International Trade & Compliance Alert
As noted in our recent alert, President Trump signed into law the Hong Kong Autonomy Act (“HKAA”) on July 14, 2020. On the same day, the President also issued an Executive Order on Hong Kong Normalization (the “Executive Order”) confirming that it is the policy of the United States to suspend or eliminate all different and preferential treatment for Hong Kong compared to mainland China. The Executive Order supplements the HKAA without establishing major new trade policy measures.
The Executive Order provides direction to the U.S. government on the imposition of HKAA blocking sanctions on foreign persons found to be contributing to China’s alleged failure to observe its international obligations regarding Hong Kong. The order also confirms retraction of favorable U.S. export control treatment for Hong Kong.
The Executive Order adds to the large and ever growing authorizations of blocking sanctions. It provides for blocking sanctions on any foreign person determined by the Secretary of State or the Secretary of the Treasury:
Building on the HKAA and export control regulators’ announcements, the Executive Order instructs federal agencies, by July 29, 2020, to commence actions to revoke all 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) that provide differential treatment compared to those license exceptions applicable to China. The regulators are also to terminate export licensing suspensions with respect to exports of defense articles to Hong Kong persons who are physically located outside of Hong Kong and China and who were previously authorized to receive defense articles.