complying with new u.s. requirements for shipping to hong kong
TRANSCRIPT
Complying with New U.S. Requirements for
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Export Services & Activities
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April 28
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May 4
Global Trade Compliance Due Diligence for Mergers & Acquisitions (webinar)
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Complying with the New FAR and DFARS Cybersecurity and Reporting Requirements (webinar)
May 24
Best Practices for Export Screening Risk Assessment (Waltham)
June 8
Best Practices for Export Control Classification & Licensing (North Reading)
www.mass.gov/export
Today’s Speaker
Gwendolyn Wilber JaramilloPartner
Foley Hoag LLP
Deputy Chair of Foley Hoag’s International Business Practice
Counsels multinational companies on foreign investments, joint ventures, export controls,
and sanctions.
Advises clients regarding compliance with export control and sanctions programs,
including product classifications, development of compliance programs, compliance audits,
compliance with OFAC regulations, and voluntary disclosures.
Clients in industries ranging from life science/pharmaceuticals; higher education; oil and
gas; emerging technologies; software development.
© 2016 Foley Hoag LLP. All Rights Reserved. 5
Agenda
Background
Requirements of Rule
Impacted Categories of Items/Parties
How to Comply
Tips & Resources
© 2016 Foley Hoag LLP. All Rights Reserved. 6
Poll
What industry do you represent?
- Manufacturing
- Life Sciences/Pharmaceuticals
- Defense
- Telecommunications
- Software/SaaS/other tech
- Legal/Professional services
- Other
© 2016 Foley Hoag LLP. All Rights Reserved. 7
Background
January 19, 2017: Publication of Final Rule “Support Document
Requirements with respect to Hong Kong” 82 FR 6216
Simultaneous publication of FAQ regarding implementation
Effective date of final rule: April 19, 2017
Key implications:
- No exports/re-exports to Hong Kong OR re-exports from Hong Kong of
certain items without additional documentation from importer or re-
exporter in Hong Kong
- No use of license exceptions or existing licenses without such
documentation
© 2016 Foley Hoag LLP. All Rights Reserved. 8
Context of Final Rule
Why Hong Kong? Why Now?
Novel Rule
Increasing focus on exports
to China
Focus on transshipment
risks generally
Hong Kong factor in
enforcement actions
© 2016 Foley Hoag LLP. All Rights Reserved. 9
Context of Final Rule
Transshipment in East Asia (presentation at BIS Update 2016)
- Hong Kong: 23.4% of GFP is trading and logistics
- Entire infrastructure of service industries focused on facilitating
transnational/transboundary trade (for expertise, logistical, or darker
reasons)
© 2016 Foley Hoag LLP. All Rights Reserved. 10
Context of Final Rule
Hong Kong is not a relevant market for most controlled items in end
use
Hong Kong maintains its own import and export requirements and
regulations
High level of formality for legitimate transactions
Close coordination between BIS and Hong Kong Trade and Industry
Department Strategic Commodities Control division in roll-out and
implementation of final rule
© 2016 Foley Hoag LLP. All Rights Reserved. 11
Poll
How is your organization impacted by the new rule?
- Frequently ship products to third countries via Hong Kong
- Use distributors or resellers in Hong Kong
- Occasional shipments to or via Hong Kong
- Hong Kong is an end market for us
- Just curious
© 2016 Foley Hoag LLP. All Rights Reserved. 12
Requirements of Rule
Items subject to EAR and controlled on CCL for:
- NS
- MT
- NP column 1
- CB
Prior to export to Hong Kong or reexport from Hong Kong, exporter
or reexporter must obtain additional documentation demonstrating
compliance with Hong Kong licensing requirements
Exports:
- Copy of Hong Kong import license
- Written statement from Hong Kong gov’t that no license required
Reexports:
- Hong Kong Export license
- Written statement from Hong Kong gov’t that no license required
© 2016 Foley Hoag LLP. All Rights Reserved. 14
Requirements of Rule
No additional license requirements imposed
- Rule reinforces existing Hong Kong law
- Adds documentation requirement under the EAR
If a Hong Kong license is required, must be valid at time of export or
reexport
Same documentation may be used for multiple exports or reexports
- As long as it is still valid!
Special Situations
Shipments in Transit as of April 19, 2017
- Not required to be held
Software Upgrades
- If software upgrades are in one of the affected control categories, they
are also covered
- Written documentation of NLR rquired for these items
© 2016 Foley Hoag LLP. All Rights Reserved. 15
Impacted Items/Parties
All entities exporting or re-exporting items
subject to the EAR to or via Hong Kong
Foreign subsidiaries of U.S. operations
Importers in Hong Kong
Exporters from Hong Kong
Distributors/transshippers in Hong Kong
© 2016 Foley Hoag LLP. All Rights Reserved. 16
Impacted Items/Parties
Items subject to rule – key categories (for example)
- 2B350 – pumps, valves, eg
- 1C210 – thermoset resin, carbon fiber, eg
- 5A002 – information security hardware, eg, routers
- 3A001 – chips, amplifiers, etc
NO LICENSE EXCEPTIONS PERMITTED WITHOUT
DOCUMENTATION
Documents as specified in rule must be obtained prior to export
or reexport
- License applications may be submitted prior to
requesting/obtaining documents
© 2016 Foley Hoag LLP. All Rights Reserved. 17
Poll
How advanced is your organization in preparing for the new
requirements?
- We are ready for April 19!
- We have begun assembling documents but it has been slower than
expected
- We are still determining whether we are impacted/how to comply
- This is the first step we’ve taken
© 2016 Foley Hoag LLP. All Rights Reserved. 18
How to Comply
Exports or Reexports to Hong Kong: Acceptable Documentation
- Confirmation on website of STC that no license is required (public search
tool)
• Specific to product/model/brand
- Formal NLR statement received from TID
- Affirmative Import License from TID
- Approval in Principle letter from TID of Government of Hong Kong
• AIP letter must be valid when shipment takes place
• AIP letter must cover items/parties subject to the export or reexport
© 2016 Foley Hoag LLP. All Rights Reserved. 19
How to Comply
Exports or Reexports from Hong Kong: Acceptable Documentation
- AIP LETTER DOES NOT WORK FOR THIS PURPOSE
- NLR Letter
- STC Website information
- Affirmative Export License from TID
© 2016 Foley Hoag LLP. All Rights Reserved. 22
How to Comply
Update export compliance procedures/policies/rubrics
Train key staff in sales/logistics/shipping/compliance
Coordinate with end user or customer in Hong Kong
Ensure that End User documentation is in order
Review Control Status of items to be exported, or for ultimate re-
export
Confirm NLR status or begin license request to obtain appropriate
documentation well in advance of ship date
Maintain documentation for each shipment/order with other required
export-related documentation
© 2016 Foley Hoag LLP. All Rights Reserved. 23
Tips and Resources
http://pepd.cloudapps.cisco.com/legal/export/pepd/Search.do
© 2016 Foley Hoag LLP. All Rights Reserved. 25
Tips and Resources
https://www.stc.tid.gov.hk/service/productSearch.do?locale=eng&text=0
© 2016 Foley Hoag LLP. All Rights Reserved. 26
Tips & Resources
Hong Kong TID Procedures
- Pre-classification service
- Electronic and paper licensing
- Approval in Principle Letters
© 2016 Foley Hoag LLP. All Rights Reserved. 27
Tips and Resources
Trading via Hong Kong
- Know your customer and end user
- Know your consignee
- Don’t rely freight forwarders or re-exporters to do your compliance work
- Differentiate between Hong Kong as destination and Hong Kong as
transshipment point
© 2016 Foley Hoag LLP. All Rights Reserved. 28
Tips and Resources
Contact Points:
BIS/USCIS in Hong Kong (Consulate General Hong Kong & Macau)
John Haberstock
Carrie Chan
U.S. Commercial Service
American Consulate General Hong Kong
26 Garden Road, Central
Hong Kong (SAR)
Tel: (852) 2521-1467
Fax: (852) 2845-9800
Email: [email protected]
Website: http://export.gov/hongkong
© 2016 Foley Hoag LLP. All Rights Reserved. 29
Tips & Resources
Strategic Trade Controls Branch
Trade and Industry Department
Room 1619, 16/F
Trade and Industry Tower
3 Concorde Road, Kowloon City, Hong Kong
https://www.stc.tid.gov.hk/eindex.html
Classification Questions: 011-852-2398-5587
Licensing Questions: 011-852-2398-5575
© 2016 Foley Hoag LLP. All Rights Reserved. 30
Questions?
Gwendolyn Wilber Jaramillo Partner-| +1.617.832.1224
Chair of Foley Hoag’s Trade Sanctions & Export Controls Practice Group
Deputy Chair of International Business Practice
Advises clients regarding compliance in areas of export control and
sanctions, as well as corporate social responsibility, including with
respect to voluntary standards on human and labor rights and reporting
requirements.
Counsels multinational companies on foreign investments, joint
ventures, and international operations.
Clients in industries including manufacturing; oil and gas; life
science/pharmaceuticals; emerging technologies; software
development.