Hong Kong is advising importers of U.S.-origin goods to check with their sellers about possible trade interruptions after the Bureau of Industry and Security increased restrictions on exports to the region. Hong Kong’s Trade and Industry Department will work with “the licensees concerned to cancel the relevant unused licences,” the agency said July 2. “Otherwise, traders might risk themselves violating the relevant U.S. laws and regulations.”
Rich Ashooh, the Commerce Department’s assistant secretary for export administration, submitted his resignation and will officially leave the agency July 16, a Commerce spokesperson said. The spokesperson declined to comment on the reasons for Ashooh’s departure. Ashooh’s resignation was first reported by Reuters.
Industry should expect the Bureau of Industry and Security to dedicate significant resources to enforcing its new export restrictions on shipments to military end-users and end-uses, export control experts said. Although the rule (see 2004270027), which took effect June 29, increased license restrictions for shipments to China, Russia and Venezuela, companies should expect increased enforcement and monitoring specifically for exports to China as the Trump administration hardens its stance on countering China’s civil-military fusion efforts, the experts said.
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The Bureau of Industry and Security clarified the agency’s suspension of license exceptions for exports to Hong Kong, saying it will no longer allow exceptions for items subject to the Export Administration Regulations “that provide differential treatment than those available” to China. In a guidance issued after its June 29 suspension announcement (see 2006290063), BIS said U.S. exporters cannot use license exceptions for any shipments to Hong Kong “except for transactions that would otherwise be eligible for a license exception” for mainland China.
The Bureau of Industry and Security stressed the importance of increased due diligence measures in a guidance (see 2004280052) on its new export licensing restrictions for military-related exports, saying industry must be careful to avoid shipping goods to entities with any nexus to the Chinese military. The newly issued guidance touches on due diligence best practices and addresses shipments to distributors and universities but does little to address the “unmanageable” compliance burdens industry said the rule will cause (see 2006150031, 2006180035 and 2005050035). BIS also did not grant a request by at least 20 industry groups to delay the rule’s effective date (see 2006150031). The rule took effect June 29.
The Bureau of Industry and Security postponed the effective date for certain filing requirements outlined in an April rule on military-related exports (see 2004270027). The agency said this week it will not require Electronic Export Information filings for some exports captured under the rule until Sept. 27 -- a three-month extension from the original June 29 effective date. Other EEI filing requirements described under the rule take effect June 29.
Export Compliance Daily is providing readers with some of the top stories for June 15-19 in case you missed them.
U.S. universities may be forced to turn down research activities -- including COVID-19 research -- due to the Bureau of Industry and Security's increased restrictions on shipments to military end-users (see 2004270027), the Association of University Export Control Officers said in comments to the agency. The restrictions are so broad that they could severely restrict academic activities that benefit the U.S. despite those activities having “no military or defense application,” the AUECO said.
The Bureau of Industry and Security's increased restrictions on shipments to military end-users (see 2004270027) presents “significant questions” for industry, which may struggle to comply with the new due diligence expectations, said Ajay Kuntamukkala, an export controls lawyer with Hogan Lovells and a former BIS official. Kuntamukkala said the rule will “significantly impact business transactions” with Chinese entities.