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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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On June 29, 2020, Secretary of State Mike Pompeo <a href="https://www.state.gov/u-s-government-ending-controlled-defense-exports-to-hong-kong/" target="_blank" rel="noopener noreferrer">announced</a> that the United States was ending exports of U.S.-origin defense equipment to Hong Kong and &ldquo;will take steps toward imposing the same restrictions on U.S. defense and dual-use technologies to Hong Kong as it does for China.&rdquo; The secretary noted that the United States &ldquo;can no longer distinguish between the export of controlled items to Hong Kong or to mainland China. We cannot risk these items falling into the hands of the People&rsquo;s Liberation Army.&rdquo; Since China&rsquo;s actions in June 2019 to crack down on Hong Kong protests (see <a href="https://www.trumpandtrade.com/2020/06/changing-hong-kongs-special-trade-status-state-department-refuses-to-certify-hong-kongs-autonomy/">Trump and Trade Update of June 1, 2020</a>), Pompeo stated that because &ldquo;Beijing now treats Hong Kong as &lsquo;One Country, One System,&rsquo; so must we.&rdquo; While no formal notice of a regulatory change has been posted to date by the Department of State&rsquo;s Directorate of Defense Trade Controls (DDTC), all interested parties must assume that as of June 30, 2020, all exports of defense/military articles under the International Traffic in Arms Regulations (ITAR) will be reviewed for export licenses under a general policy of denial.
Similarly, Secretary of Commerce Wilbur Ross has <a href="https://www.commerce.gov/news/press-releases/2020/06/statement-us-secretary-commerce-wilbur-ross-revocation-hong-kong" target="_blank" rel="noopener noreferrer">announced</a> that with China&rsquo;s imposition of new security measures on Hong Kong, &ldquo;the risk that sensitive U.S. technology will be diverted to the People&rsquo;s Liberation Army or Ministry of State Security has increased.&rdquo; As a result, he stated that Commerce Department regulations providing preferential trade and export control treatment to Hong Kong, including the availability of export license exceptions, have been suspended. On June 30, 2020, the Department&rsquo;s Bureau of Industry and Security (BIS) <a href="https://www.bis.doc.gov/index.php/documents/pdfs/2568-suspension-of-license-exceptions-for-exports-and-reexports-to-hong-kong/file" target="_blank" rel="noopener noreferrer">posted an announcement</a> noting that effective immediately, &ldquo;BIS is hereby suspending any License Exceptions for exports to Hong Kong, reexports to Hong Kong, and transfers (in-country) within Hong Kong of items subject to the Export Administration Regulations (EAR), 15 CFR Parts 730-774, that provide differential treatment than those available to the People&rsquo;s Republic of China.&rdquo; As a result of this action, no items subject to the EAR may be exported to Hong Kong based upon a license exception (except for transactions that would otherwise be eligible for a license exception if exported to China).
BIS has clarified that any shipments of items to Hong Kong that were on dock for loading, on lighter, laden aboard an exporting or transferring carrier, or en route aboard a carrier to a port of export or reexport on June 30, 2020, may proceed to their destination under any previous license exception eligibility. Further, deemed export/reexport transactions involving Hong Kong persons authorized due to license exception eligibility prior to June 30, 2020 may continue to be authorized under such provision until August 28, 2020, after which such transactions will require a license.

core/freeform

SmarTrade

Senior Legislative and Regulatory Policy Advisor

Scott E. Diamond

U.S. Tightens Export Controls for Hong Kong – Pompeo States That If China Treats Hong Kong as “One Country, One System,” So Must the United States