pdf format) .

Licensing Procedures for Electronic Applications

8. Companies can also apply licences electronically. The E-Application for import and export licences can be made through companies' E-Accounts in the SC Website under the program of "Apply for Import Licence" or "Apply for Export Licence" provided at the E-Application menu (At http://www.stc.tid.gov.hk > Login Your E-Account > E-Applications > Import/Export Licence Applications > Apply for Import/Export Licence). Like paper applications, E-Applicants should download and complete all supporting documents in paragraph 5 (d) and afterwards, scan, upload and submit the duly completed forms together with the related E-Import/Export Licence Application. Alternatively, the supporting documents can be submitted to TID by person or by fax. As for all E-Applications, upon successful submission, E-Applicant should follow the instructions to print out by themselves the receipts for future collection of the approved licences/processed licence applications. In this connection, applicants are reminded that the provision of scanned or faxed copy of the End-user Statements, High Performance Computer Undertaking, letter issued by the computer manufacturer and Importer/End-user Statements as required in paragraph 5 (d) (iii), (v) to (vii) above will only serve to facilitate TID in processing their applications more expeditiously. They are not equivalent to the original signed copy which are required to be submitted to TID in all circumstances. Thus, after making the E-Application, applicants should make sure to deliver the original signed copy to TID as soon as possible. TID will withhold approval and issuance of licences unless and until the original and signed End-user Statement(s)/High Performance Computer Undertaking/letter issued by the computer manufacturer/ Importer/End-user Statement(s) are received.
   
   
9. To use and submit E-Applications, companies are required to complete a special registration with TID in advance. Details of the special registration and other requirements for the use of E-Applications can be found in the specific sections in SC Website : http://www.stc.tid.gov.hk/english/circular_pub/files/open_e-account.htm

Issuance of Licence

10. If licence applications, regardless of paper or electronic, are approved, paper licences will be issued. Samples of approved import and export licences are at Annexes M (pdf format) and N (pdf format) respectively. Under normal circumstances, applications duly completed and supported by the documents required will be processed within 2.5 clear working days after the date of submission of the licence application and are ready for collection at Room 516B, 5/F of Trade and Industry Department. For cases with complications or if additional technical details, other documents and information and/or clarifications are necessary, it may take longer time to process. Applicants can check whether their applications have been processed and are ready for collection by visiting the SC website at http://www.stc.tid.gov.hk. In any event, applicants are advised to submit their applications well in advance of shipments. Application forms that are not properly completed or not accompanied by all the necessary documentation will be deferred/rejected.

Licence Conditions

11. On top of the standard licence conditions, the Director-General of Trade and Industry may, depend on the circumstances of individual cases, impose special and additional conditions on approved licences. At the time of receiving the licences, companies are advised to read the designated part, "(H) Conditions of Licence", for the imposition of both the standard and special conditions.
    
    
12. For digital computers, one very common special licence condition is that "This licence only authorises import of goods for civil end-use by the end-user as stated on the licence. Any change of end-use or end-user, or further re-export, resale, transfer or disposal of the goods requires prior notice to and approval from the Director-General of Trade and Industry". Licensees imposed with this condition should be very careful in handling any subsequent resale/transfer/disposal of the goods covered by the licence. They should first submit to the Strategic Trade Controls Branch written applications made in the designated form SC047 (Annex O) (pdf fillable format). To facilitate TID's consideration on the applications, documents like original enduser-statement duly completed by the proposed end-user, copy of business registration certificate of the proposed recipient and end-user, valid export permit/authorization issued by the product's originating/exporting country (place) giving approval to the proposed resale/transfer etc. must also be submitted. TID will give due consideration on the application and notify the licensee in writing whether the request can be approved. Only that TID's written approval has been obtained should the licensee proceed with the resale/transfer/disposal of the goods. Otherwise, the licensee would be liable to breaching of the licence conditions.
    
    
13. Companies can also apply electronically for resale/transfer/disposal of strategic commodities provided that the relevant import licences are obtained through E-Applications. E-Application for resale/transfer/disposal can be made through companies' E-Accounts in the SC Website under the program of "Apply for Resale/Transfer/Disposal of Products Under Approved Import Licence" provided at the E-Application menu (At http://www.stc.tid.gov.hk > Login Your E-Account > E-Applications > Resale/Transfer/Disposal of Products Under Approved Import Licence > Apply for Resale/Transfer/Disposal of Products Under Approved Import Licence). Unlike paper applicant, E-Applicants for resale/transfer/disposal need not to wait for TID's written notification on the results of their applications. They could efficiently know it by checking the application status through their E-Accounts. And if the application is approved, the applicants can simply print out by themselves the approval status of the application as an evidence of TID's approval on the resale/transfer/disposal request. (At http://www.stc.tid.gov.hk > Login Your E-Account > E-Applications > Resale/Transfer/Disposal of Products Under Approved Import Licence > Check Previously Submitted Applications for Resale/Transfer/Disposal of Products Under Approved Import Licence).

Pre-classification Service

14. For applicants who frequently import or export the same types of digital computers, it is advisable for them to make use of our pre-classification service. In brief, traders will be advised of the control status of a product through this service. Applicants should download the pre-classification application form SC013 (Rev 2004) from SC website, attach with corresponding technical specifications and where applicable, questionnaire(s) mentioned in paragraph 5(d)(ii) above. After pre-classification, the Department will assign a Pre-Classification Reference Number to the product concerned. By quoting this reference number on future licence applications covering the same goods, the requirement to submit the technical specification/data sheets is waived. For details of the pre-classification procedures, please refer to the relevant circular available in Room 516B of the Department or at the SC website at http://www.stc.tid.gov.hk/english/circular_pub/stc5_04.html

End-use Controls

15. In addition to the control imposed on specific items as set out in Schedules 1 and 2 to the Regulations, traders are reminded that end-use control in relation to WMD are imposed under Schedules 3 and 4 to the Regulations. The Regulations impose licensing requirement on articles specified in Schedule 3 to the Regulations (Annex P) (pdf format) , or any technological document containing information relating to any such article:
    
    
    1. if the importer/exporter knows that the article or document is intended or likely to be used in any activity related to nuclear, chemical or biological weapons or missiles capable of delivering them as specified in Schedule 4 to the Regulations (Annex Q (pdf format) refers); or
       
    2. if the importer/exporter has grounds for suspecting that the article or document may be used in any activity specified in Schedule 4.
       

    Import and/or export licences are required if the end-use of the goods fall under (a) and/or (b) above.

Reminder

16. Section 6A of the Import and Export Ordinance stipulates that no person shall import or export any article specified in the Schedules to the Import and Export (Strategic Commodities) Regulations except under and in accordance with a licence issued by the Director-General of Trade and Industry. Any person who contravenes the provision commits an offence and is liable :
    
    
    1. on summary conviction to a fine of HK$500,000 and to imprisonment for two years; and
       
    2. on conviction on indictment to an unlimited fine and to imprisonment for seven years.
       

    In addition to prosecution, the Department may impose administrative actions against these persons. Such administrative actions may involve but shall not necessarily be confined to, suspension of a licence, refusal to issue a licence, debarment of all licensing facilities, etc.

Enquiry

17. If you have any enquiry concerning licensing requirements for computers, please contact Miss Angel Sham at 2398 5639. For specific technical questions or matters concerning classification of the goods and the pre-classification service, please call the general enquiry desk of the Strategic Trade Controls Branch at 2398 5587. Enquiry could be sent to fax no. 2396 3070 or by email to stc@tid.gov.hk.

Strategic Trade Controls Branch
Trade and Industry Department