Ref : | TRA CR 1015/35 |
TRA CR 1015/37 |
Strategic Trade Controls Circular No. 6/2018
Import and Export of Encryption Products
This circular reminds traders of the licensing requirements for the import and export of encryption products. Circular No. 7/2009 dated 12 May 2009 of the same subject is hereby superceded.
(I) The Legal Basis
(II) Control on Encryption Products
(III) Exemptions of Control
ii. meeting all of the following conditions :
a. Generally available to the public by being sold, without restriction, from stock at retail selling points by means of any of the following :
- Over-the-counter transactions;
- Mail order transaction;
- Electronic transactions; or
- Telephone call transactions;
c. Designed for installation by the user without further substantial support by the supplier; and
d. When necessary, details of the items are accessible and will be provided, upon request, to the appropriate authority in the exporter's country in order to ascertain compliance with conditions described in paragraphs (a) to (c) above.
For details of the above exemptions as well as further information on other exemptions provided for certain products, traders may refer to Notes 2 or 3 (also known as the Cryptography Note) and the Note for "Category 5, Part 2 - Information Security" of Schedule 1 to the Regulations. This part of legislation can also be found at the Strategic Commodities Control System Website (the "SC Website") at http://www.stc.tid.gov.hk/english/checkprod/cat_5_2.html.
(IV) Licensing Procedures
(A) Paper Application Forms
(B) Declaration and Supporting Documents
- the name and full address of end-user;
- the specific end-use of the goods concerned;
- if the shipment is supported by an export/re-export authorization issued by the supplier (originating) country/place: essential details of the licence or licence exception and a copy of the export/re-export authorization issued by the supplier (originating) country/place of the goods giving explicit approval to the export/re-export concerned. If the licence/authorization is written in languages other than English or Chinese, a translated version (either in English or Chinese) prepared by a registered translation company in Hong Kong or certified correct by the relevant consulate offices in Hong Kong will be essential to the processing of the case;
- the technical specifications and/or the completed Cryptography Questionnaire (Annex C) (fillable pdf format). This questionnaire is for ascertaining whether the products can meet the criteria listed in paragraph 4(ii) and giving the general technical features of the products; and
- depending on the circumstances of individual cases, the following documents may also be required for certain applications:
original of the Importer/End-user Statement for supporting import licence applications covering the goods (for imports from the UK only) (Annex F) (fillable pdf format); and/or a copy of the valid business registration certificate of the applicant or local end-user.
The Director-General of Trade and Industry at all times reserves the right to request additional information and further documentary proof to substantiate the licence applications. Applications that are not properly completed or not accompanied by all the necessary documentation will be deferred/rejected. Blank forms for Annexes A to F can be downloaded from the SC website at http://www.stc.tid.gov.hk/english/download/by_formno.html.
(C) General Electronic Applications
8. To make 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 the SC Website: http://www.stc.tid.gov.hk/english/circular_pub/files/open_e-account.htm.
(D) Electronic Applications made under the Approval-in-Principle Arrangement (AIP)
9. Companies which frequently import encryption products from the same supplier or frequently export encryption products to the same consignee may apply to join the Approval-in-Principle Arrangement (AIP). For further information on AIP for encryption products, please refer to Strategic Trade Controls Circular No. 9/2009.
(V) Export Control of Originating/Supplier/Foreign Exporting Country (Place) on Encryption Products
10. Traders should note that the originating/supplier/exporting country (place) of encryption products, especially if it is a member of the Wassenaar Arrangement Note, may impose export control over the products by ways of individual licence, general licences, licence exceptions or other mechanisms. Since it is the policy of Hong Kong to maintain a licensing system complementary to the export control arrangement of our trading partners, TID will only approve licences to cover shipments that are in full compliance with the export control regulations of the originating/supplier/exporting country (place). To ascertain such compliance, licence applicants are required to provide additional supporting documents that may include, but shall not necessarily be confined to: the relevant government authorities' determination/ classification result indicating that the goods have been reviewed and classified to be eligible for export to the proposed destination(s)/end-user(s), individual export licence, the review request/notification submitted by the product's manufacturer to the relevant government authorities, manufacturer's certification letter etc.
11. For U.S.-origin encryption products, traders should be aware that the U.S. Department of Commerce (DoC) revises their control over encryption products from time to time. In addition to individual licences, U.S. Licence Exception ENC might be applicable to certain products subject to prior authorization from the DoC. Exports of certain type of encryption goods to specific type of end-users or countries (places) might not require prior review. For details of the U.S.' latest regulations, we would advise traders to consult their U.S. exporters/manufacturers direct or to visit the relevant U.S. Government's website at: http://www.bis.doc.gov.
(VI) Issuance of Licence
12. For paper and general electronic licence applications, paper licences will be issued upon licence approval. 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 receipt of the licence application. They are ready for collection at Room 1324, 13/F of Trade and Industry Tower. 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 the applications. Applicants may 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 lodge their applications well in advance of shipments. Approved import and export licences are valid for six months and three months respectively.
(VII) Licence Conditions
Special Licence Condition and Resale/Transfer Application for U.S.-origin Encryption Products
14. For U.S.-origin encryption products, one very common special licence condition is that "This licence only authorises import of the goods for civil end-use by non-government end-users. Any further re-export, resale or transfer of the goods for the use by government end-user(s) requires prior notice to and approval from the Director-General of Trade and Industry". Licensees imposed with this condition should carefully handle any subsequent resale/transfer of the goods covered by the licence. An Important Note shall be attached to the licences concerned and traders are required to pass on the Note to the new recipient of the goods whenever the goods are transferred in Hong Kong.
15. If the goods are to be resold/transferred for the use by any government end-user(s), the importer/owner of the products (i.e., the applicant) should lodge applications with the Strategic Trade Controls Branch in paper or electronically:
(a) Paper application(s) are to be made in the designated form SC054 (Annex G) (fillable pdf format). To facilitate TID's consideration of the applications, applicants should enclose in their applications supporting documents like original end-user statement duly completed by the proposed government end-user; technical specification and questionnaire of the products; valid export authorization issued by the U.S. Government giving approval to the proposed resale/transfer, etc. TID will give due consideration for the application and notify the applicant in writing whether the request can be approved. Only after TID's written approval has been obtained should the applicant proceed with the proposed resale/transfer of the goods.
(b) E-Applications for resale/transfer can be made through companies' E-Accounts in the SC Website under the program of "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). E-Applicants could efficiently know the results of their applications by checking the application status through their E-Accounts. Once 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 for the resale/transfer 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).
(VIII) Pre-classification Service
(IX) End-use Control
18. Import and/or export licences are required if the end-use of the goods fall under (a) and/or (b) above.
(X) Reminder
19. 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 :
(b) on conviction on indictment to an unlimited fine and to imprisonment for seven years.
20. 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.
(XI) Enquiry
Strategic Trade Controls Branch
Trade and Industry Department
Note : The Participating States of the Wassenaar Arrangement are : Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, India, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Republic of Korea, Romania, the Russian Federation, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Ukraine, the United Kingdom and the United States.