Skip to main content

Executive Order Eliminates Special Status Given to Hong Kong

The White House announced an executive order initiating the process of ending the special status afforded to Hong Kong.

This move, taken in response to policies enacted by the Chinese government infringing on the limited autonomy given to Hong Kong, will have major repercussions for international trade.

Hong Kong has enjoyed differential policy exemptions that made trade with the U.S. preferential to the U.S. trade policy with mainland China.

The order was issued on July 15 and it directs governmental agencies to make amendments to their regulations within 15 days.

One impact of this order will increase export controls on dual use technologies destined to Hong Kong. These new controls will now reflect those currently imposed on China. Expect denials for export license requests where a Hong Kong person is named as an end-user, licensee (signatory), or sub licensee or where Hong Kong appears as a marketing, transfer, re-transfer, re-export, sales, or distribution territory.

Products of Hong Kong will need to be labeled “Made in China” – but for now, the Section 301 Tariffs imposed on Chinese goods will not apply. This order also includes sanctions on trade with specified persons involved in developing and implementing the new Chinese Security Law. The order is wide ranging and the full version can be found by clicking here.

New China Section 301 Exclusions Announced

The USTR has announced the 32nd set of exclusions for the Section 301 tariffs on China origin goods. This list of 64 new exclusions apply to certain goods found on Round 4 and covers many works of art, collectible coins and all the tariff codes for antiques. Eleven of the granted exclusions are at the tariff number level while the remainder are limited to the written description of the exclusion order.

The exclusions are retroactive to the September 1, 2019 start of the additional tariffs and are set to expire on September 1, 2020. If you import goods from China, please take the time to review this list to check if any of these exclusions apply to products you import. Check out the exclusion list here. 

Exclusion Expirations

The pace of expiring exclusions to the Section 301 tariffs is about to increase significantly.  Exclusion set seven (9903.99.12), which covers items entered under section 301 round 1 (9903.88.02), is slated to expire on July 31, while all 14 exclusion sets for goods under round three (9903.88.03/04) had an August 7 expiration date. This means that any affected products which arrive and clear on or after the expiration date will not be eligible for the exclusion.

It is probable that there will be some extensions granted to these exclusions, but to date the percentage of extensions granted has been low. Also, previous extensions have been announced only a day or two prior to the expiration date. This creates problems due to the lag time between the granted extension and the required updates to Customs’ system.

Last week, Rep. Jackie Walorski introduced bipartisan legislation proposing to extend the Section 301 exclusions currently in effect for one year. Under H.R. 7665, the exclusions would be extended unless the USTR finds the product is important to the “Made in China 2025” initiative, or if the extension would cause severe harm to the U.S.

The bill’s sponsors claim it would provide some degree of relief and certainly for businesses already adversely  impacted thy the COVID pandemic. A link to Congress.gov can be found by clicking here; the future of this legislation in Congress is highly uncertain.

If you are currently benefiting from any of the exclusions we recommend that you review them for the applicable expiration date.

Need an overview of all the exclusions and their expirations? 

Go to CVI’s Exclusion Guide 2020 (view on desktop for optimal search).

 

Sam McClure, LCB
Director of Compliance & Customs Services

 

Amendment to Export Administration Regulations Issued

On April 28, 2020, Bureau of Industry and Security (BIS) issued a final ruling amending Export Administration Regulations (EAR). Among these changes, is the expansion of filing requirements for Electronic Export Information (EEI).

The new ruling, which went into effect on June 29, 2020, requires an EEI filing for all tangible export items described on the Commerce Control List (CCL) when destined to China, Russia and Venezuela, regardless of value, unless the export is made under license exception GOV that allows for exports and reexport for U.S. government agencies or personnel.

The new requirement does not affect most EAR99 designated items. EAR99 shipments will still require an EEI if a license is required or if the value exceeds $2,500.

The change will put more responsibility on the exporter to know the exact Export Control Classification Number (ECCN) number for all products to ensure EEI regulations are being filed correctly.

Commerce Control List Reference
https://www.bis.doc.gov/index.php/regulations/commerce-control-list-ccl

Jarred Hisel
Branch Manager, Norfolk

Close Menu

Ready to Get Started?

Sign up for a CVI account or ask to see our services in action.

Get started »