Dear Sirs,

Strategic Trade Controls Circular No. 6/2007

Import and Export of Strategic Commodities of US Origin

The Trade and Industry Department issues from time to time circulars to inform traders of the control requirements for import and export of strategic commodities into and out of Hong Kong. The purpose of this circular is to remind that traders who import or export US-origin strategic commodities should ensure that their shipments are in full compliance with the US export control policy and regulations.

Control on Import and Export of Strategic Commodities in Hong Kong

2. The legal basis of the strategic trade controls in Hong Kong is the Import and Export Ordinance, Chapter 60 of the Laws of Hong Kong. The Ordinance stipulates that strategic commodities are one of the categories of goods the import and export of which is prohibited except under and in accordance with licences issued by the Director-General of Trade and Industry. The strategic commodities under licensing control are set out in the Import and Export (Strategic Commodities) Regulations (Chapter 60G).
   
   
3. Under the current legislative framework, the Department imposes licensing control on import, export, transshipment, and in some cases, transit of strategic commodities. Licences are granted to importers/exporters on an individual consignment and pre-shipment basis. The licensing control on import and export of strategic commodities applies to shipments from all places outside Hong Kong and to all destinations, irrespective of the technology origin of the goods concerned. In implementing the licensing control system, the Department strives to complement the control arrangements of Hong Kong's trading partners. We have put in place a system which prevents imported strategic goods from going to places/entities which the technology-originating countries/places do not permit under their own control policies/regulations. This is essential to maintaining the confidence of our trading partners in the integrity of Hong Kong's control system, which in turn helps ensure our continued access to high technology goods necessary for the economic development of Hong Kong.
   

Important Note for Traders Engaging in Import and Export of Strategic Commodities of US Origin

4. In arranging import or export of US-origin strategic commodities, traders should observe the US export control policy and arrangements. Breaching of the US export control regulations may adversely affect the acquisition of US-origin goods by the traders concerned in future. Traders should note in particular the following :
   
   
   1. Under the US export control regulations, the Mainland of China and Hong Kong are regarded as separate destinations. In some cases, goods authorised to be exported to Hong Kong under US licence exception are subject to US individual licences when exported to the Mainland of China. In some other cases, goods authorised to be exported to Hong Kong under US individual licences are not permitted to be re-exported to the Mainland of China. Such arrangements apply even in cases where the goods are intended for use by the Mainland subsidiaries/ operations/ associated companies of Hong Kong companies.
      
      
   2. Before arranging further re-export of strategic commodities which are originally authorised by the US authorities for export to Hong Kong for local consumption only, traders should ensure that there is an applicable licence exception or they should seek re-export authorisation from the relevant US authorities. For re-export of strategic commodities of US origin to a place which is subject to the US individual licence requirement, the Department will require the production of the US export authorisation when considering the relevant licence application.
      
      
   3. For goods which are authorised by the US authorities for export to Hong Kong for specific enduser and enduse, the Hong Kong importer and enduser concerned should ensure that proper authorisation from the US authorities is obtained before arranging further transfer of the goods to any other parties, whether in Hong Kong or elsewhere. Accordingly, when approving a licence covering the import or export of such goods, the Department will make reference to the relevant US export control regulations and the US export licence, and will impose as appropriate licensing conditions governing the use, resale, transfer or disposal of the goods by the importer and enduser concerned. The importer should ensure that the conditions pertaining to the US and Hong Kong licences are properly conveyed to the recipient/enduser. The importer/ recipient/enduser should observe such licensing conditions in the use of the goods. It is a breach of licensing conditions if the goods are found to have been resold/transferred to an unauthorised party, even though it is located in Hong Kong, and the parties concerned will be liable to prosecution/administrative actions.
      
      
   4. In case the goods imported into Hong Kong as mentioned in paragraph 4(c) above will be transferred to a subsidiary or a branch of the Hong Kong importer/enduser outside Hong Kong, this transfer is regarded as export and is required to be covered by an export licence. Separately, if an importer would like to alter the enduse for or enduser of the goods after an import licence has been approved or export the goods to any place outside Hong Kong, application to the Department for a fresh licence to cover the altered enduse/enduser or for an export licence respectively should be made. In considering such applications, the Department will take into account of, as appropriate, the US export control regulations, the conditions pertaining to the relevant US licence, and/or the availability of US re-export authorisation.
      
      
5. From time to time, there are cases where certain US-origin goods are not subject to the licensing control under Hong Kong's strategic trade controls system as they are not listed in Schedules 1 and 2 to the Import and Export (Strategic Commodities) Regulations (Chapter 60G) and provided that the goods are not for a use in relation to nuclear, chemical or biological weapons or missile capable of delivering these weapons. That said, to ensure the continued access to US-origin goods in future, traders concerned have the responsibility to ensure that their intended exports or re-exports of such goods out of Hong Kong to other destinations are in compliance with the US export control regulations.

US Export Control Information

6. Traders are advised to refer to the websites of the relevant US government agencies for updated information on the persons/companies/countries/places subject to denial/restriction/sanction actions in respect of US-origin goods. The following provides a quick reference:-
   

   US Department of Commerce, Bureau of Industry and Security (BIS)

   • Embargoes and Other Special Controls in Part 746 of the US Export Administration Regulations (EAR)
     
     
   • US Denied Persons List
     
     
   • US Entity List
     
     
   • US Unverified List
     
     
   • General Order 3 to EAR part 736
     
     

   US Department of the Treasury, Office of Foreign Assets Control (OFAC)

   • Country and List-based Sanctions Programmes
     
     
   • Specially Designated Nationals List (SDN List)
     
     

   US Department of State, Directorate of Defence Trade Controls

   • US Arms Embargoes
     
     
   • Nonproliferation Sanctions
     
     
   • Debarred List
     
     
     
7. Traders may check the relevant information through the Department's Strategic Commodities Control System Website (http://www.stc.tid.gov.hk) which provides hyperlinks to the relevant websites of the US Administration. In addition, traders are advised to contact their overseas exporters, manufacturers or the overseas licensing authorities direct for the detailed export control information in respect of individual cases.

Control on Specific US-origin Products

8. For certain common types of strategic commodities, traders may refer to the following circulars issued by the Department for more information on the US export control arrangements and the corresponding requirements in Hong Kong's licensing control system:

   
   On US-origin computers - Strategic Trade Controls Circular No. 11/06 - Annexes K (pdf format) and L (pdf format)

   
   On US-origin encryption products - Strategic Trade Controls Circular No. 12/04 - paragraph 16.

Enquiries

9. For more information on the controls of strategic commodities in Hong Kong, traders may visit the Strategic Commodities Control Website of the Department, or contact the Strategic Trade Controls Branch of the Department by phone (tel. 2398 5575), email (stc@tid.gov.hk) or in person (Room 516B, 5/F, Trade and Industry Department Tower, 700 Nathan Road, Mongkok).
   
   
   
   

Strategic Trade Controls Branch
Trade and Industry Department