Strategic Trade Controls Circular No. 7/04

Import and Export Control on Strategic Commodities

THE LEGAL BASIS OF CONTROL

            The legal basis of Strategic Commodities Licensing Controls is the Import and Export (Strategic Commodities) Regulations, made under the Import and Export Ordinance, Chapter 60, Laws of Hong Kong. Under the Regulations, no person shall import or export any article specified in the Schedules to the said Regulations except under and in accordance with a valid licence issued by the Director-General of Trade and Industry.

SCOPE OF CONTROL

2.          The goods for which a licence is required for import/export from/to Hong Kong are listed in Schedules 1, 2, 3 and 4 to the Import and Export (Strategic Commodities) Regulations. The scope encompasses the controls lists of the various international non-proliferation regimes, i.e. the Wassenaar Arrangement (WA), the Nuclear Non-Proliferation Treaty (NNPT), the Nuclear Suppliers Group (NSG) and the Zangger Committee, the Missile Technology Control Regime (MTCR), the Australia Group (AG), the Chemical Weapons Convention (CWC) and the Arms Trade Treaty (ATT).

3.          Schedule 1 to the Regulations comprises two lists : the Munitions List and the Dual-use Goods List together with Definition of Terms. They cover a wide variety of goods and technology, as follows :

• Munitions List covers firearms, ammunition, explosives, bombs and rockets, tanks and toxicological agents, etc., and equipment and technology for the production of these weapons, etc.
• Dual-use Goods List covers a wide variety of industrial dual-use goods under ten categories, i.e. :​

Category	Commodities/Technology
0	Nuclear Materials, Facilities and Equipment
1	Materials, Chemicals, Microorganisms and Toxins
2	Materials processing
3	Electronics
4	Computers
5	Telecommunications & Information Security
6	Sensors & Lasers
7	Navigation & Avionics
8	Marine
9	Propulsion Systems, Space Vehicles and Related Equipment

Each category is further divided into different sub-categories as follows -

Sub-Categories	Commodities/Technology
A	Systems, Equipment & Components
B	Test, Inspection & Production Equipment
C	Materials
D	Software
E	Technology

For easy identification of controls under various control regimes, the following numbering series are used :

WA	0 series (e.g. 1.A.001)
MTCR	100 series (e.g. 1.A.102)
NNPT, NSG	200 series (e.g. 1.A.202)
AG	300 series (e.g. 1.C.351)
CWC	400 series (e.g. 1.C.450)

For details, please refer to Schedule 1 to the Import and Export (Strategic Commodities) Regulations Strategic Commodities Control System Website ("SC Website") at http://www.stc.tid.gov.hk/english/checkprod/sc_control.html.

4.          Schedule 2 to the Regulations extends controls on certain goods in transit and technological documents relating thereto, including certain specific munitions, items in the Category 0 of the Dual-use Goods List, encryption equipment, items of nuclear concern, and articles for a use relating to nuclear, chemical and biological weapons. It came into operation on 1 August 1991 under L.N. 301 of 1991 and were amended and updated under L.N. 456 of 1993 and L.N. 247 of 1997.

5.          Schedule 3 (Annex A) (pdf format) was introduced on 5 May 1992 under L.N. 148 of 1992 to bring END-USE under control for materials, chemicals, agents and equipment for use in relation to the production, development or storage of nuclear, chemical and biological weapons in so far that the importer or exporter knows that they will be used, or suspects that they might be used, for those purposes.

6.          Schedule 4 (Annex B) (pdf format) lists the activities under control in relation to articles specified in Schedule 3. It was introduced on 6 August 1993 under L.N. 299 of 1993 when the text was removed from the main body of the Regulations.

LICENSING CONTROL SYSTEM

7.          An individual validated licence, i.e. import licence or export licence, is required for the importation or exportation of any commodity under control. Licence applications are processed by the Strategic Trade Controls Branch of the Trade and Industry Department. Other government departments with an interest may be consulted as and when necessary on a case-by-case basis. Such licensing requirement extends to all imports and exports irrespective of destination. Transshipment cargo is also subject to the licensing requirement. Goods in transit, i.e. those remaining on board the same vessel or aircraft throughout its passage through Hong Kong, are normally not required to be covered by a licence except for particular sensitive items as listed in Schedule 2, or items which are, or may be, used in the development, production, handling or storage of weapons of mass destruction.

8.          Apart from having to provide all basic shipment particulars as required in the licence application form, an application must also include details concerning the specifications and technical capabilities of the goods (in the case of computers, telecommunications systems, numerical control products, answers to a technical questionnaire may also be required).

9.          Depending on the technical capability of the goods and the destination, the application may also need to contain information on the end-use to which the goods will be put. (See paragraph 22 below)

10.         An application for a licence will be approved only when the following factors are favourable :

1. there is little risk of diversion at the country (place) of consignment or en route;
2. the technical capabilities of the goods are suitable for the end-use declared;
3. the end-use is acceptable and believed to be genuine; and
4. there is no adverse considerations against the consignor, the consignee, the end-user, or the applicant.

11.         When applying for a licence for import or export of strategic commodities, applicants should ensure that :

1. all details required in the application form are correctly filled in; and
2. the application is accompanied by technical specifications, data sheets or brochures/catalogues giving adequate technical details of the commodities under application.

Application forms that are not properly completed or not accompanied by relevant technical information will be rejected.

12.         Imports and exports of strategic commodities should be made on TID 501 (fillable pdf format) and TID 502 (fillable pdf format) respectively which are free of charge and available at the Integrated Customer Service Centre at Room 1324, 13/F, Trade and Industry Tower, 3 Concorde Road, Kowloon City, Hong Kong. It can also be downloaded from the "SC Website" at http://www.stc.tid.gov.hk. Licence applications in paper mode and supporting documents should be submitted to the Integrated Customer Service Centre at Room 1324, 13/F, Trade and Industry Tower.

13.         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). Same as paper applications, E-Applicants should download and complete all supporting documents and afterwards, scan, upload and submit the duly completed form together with the related E-Import/Export Licence Application. Alternatively, the supporting documents can be submitted to TID by person or by fax.

14.         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/eaccount/how_open.html

IMPORT AND EXPORT LICENSING PROCEDURES
FOR GOODS CONTROLLED BY THE WASSENAAR ARRANGEMENT

15.         Licensing procedures for goods controlled by the Wassenaar Arrangement are set out at paragraphs 18-23. Licensing arrangements for items controlled under other international export control regimes are covered by separate trade circulars issued to traders.

The Wassenaar Arrangement

16.         Since the dissolution of COCOM in 1994, its Members agreed to maintain the control lists in force for export purposes until a new arrangement was put in place. On 11-12 July 1996, the Wassenaar Arrangement, COCOM's successor regime, was formally launched by 33 founding participating states and a new control list for military and dual-use goods and technology was agreed. To reflect the control list of the Arrangement, amendments to the Schedules to the Import and Export (Strategic Commodities) Regulations under Hong Kong's Import and Export Ordinance were made from time to time.

17.         The founding Participating States of the Wassenaar Arrangement are :
 

Import Licensing Procedures

18.          Applications for import of strategic commodities from any country (place) are normally approved, unless there is suspicion that the items imported may be re-exported illegally. However, applications covering sensitive commodities will be closely scrutinized and may be subject to inter-departmental reviews. Besides, the Trade and Industry Department may attach to any licence any condition as it may consider necessary, e.g. a condition that the importer, after importing the article, may not remove it from a place specified by the Commissioner of Customs and Excise, unless he so approves. This condition is commonly referred to as a "direction order" and is used to prevent unauthorized re-export.

Export Licensing Procedures

19.          The Department normally approves applications for export to most member countries (places) of the Wassenaar Arrangement or to countries (places) that have an effective export control system in place unless it sees any particular reason why it should not. One example is a strong suspicion that the articles covered by the application are to be diverted to proliferators. The Department may attach to any licence such conditions as it considers necessary, e.g. a condition that the licensee must obtain a delivery verification certificate for post-shipment verification or an international import certificate prior to the shipment of the goods, or some other acceptable forms of delivery/import certification such as a landing certificate from the importing countries' (places') authorities.

20.         A licence application covering export to other countries (places) can be approved on a case-by-case basis if the application is supported by a valid export licence, clearly indicating the country (place) as the destination, issued by the member countries (places) of the Wassenaar Arrangement (see paragraph 17 above).

21.         A valid supporting export licence from the member countries (places) should take one of the following forms :

1. the original; or
2. a certified true copy of the original of a valid export licence, issued by the licensing authorities of that country (place); or
3. a copy of the original export licence sent to the Trade and Industry Department directly via facsimile by the licensing authorities of the country (place) concerned.

The Department may approve an export licence application on the strength of a photocopy of the valid export licence subject to an undertaking at Annex C to provide (a), (b) or (c) above within 30 days.

22.         For licence applications covering exports to countries (places) other than those specified in paragraph 19 and are not supported by any valid export licence issued by member countries (places) of the Wassenaar Arrangement, the applicant should also provide on the application the following information :

1. name and full address of the end-user;
2. the specific operations to be performed by the commodity in support of the consignee/end-users' activities (i.e. end-use) under application; and
3. whether the goods are for civil or military use.

Other Licensing Requirements

23.         Notwithstanding the general licensing arrangements set out at paragraphs 18-22 above, depending on the technical capability of the goods, the foreign exporting country (place) and the ultimate destinations, the Department may request further documents to support an application. Documents so required may include the following :

1. export permit issued by the originating /foreign exporting countries (places) of the goods giving expressive approval to the export concerned; or
2. a completed HKF5 form (Annex D) (fillable pdf format) and
3. an end-user statement (Annex E) (fillable pdf format) ; or
4. in some cases of the Mainland of China Trade, a completed Importer Statement on End-User and End-Use issued by the Ministry of Commerce (MOFCOM) in Beijing, China.

Except for (i) (see paragraph 21), original of the documents mentioned above must be submitted to Trade and Industry Department in all circumstances. The Deparment will withhold approval and issuance of licences unless and until the original document is received.

Licence applications covering temporary exports to any country (place)

24.         Licence applications covering exports of strategic commodities to any country (place) on a temporary basis (e.g. participation in an exhibition after which the goods will be returned to Hong Kong) are also processed by the Trade and Industry Department under special licensing procedures for temporary exports. Such licence application must be supported by documentary evidence certifying that the goods are exported to the country (place) on a temporary basis. Furthermore, as a condition of issue of the temporary export licence, the licensee is required, among other things, to declare and undertake to :

1. bring the same goods back to Hong Kong immediately after use; and
2. present the goods and the licence to officers of the HK Customs and Excise Service at Customs Control Points for examination and endorsement, both at the time of departure of the goods to the country (place) and upon their return to Hong Kong.

Details please refer to a separate circular No.15/04.

Licence applications covering temporary imports from any country (place)

25.         To facilitate the trade to import strategic commodities from any country (place) on a temporary basis (e.g. for repair in Hong Kong), licence applications covering the subsequent return of the goods to the original exporting country (place) can also be approved by the Trade and Industry Department under special licensing procedures. Physical examination of the goods at the time of importation (e.g. for repair in Hong Kong) and the subsequent return (after repair) to the original exporting country (place) is also one of the conditions which the licensee must comply with.

26.         Details of the temporary import licensing procedures are covered by the Strategic Trade Controls Circulars No.14/04.

ARTICLES IN TRANSIT

27.         When applying for licences for goods in transit, applicants should :

1. ensure that all details required in the application forms are correctly filled in;
2. ensure that the applications are accompanied by technical specifications, data sheets or brochures/catalogues giving adequate technical details of the commodities under application;
3. declare on the licence applications that the goods are in transit, and state the name of the vessel or flight number; and
4. declare the end-user and end-use of the goods on the applications.

28.         As the goods under exportation are normally sensitive goods, a condition of issue of the export licence that the exporter must produce a landing certificate or delivery verification certificate in respect of the goods detailed in the licence to the Director-General within 12 weeks after the date of shipment may also be imposed when the export licence is approved.

END-USE CONTROLS

29.         The Import and Export (Strategic Commodities) Regulations also impose licensing requirement on articles specified in Schedule 3 to the Regulations (Annex A  refers)(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 B  refers)(pdf format); or
2. if he or she has grounds for suspecting that the article or document may be used in any activity specified in Schedule 4.

COLLECTION AND USE OF DATA PROVIDED IN LICENCE APPLICATIONS

30.         The data collected in the applications or documents submitted in connection with the applications may be disclosed to third parties in Hong Kong or elsewhere, if such disclosure is necessary to facilitate consideration of the application, or is in the interests of Hong Kong, or is authorized or required by the law; or if explicit consent to such disclosure is given by the applicant/data subject.

ENFORCEMENT

31.         Traders are reminded that the Trade and Industry Department works closely with the Customs and Excise Department to ensure that all applicants for strategic commodities licences comply with the provisions of the Import and Export Ordinance and its subsidiary Regulations by means of consignment checks at pre-licensing stage or post-licensing stage. Officers of the Customs and Excise Department are therefore empowered by law to enter the premises of the importer, exporter, or manufacturer concerned, and to conduct inspections at any reasonable time. Inspections of goods or books and records may also take place at the container terminal, the airport and other points of entry or exit. Where necessary, sealed packages or containers may also be opened for inspection. Suspected malpractices are subject to full investigations which may result in legal and/or administrative proceedings against the company/individual concerned.

ENQUIRIES

32.         This is a general guide only. Further enquiries concerning import and export licensing procedures of strategic commodities may be made to the Integrated Customer Service Centre on 13/F, Trade and Industry Tower, 3 Concorde Road, Kowloon City, Hong Kong, or by telephoning 2398 5575, and for classification matters, by telephoning 2398 5587, by fax to 2396 3070 or email to stc@tid.gov.hk.

Strategic Trade Controls Branch
Trade and Industry Department

Note : This document is only a guide to assist traders on import and export licensing procedures of strategic commodities. It is not exhaustive and has NO legal status.