In connection with China’s new Hong Kong national security law, the U.S. Government is taking steps to revoke the differential treatment afforded to Hong Kong in relation to China. On June 29, 2020, the Department of State announced that it would end exports of U.S.-origin defense equipment to Hong Kong and will take steps toward imposing the same restrictions on U.S. defense and dual-use technologies to Hong Kong as it does to China. In announcing the changes, the State Department said that “the United States is reviewing other authorities and will take additional measures to reflect the reality on the ground in Hong Kong.” The State Department has not yet announced any regulatory updates, but it is likely that Hong Kong will be added to the list of proscribed countries in Section 126.1 of the International Traffic in Arms Regulations (ITAR). Additionally, on June 29, 2020, the Department of Commerce announced the suspension of License Exceptions under the Export Administration Regulations (EAR) for exports to, reexports to, and transfers within Hong Kong. In announcing the change, the Secretary of Commerce stated that the Commerce Department was suspending regulations affording preferential treatment to Hong Kong over China, and that “[f]urther actions to eliminate differential treatment are also being evaluated.”
These actions were followed by the issuance of an Executive Order on July 14, 2020, wherein President Trump declared a national emergency with respect to China’s actions and suspended the preferential treatment of Hong Kong pursuant to several statutes, including the Arms Export Control Act and the Export Control Reform Act of 2019. The Executive Order directs applicable agencies to, among other things, amend regulations and revoke export license exceptions. Revisions to the ITAR and EAR are expected in the coming days.
For more information on how these could impact your business, contact:
- Martin Lutz, Partner (firstname.lastname@example.org, 512-495-6024),
- Jamie Joiner, Special Counsel (email@example.com, 713-615-8530),
- Lindsey Roskopf, Attorney (firstname.lastname@example.org, 713-615-8534),
- Justin Cawley, Senior Counsel (email@example.com, 202-812-2644), or
- Another member of the McGinnis Lochridge International Trade and Transactions Practice Group