[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Rules and Regulations]
[Pages 6216-6218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00446]



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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 740, 748, and 762

[Docket No. 161230999-7013-01]
RIN 0694-AH11


Support Document Requirements With Respect to Hong Kong

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: This rule requires persons intending to export or reexport to 
Hong Kong any item subject to the Export Administration Regulations 
(EAR) and controlled on the Commerce Control List (CCL) for national 
security (NS), missile technology (MT), nuclear nonproliferation (NP 
column 1), or chemical and biological weapons (CB) reasons to obtain, 
prior to such export or reexport, a copy of a Hong Kong import license 
or a written statement from the Hong Kong government that such a 
license is not required.
    This rule also requires persons intending to reexport from Hong 
Kong any item subject to the EAR and controlled for NS, MT, NP column 
1, or CB reasons to obtain a Hong Kong export license or a statement 
from the Hong Kong government that such a license is not required.

DATES: The rule is effective April 19, 2017.

FOR FURTHER INFORMATION CONTACT: Tracey Patts, Foreign Policy Division, 
Bureau of Industry and Security, Phone: (202) 482-4252.

SUPPLEMENTARY INFORMATION:

Background

    The government of the Hong Kong Special Administrative Region 
maintains an import and export control system. The ``Import and Export 
(Strategic Commodities) Regulations'' are an integral part of that 
system. Schedules in those regulations identify articles that may not 
be imported or exported without a license from Hong Kong's Director-
General of Trade and Industry. Those schedules and much of the CCL are 
based on the control lists published by four multilateral export 
control regimes. Export control classification number (ECCN) entries on 
the CCL identify one or more reason(s) for which listed items are 
controlled. Four of these reasons for control are based on the four 
multilateral export control regimes, as follows: The Wassenaar 
Arrangement on Export Controls for Conventional Arms and Dual-Use Goods 
and Technologies (NS on the CCL), the Missile Technology Control Regime 
(MT on the CCL), the Nuclear Suppliers Group (NP column 1 on the CCL), 
and the Australia Group (CB on the CCL). Because the Hong Kong 
schedules and most of the CCL are developed from these same four 
sources, large portions of both sets of documents cover the same items.
    The government of the Hong Kong Special Administrative Region uses 
information from the import licenses that it issues to identify 
articles that require an export license. This rule imposes new support 
documentation requirements affecting items subject to the EAR that are 
exported or reexported to Hong Kong or are reexported from Hong Kong. 
BIS is taking this action to provide greater assurance that U.S. origin 
items that are subject to the multilateral control regimes noted above 
will be properly authorized by the United States to their final 
destination, even when those items first pass through Hong Kong. This 
rule does not impose any new license requirements.

Exports and Reexports to Hong Kong

    This rule requires exporters and reexporters using a BIS license or 
a license exception to export or reexport to Hong Kong items controlled 
for NS, MT, NP column 1, or CB reasons to obtain certain documents that 
verify the items' status under the Hong Kong Import and Export 
(Strategic Commodities) Regulations. The exporter or reexporter must 
obtain from its client or consignee a copy of a valid import license 
issued to the Hong Kong importer by the Hong Kong government 
authorizing import of the item(s) to be shipped to Hong Kong, or a copy 
of a written statement issued by the Hong Kong government stating that 
no import license is required to import the item(s) into Hong Kong. The 
exporter or reexporter must have the copies in its possession, and any 
Hong Kong import license must not have expired at the time of the 
export or reexport to Hong Kong. For purposes of this requirement, a 
written statement issued by the Hong Kong government includes either a 
written communication to a license applicant informing the applicant 
that the item does not require a license or a statement available to 
the general public (including a statement on a Web site by the Hong 
Kong government) that a license is not required for the item.

Reexports From Hong Kong

    This rule also requires reexporters in Hong Kong intending to 
reexport from Hong Kong items subject to the EAR that are controlled 
for NS, MT, NP column 1, or CB reasons to obtain from the Hong Kong 
government a license authorizing export from Hong Kong of the items, or 
a copy of a written statement issued by the Hong Kong government 
stating that no export license is required from Hong Kong to export the 
items. If a Hong Kong license is issued, the reexport must be in 
accordance with the terms of that license and must be completed during 
the validity period of the Hong Kong-issued export license. For 
purposes of this requirement, a written statement issued by the Hong 
Kong government includes a written communication to a license applicant 
informing the applicant that the item does not require a license or a 
statement available to the general public (including a statement on a 
Web site by the Hong Kong government) that a license is not required 
for the item.

Export Administration Act

    Since August 21, 2001, the Export Administration Act of 1979, as 
amended, has been in lapse. However, the President, through Executive 
Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as 
amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 
13, 2013), and as extended by the Notice of August 4, 2016, 81 FR 52587 
(August 8, 2016), has continued the EAR in effect under the 
International Emergency Economic Powers Act. BIS continues to carry out 
the provisions of the Export Administration Act, as appropriate and to 
the extent permitted by law, pursuant to Executive Order 13222 as 
amended by Executive Order 13637.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). This rule 
has been determined to be not significant for purposes of Executive 
Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et 
seq.) (PRA), unless that collection of information displays a currently 
valid Office of Management and Budget (OMB) Control Number. This rule 
includes an expansion of an existing collection of information approved

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under OMB control number 0694-0093--Import Certificate and End-User 
Certificate, for which the current burden estimates are 5,872 responses 
and 1,618 hours annually. BIS expects that this rule will increase the 
number of transactions for which exporters and reexporters will have to 
acquire support documentation by about 12,000 transactions annually, 
with a corresponding increase in the number of burden hours. Send 
comments regarding this burden estimate or any other aspect of this 
collections of information, including suggestions for reducing the 
burden, to Jasmeet K. Seehra, Office of Management and Budget, by email 
at [email protected] or by fax to (202) 395-7285 and to Hillary Hess, 
BIS, at [email protected].
    3. This rule does not contain policies with Federalism implications 
as that term is defined under Executive Order 13132.
    4. The provisions of the Administrative Procedure Act (5 U.S.C. 
553) requiring notice of proposed rulemaking, the opportunity for 
public participation, and a 30-day delay in effective date, are 
inapplicable because this regulation involves a military and foreign 
affairs function of the United States (5 U.S.C. 553(a)(1)). Therefore, 
we are issuing this action as a final rule. This action will foster 
effective administration of and compliance with the export control 
regulations of the Hong Kong Special Administrative Region with respect 
to U.S.-origin items. Those regulations apply to items that are listed 
on the control lists of multilateral export control regimes of which 
the United States is a member. Effective control over such items 
imported into Hong Kong by the government of the Hong Kong Special 
Administrative Region serves the United States' national security and 
foreign policy interests directly, because many of these items are 
controlled due to their national security significance or their 
potential to be used in activities that would promote proliferation of 
weapons of mass destruction or in regional destabilizing activities.
    This rule also enhances the effectiveness of the multilateral 
control regimes, which serves United States interests in two ways. 
First, widespread consistent implementation of those regime-based 
export controls promotes peace and stability throughout the world 
generally. Second, this rule signals to other nations, regime member 
states and non-members alike, the United States' determination that 
distribution of U.S. origin items throughout the world will be in 
accordance with its regime commitments.
    Moreover, BIS expects that in nearly all instances, this rule 
requires only that a party in Hong Kong obtain a license that is 
already required under Hong Kong law. In those instances, no new action 
is required by persons reexporting from Hong Kong and the only new 
action with respect to exports and reexports to Hong Kong is for the 
person in Hong Kong to send a copy of the license to its supplier. In 
the limited instances where the CCL covers items with one or more of 
the reasons for control noted above that are not listed on the Hong 
Kong control, such as when the Hong Kong Government and the United 
States Government update their control lists in response the changes in 
the multilateral export control regime lists at different times, the 
party in Hong Kong will have to obtain a written statement from the 
Hong Kong Government that a Hong Kong license is not required. However, 
the rule gives the party in Hong Kong several options for providing the 
required information. Various documents, including the Hong Kong 
government's specific response to a license application informing the 
applicant that a license is not required and more general statements 
downloaded from a Hong Kong Government Web site, will be adequate to 
fulfill this requirement. One document may be used for multiple 
shipments as long as the document remains accurate.
    Despite the importance of prompt publication and effectiveness to 
our foreign policy goals as noted above, BIS recognizes that some 
exporters and reexporters will need time to obtain the required 
documentation from their customers for all transactions subject to this 
rule. Therefore, the effective date of this final rule is ninety days 
after publication.

List of Subjects

15 CFR Parts 740 and 748

    Administrative practice and procedure, Exports, Reporting and 
recordkeeping requirements.

15 CFR Part 762

    Administrative practice and procedure, Business and industry, 
Confidential business information, Exports, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, parts 740, 742, and 762 
of the Export Administration Regulations (15 CFR parts 730 through 774) 
are amended as follows:

PART 740--LICENSE EXCEPTIONS

0
1. The authority citation for part 740 is revised to read as follows:

    Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 
U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 
228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of 
August 4, 2016, 81 FR 52587 (August 8, 2016).


0
2. In Sec.  740.2, add paragraphs (a)(19) and (20) to read as follows:


Sec.  740.2  Restrictions on all License Exceptions.

    (a) * * *
    (19) The exporter or reexporter to Hong Kong of any item subject to 
the EAR and controlled on the CCL for NS, MT, NP Column 1, or CB 
reasons has not received one of the following with respect to the item:
    (i) A copy of an import license issued to the Hong Kong importer by 
the Government of the Hong Kong Special Administrative Region, pursuant 
to the Hong Kong Import and Export (Strategic Commodities) Regulations, 
that covers all items to be exported or reexported pursuant to that 
license exception for which a Hong Kong import license is required and 
that is valid on the date of the export or reexport that is subject to 
the EAR; or
    (ii) A copy of a written statement issued by the Government of the 
Hong Kong Special Administrative Region that no import license is 
required to import into Hong Kong the item(s) to be exported or 
reexported. The statement may have been issued directly to the Hong 
Kong importer or it may be a written statement available to the general 
public. The statement may be used for more than one export or reexport 
to Hong Kong so long as it remains an accurate statement of Hong Kong 
law.
    (20) The reexporter from Hong Kong of any item subject to the EAR 
controlled on the CCL for NS, MT, NP column 1, or CB reasons has not 
received one of the following with respect to the item:
    (i) An export license issued by the Government of the Hong Kong 
Special Administrative Region, pursuant to the Hong Kong Import and 
Export (Strategic Commodities) Regulations, that covers all items to be 
reexported pursuant to that license exception for which a Hong Kong 
export license is required and that is valid on the date of the 
reexport that is subject to the EAR; or
    (ii) A copy of a written statement issued by the Government of the 
Hong Kong Special Administrative Region that no Hong Kong export 
license is required for the item(s) to be rexported.

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The statement may have been issued directly to the Hong Kong reexporter 
or it may be a written statement available to the general public. The 
statement may be used for more than one reexport from Hong Kong so long 
as it remains an accurate statement of Hong Kong law.

PART 748--APPLICATIONS (CLASSIFICATION, ADVISORY, AND LICENSE) AND 
DOCUMENTATION

0
3. The authority citation for part 748 is revised to read as follows:

    Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; E.O. 
13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 
44025, 3 CFR, 2001 Comp., p. 783; Notice of August 4, 2016, 81 FR 
52587 (August 8, 2016).


0
4. 748.9(b) is amended by revising the section heading, revising 
paragraph (b) and all notes to paragraph (b), and adding two sentences 
to the end paragraph of (e)(1), to read as follows:


Sec.  748.9  Support documents for evaluation of foreign parties in 
license applications and/or for promoting compliance with license 
requirements.

* * * * *
    (b) Requirements to obtain support documents for license 
applications. Unless an exception in paragraph (c) of this section 
applies, a support document is required for certain license 
applications for:
    (1) The People's Republic of China (PRC) other than the Hong Kong 
Special Administrative Region (see Sec. Sec.  748.10 and 748.11(a)(2));
    (2) ``600 Series Major Defense Equipment'' (see Sec.  748.11);
    (3) Firearms and related commodities to member countries of the 
Organization of American States (see Sec.  748.12); and
    (4) The Hong Kong Special Administrative Region of the People's 
Republic of China (see Sec.  748.13).

    Note 1 to Paragraph (b): On a case-by-case basis, BIS may 
require license applicants to obtain a support document for any 
license application.


    Note 2 to Paragraph (b): For End-Use Certificate requirements 
under the Chemical Weapons Convention, see Sec.  745.2 of the EAR.

* * * * *
    (e) * * *
    (1) * * * The documents issued by the Government of the Hong Kong 
Special Administrative region that are required pursuant to Sec.  
748.13 are not used to evaluate license applications. They must be 
obtained before shipment and need not be obtained before submitting a 
license application.
* * * * *

0
5. Redesignate Sec.  748.13 as Sec.  748.14 and add new Sec.  748.13 to 
read as follows:


Sec.  748.13  Hong Kong import and export licenses.

    (a) Requirement to obtain the document--(1) Exports and reexports 
to Hong Kong. An exporter or reexporter must obtain the documents 
described in paragraph (a)(1)(i) or (a)(1)(ii) of this section before 
using a license issued by BIS to export or reexport to Hong Kong any 
item subject to the EAR and controlled on the CCL for NS, MT, NP column 
1, or CB reasons. Collectively, the documents issued by Hong Kong must 
cover all of the items to be exported or reexported pursuant to a 
license.
    (i) A copy of an import license issued to the Hong Kong importer by 
the Government of the Hong Kong Special Administrative Region, pursuant 
to the Hong Kong Import and Export (Strategic Commodities) Regulations, 
that covers the items to be exported or reexported pursuant to that BIS 
license for which a Hong Kong import license is required and that is 
valid on the date of the export or reexport that is subject to the EAR; 
or
    (ii) A copy of a written statement issued by the Government of the 
Hong Kong Special Administrative Region that no import license is 
required to import into Hong Kong the item(s) to be exported or 
reexported to Hong Kong. The statement may have been issued directly to 
the Hong Kong importer or it may be a written statement available to 
the general public. The statement may be used for more than one export 
or reexport to Hong Kong so long as it remains an accurate statement of 
Hong Kong law.
    (2) Reexports from Hong Kong. No license issued by BIS may be used 
to reexport from Hong Kong any item subject to the EAR controlled on 
the CCL for NS, MT, NP column 1, and/or CB reasons unless the 
reexporter has received either:
    (i) An export license issued by the Government of the Hong Kong 
Special Administrative Region, pursuant to the Hong Kong Import and 
Export (Strategic Commodities) Regulations, that covers all items to be 
rexported pursuant to that BIS license for which a Hong Kong export 
license is required and that is valid on the date of the reexport that 
is subject to the EAR; or
    (ii) A copy of a written statement issued by the Government of the 
Hong Kong Special Administrative Region that no export license is 
required from Hong Kong for the item(s) to be reexported. The statement 
may have been issued directly to the Hong Kong reexporter or it may be 
a written statement available to the general public. The statement may 
be used for more than one reexport from Hong Kong so long as it remains 
an accurate statement of Hong Kong law.
    (b) Recordkeeping. The documents required to be obtained by 
paragraph (a) of this section must be retained and made available to 
the U.S. Government upon request in accordance with part 762 of the 
EAR.

PART 762--RECORDKEEPING

0
6. The authority citation for part 762 continues to read as follows:

    Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; E.O. 
13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 4, 
2016, 81 FR 52587 (August 8, 2016).


0
7. In Sec.  762.2 remove the word ``and'' from the end of paragraph 
(b)(52); remove the period from the end of paragraph (b)(53) and add in 
its place a semicolon followed by the word ``and''; add paragraph 
(b)(54) to read as follows:


Sec.  762.2  Records to be retained.

* * * * *
    (b) * * *
    (54) Sec.  748.13, Certain Hong Kong import and export licenses.
* * * * *

    Dated: January 6, 2017.
Kevin J. Wolf,
Assistant Secretary for Export Admiration.
[FR Doc. 2017-00446 Filed 1-18-17; 8:45 am]
BILLING CODE 3510-33-P