[Federal Register Volume 77, Number 120 (Thursday, June 21, 2012)]
[Proposed Rules]
[Pages 37523-37547]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-15074]
[[Page 37523]]
Vol. 77
Thursday,
No. 120
June 21, 2012
Part III
Department of Commerce
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Bureau of Industry and Security
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15 CFR Parts 734, 736, 740, et al.
Proposed Revisions to the Export Administration Regulations:
Implementation of Export Control Reform; Revisions to License
Exceptions After Retrospective Regulatory Review; Proposed Rule
Federal Register / Vol. 77 , No. 120 / Thursday, June 21, 2012 /
Proposed Rules
[[Page 37524]]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
15 CFR Parts 734, 736, 740, 742, 743, 744, 750, 758, 762, 764, 774
[Docket No. 120501427-2427-01]
RIN 0694-AF65
Proposed Revisions to the Export Administration Regulations:
Implementation of Export Control Reform; Revisions to License
Exceptions After Retrospective Regulatory Review
AGENCY: Bureau of Industry and Security, Commerce.
ACTION: Proposed rule.
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SUMMARY: President Obama directed the Administration in August 2009 to
conduct a broad-based review of the U.S. export control system in order
to identify additional ways to enhance national security. Then-
Secretary of Defense Gates described in April 2010 the initial results
of that effort and why fundamental reform of the U.S. export control
system is necessary to enhance national security. Since then, the
Bureau of Industry and Security (BIS), Department of Commerce, and the
Directorate of Defense Trade Controls (DDTC), Department of State, have
published multiple proposed amendments to the Export Administration
Regulations (EAR) and the International Traffic in Arms Regulations
(ITAR), respectively, that would implement various aspects of what has
become known as the Export Control Reform Initiative. One aspect of the
reform effort would result in the transfer of control to the EAR of
items the President determines no longer warrant control under ITAR,
once congressional notification requirements and corresponding
amendments to the ITAR and the EAR are completed. This proposed rule
addresses issues pertaining to transition of control over such items.
It complements the Export Control Transition Plan, a proposed policy
statement and request for comments issued by DDTC.
This rule proposes to amend the EAR by, inter alia, establishing a
General Order regarding continued use of State authorizations for a
specified period, by broadening license exceptions in the EAR to make
them consistent with ITAR exemptions, and by extending the validity
period of Commerce licenses. Any modifications to License Exceptions
specific to particular types of items, such as firearms, will be
addressed in the proposed rules pertaining specifically to those items.
This rule also addresses specific concerns raised in public comments on
recent rules by proposing a revised de minimis rule for ``600 series''
items, i.e., the items the President determines no longer warrant
control on the USML and that would thus be controlled in the ``600
series'' of the EAR's Commerce Control List (CCL). Finally, this rule
proposes additional conforming changes that are necessary to implement
the Export Control Reform Initiative, but also would affect items
currently subject to the EAR, such as changes to reporting thresholds
for the Automated Export System.
In addition, this proposed rule addresses issues raised by the
public in response to a notice requesting comments on the streamlining
of BIS's regulations published on August 5, 2011 (76 FR 47527). On
January 18, 2011, President Barack Obama issued Executive Order 13563,
affirming general principles of regulation and directing government
agencies to conduct retrospective reviews of existing regulations.
Although the Export Control Reform Initiative did not originate with
Executive Order 13563, it is entirely consistent in spirit and
substance. BIS issued a notice soliciting public comment on
streamlining its regulations pursuant to the President's Executive
Order. In response to the public comments received on the notice, and
consistent with BIS's internal analysis, this rule proposes revisions
to license exceptions for government uses and temporary exports that
streamline and update unduly complex or outmoded provisions in addition
to broadening certain provisions to implement Export Control Reform.
Other proposed changes to the EAR warranted by the Executive Order will
be addressed in separate Federal Register notices. Commerce's full plan
can be accessed at: http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules.
DATES: Comments must be received by BIS no later than August 6, 2012.
ADDRESSES: Comments may be submitted to the Federal rulemaking portal
(http://www.regulations.gov). The regulations.gov ID for this notice of
inquiry is: BIS-2012-0024. Comments may also be submitted via email to
publiccomments@bis.doc.gov or on paper to Regulatory Policy Division,
Bureau of Industry and Security, Room 2099B, U.S. Department of
Commerce, Washington, DC 20230. Please refer to RIN 0694-AF65 in all
comments and in the subject line of email comments. All comments must
be in writing. All comments (including any personal identifiable
information) will be available for public inspection and copying. Those
wishing to comment anonymously may do so by submitting their comment
via regulations.gov and leaving the fields for identifying information
blank.
FOR FURTHER INFORMATION CONTACT: Hillary Hess or Timothy Mooney,
Regulatory Policy Division, Office of Exporter Services, Bureau of
Industry and Security at 202-482-2440 or rpd2@bis.doc.gov.
SUPPLEMENTARY INFORMATION:
Background
The Export Control Reform Initiative
The objective of the Export Control Reform Initiative is to protect
and enhance U.S. national security interests. On July 15, 2011 (76 FR
41958), BIS published a proposed rule, Proposed Revisions to the Export
Administration Regulations (EAR): Control of Items the President
Determines No Longer Warrant Control Under the United States Munitions
List (USML). The July 15 rule proposed a regulatory framework to
control items on the USML that, in accordance with section 38(f) of the
Arms Export Control Act (AECA) (22 U.S.C. 2778(f)(1)), the President
determines no longer warrant control under the AECA. These items would
be controlled under the Export Administration Regulations (EAR) once
the congressional notification requirements of section 38(f) and
corresponding amendments to the International Traffic in Arms
Regulations (ITAR) (22 CFR parts 120-130) and its USML and the EAR and
its Commerce Control List (CCL) are completed. After the July 15 rule
established this regulatory framework, subsequent rules, including the
November 7, 2011 (76 FR 68675) proposed rule, proposed specific changes
to the USML and the CCL.
Once the ITAR and its USML are amended so that they control only
the items that provide the United States with a critical military or
intelligence advantage or otherwise warrant the controls of the ITAR,
and the EAR is amended to control military items that do not warrant
USML controls, the U.S. export control system will enhance national
security by (i) improving interoperability of U.S. military forces with
allied countries, (ii) strengthening the U.S. industrial base by, among
other things, reducing incentives for foreign manufacturers to design
out and avoid U.S.-origin content and services, and (iii) allowing
export control officials to
[[Page 37525]]
focus government resources on transactions of more concern.
All references to the United States Munitions List (``USML'') in
this rule are to the list of defense articles that are controlled for
purposes of export or temporary import pursuant to the International
Traffic in Arms Regulations (``ITAR''), 22 CFR Parts 120 et seq., and
not to the list of defense articles on the USML that are controlled by
the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for
purpose of permanent import under its regulations at 27 CFR part 447.
Pursuant to section 38(a)(1) of the Arms Export Control Act (AECA), all
defense articles controlled for export or import are part of the
``USML'' under the AECA. For the sake of clarity, the list of defense
articles controlled by ATF for purposes of permanent import are on the
United States Munitions Import List (USMIL). The transfer of defense
articles from the ITAR's USML to the EAR's CCL for purposes of export
controls does not affect the list of defense articles controlled on the
USMIL under the AECA for purposes of permanent import controls.
Public Comments on the July 15 and November 7 Proposed Rules
BIS received 43 comments in response to the July 15 proposed rule.
Those who submitted comments generally supported the proposed
amendments to the EAR and the Export Control Reform Initiative
objectives. However, they also expressed both general concerns about
the process of transition from State to Commerce jurisdiction and
specific concerns regarding certain proposed provisions. With respect
to general concerns regarding the transition, nine commenters addressed
perceived burdens caused by implementation of Export Control Reform,
specifically expressing concern over shorter validity periods for
licenses under the EAR than the ITAR and difficulty complying with two
sets of regulations in the same transaction. They urged incremental
implementation, including grandfathering of ITAR licenses and
continuing opportunities for public participation in the rulemaking
process. Ten commenters found that certain ITAR exemptions were broader
than EAR license exceptions. While these comments on implementation
concerns were outside the scope of the July 15 rule, they did
anticipate issues that BIS planned to address in this proposed rule.
One commenter requested adoption of a single licensing form, which is
outside the scope of this rule but nonetheless something the
Administration has announced it is developing.
With respect to specific proposed provisions, fourteen commenters
found the July 15 proposal regarding a revised de minimis rule for
``600 series'' items too complex and unworkable. Commenters stated that
having a 10 percent de minimis rule for ``600 series'' items and a 25
percent de minimis rule for all other items subject to the EAR would be
extremely burdensome, if not impossible, for the commenters to
calculate.
Three commenters on the July 15 rule requested clarification
regarding application of the China military end-use restriction to
``600 series'' items.
Similar to the July 15 rule, BIS received public comments regarding
implementation concerns in response to the November 7 rule.
Implementation concerns were generally outside the scope of the
November 7 rule, which proposed CCL entries for aircraft and related
items the President determines do not warrant control on the USML;
however, five commenters raised the issue that certain ITAR exemptions
were broader than comparable EAR license exceptions.
BIS plans to address comments received in response to the July 15
and November 7 proposed rules, to the extent that they are germane to
this proposed rule, when this rule is published in final form.
The ``600 Series'' and U.S. Arms Embargoed Countries
As noted in the preamble to the July 15 rule, items determined to
no longer warrant control under the ITAR would be controlled by a new
series of ECCNs identified by the ``6'' at the third character of each
ECCN and collectively referred to as ``600 series'' items. While these
items no longer would be subject to the ITAR, they still would be
military items or items ``specially designed'' for military uses. BIS
is not suggesting by their inclusion on the CCL that they are ``dual-
use'' items. The CCL controls ``dual use'' (e.g., items designed for
both military and civil applications), exclusively military, and other
types of items warranting control. The amendments at issue in this part
of the Export Control Reform Initiative would merely add significantly
more military items to controls of the EAR. Applications to export such
items to countries subject to U.S. arms embargoes as described in Sec.
126.1 of the ITAR and subsequently in proposed Sec. 740.2 (a)(12) of
the EAR in the July 15 rule would be subject to the general policy of
denial proposed in the November 7 rule. (An exception to this would be
those items contained in the .y paragraph of each ``600 series'' ECCN;
while they are military items, they are so militarily insignificant
that licenses would not be required except for export to terrorist
supporting countries or for a military end use in China.) Another
general principle underlying the incorporation of the ``600 series''
into the EAR is that because items subject to the EAR are less
militarily significant than those subject to the ITAR, EAR exceptions
should not be more restrictive than comparable ITAR exemptions.
Similarly, EAR procedures should not be more restrictive than
comparable ITAR procedures. As one public comment in response to the
July 15 rule stated, ``[r]egulatory changes that have the unintended
result of being more onerous than current requirements are not
beneficial for U.S. national security or economic interests and will
not further the stated objectives of comprehensive Export Control
Reform.'' BIS agrees.
Revisions Addressed in This Proposed Rule
This rule proposes certain measures to ease the transition for
those items moving from State to Commerce jurisdiction, including
establishing a General Order regarding continued use of State
authorizations for a specified period, broadening license exceptions
consistent with ITAR exemptions, and extending the two-year validity
period of Commerce licenses to match State's four-year period. In the
course of broadening certain license exceptions, this rule streamlines
and updates existing text to reduce undue complexity. This rule also
addresses concerns regarding the de minimis rule by proposing
alternative provisions. Specifically, this rule responds to public
comments by proposing a uniform 25 percent de minimis rule for
reexports of ``600 series'' items to all countries, except for
countries subject to U.S. arms embargoes, which would be subject to a
zero percent de minimis rule.
Moreover, this rule augments the framework constructed by the July
15 rule (and modified by the November 7 rule) by proposing additional
changes to the EAR necessary to implement Export Control Reform. Note
that in addition to applying to items transitioning from the ITAR, many
revisions also would apply to items currently subject to the EAR, such
as changes to validity periods and reporting thresholds for the
Automated Export System.
Finally, in response to Executive Order 13563, this rule proposes
revisions to license exceptions for government uses and temporary
exports
[[Page 37526]]
that streamline and update unduly complex or outmoded provisions in
addition to broadening certain provisions to implement Export Control
Reform. On August 5, 2011, BIS issued a notice soliciting public
comments on all of its existing and proposed rules, with the exception
of those rules related to the Export Control Reform Initiative, which
solicit public comment separately. The comment period for the notice
closed on February 1, 2012. BIS received 22 comments. Three issues
raised in these comments involve issues related to transition issues
and are addressed in this proposed rule. The comments relevant to this
rule suggested various amendments to make the EAR more consistent with
the ITAR and State Department policy. License Exception GOV should be
broadened to include those acting on behalf of the U.S. Government.
License Exception TSU should be broadened to allow release of
technology in the United States by U.S. universities to their
employees. License validity periods should be lengthened. These
comments dovetailed with comments submitted in response to the July 15
and November 7 rules, and with BIS's own analysis. These proposed
changes are discussed in the License Exception and License Issuance
sections. Other comments on the August 5 notice will be summarized in
future proposed rules as those issues are addressed. Commerce's full
plan can be accessed at: http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules.
Transition
This proposed rule details, and solicits public comment on, the
amendments to the EAR that would be necessary to effect the transition
of items from the ITAR. In addition to protecting and enhancing U.S.
national security, Export Control Reform is expected to generate
significant long-term benefits for U.S. exporters in the form of more
efficient and flexible export controls that are more tailored to the
significance of the item. In contrast, the ITAR, as a result of the
Arms Export Control Act, is a less flexible regulatory structure. The
least significant part or component is generally controlled the same
way as the most significant part or component and the end item itself.
In the short term, however, both government and industry will need to
adjust licensing and compliance procedures.
BIS anticipates that the Department of State, Directorate of
Defense Trade Controls (DDTC) will set forth approximately a two-year
period during which, under certain circumstances, holders of DDTC
authorizations that include items transitioning to the EAR may continue
to use those authorizations. This proposed rule should be read in
conjunction with DDTC's proposed policy statement regarding its Export
Control Reform Transition Plan (INSERT FR CITE). Consistent with DDTC's
policy statement, all provisos, conditions, or other requirements
placed on ITAR authorizations will continue to apply as long as such
authorizations are in use.
General Order
This rule proposes to add a new General Order No. 5 (Supplement No.
1 to part 736 of the EAR). In the proposed General Order No. 5, holders
of State licenses for items that transition to Commerce jurisdiction
who wish to begin using BIS authorizations may do so as early as the
effective date of the rule that transfers jurisdiction of their items
by returning their DDTC licenses in accordance with Sec. 123.22 of the
ITAR and complying with the EAR.
On the effective date of each rule that adds an item to the CCL
that was previously subject to the ITAR, that item will be subject to
the EAR. Authorizations issued by DDTC before the transition date for
those items may continue in effect as specified by DDTC in the
Department of State's Export Control Reform Transition Plan. Foreign
consignees or end users with items that have transitioned from State to
Commerce jurisdiction must comply with the EAR for subsequent reexports
or transfers.
Exporters, temporary importers, manufacturers, and brokers are
cautioned to closely monitor ITAR and EAR compliance concerning
Department of State licenses and agreements for items transitioning
from USML to CCL. Parties who discover that they may have violated the
ITAR, the EAR, or any license or authorization issued thereunder, are
strongly encouraged to consult with BIS or DDTC and avail themselves of
the appropriate department's current, established procedures for
submitting voluntary disclosures and for requesting specific
authorization to take any further actions in connection with that item.
License Exceptions
License Exceptions are published authorizations set forth in part
740 of the EAR that allow exports, reexports, and in-country transfers
that would otherwise require a license to proceed without one if
certain conditions are met. The same principle underlies ITAR
exemptions. As part of the general effort under the Export Control
Reform Initiative to begin harmonizing the definitions, structure, and
licensing aspects of the EAR and the ITAR, BIS undertook a
comprehensive review of both EAR license exceptions and ITAR
exemptions. While the EAR are generally believed to offer more
flexibility than the ITAR, the BIS review of its regulations and public
comments on the July 15 rule identified certain specific instances
where the EAR would inadvertently be more restrictive. According to
public comments received in response to the July 15 and November 7
proposed rules, exporters found that exemptions under the ITAR for some
of their items were broader than license exceptions under the EAR.
These comments stemmed from concerns over implementing Export Control
Reform for transactions of interest to those commenters rather than
from any specific BIS proposals to revise license exceptions.
This rule proposes to harmonize the provisions of several EAR
license exceptions with several ITAR exemptions, as set out in detail
below, but only insofar as they are permitted by law and otherwise
relevant to ``600 series'' items and other items subject to the EAR. In
particular, BIS has no authority to change the scope of license
exceptions available for items controlled for Missile Technology
reasons because of statutory restrictions. See section (6)(l) of the
Export Administration Act of 1979, as amended, 50 U.S.C. appx. 2405(l).
BIS welcomes comments on the differences between license exceptions
under the EAR and exemptions under the ITAR and the issues they raise
for those attempting to comply with both bodies of regulation or to
transition from ITAR compliance to EAR compliance. Given the
differences between the two systems, BIS is interested in comments
regarding where deviations in the scope of control under the EAR versus
the ITAR may be appropriate, especially with respect to treatment of
reexports and in-country transfers. Note that license exceptions
closely linked to specific items, such as firearms, that have not yet
been proposed for control under the EAR will likely be addressed in
rules related to those items. Descriptions of specific scenarios make
particularly helpful examples.
Restrictions on All License Exceptions
Proposed new paragraphs (a)(15) and (a)(16) to Sec. 740.2 describe
restrictions on all license exceptions. This rule proposes restrictions
on certain exports for which prior notification to Congress will be
made, as explained below in the
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discussion of major defense equipment. In addition, this rule proposes
to revise a restriction originally proposed in the July 15 rule
regarding the use of license exceptions for ``600 series'' items to
U.S. arms embargoed countries, which was subsequently proposed to be
amended in Revisions to the Export Administration Regulations (EAR):
Control of Personal Protective Equipment, Shelters, and Related Items
the President Determines No Longer Warrant Control Under the United
States Munitions List (USML) published on June 7, 2012 (77 FR 33688).
The text set forth in this rule uses as a baseline the proposed
provision published on June 7, 2012. This rule proposes restricting
most license exception eligibility for ``600 series'' items not only
destined to U.S. arms embargoed countries, but also for ``600 series''
items manufactured in or shipped from those countries as well,
consistent with the ITAR (Sec. 126.1(a)).
License Exception TMP
This rule proposes a complete revision of Sec. 740.9, License
Exception Temporary Imports, Exports and Reexports (TMP) paragraphs (a)
(Temporary exports and reexports) and (b) (Exports of items temporarily
in the United States) to streamline the existing exception, which
successive amendments over the years have rendered increasingly
difficult to read. This streamlining is consistent with the
retrospective review and regulatory improvement directed in E.O. 13563
and is not intended to substantively change the scope of TMP beyond
adding explicit authority for in-country transfers and broadening to
match the scope of the ITAR exemptions. Proposed amendments to
streamline other EAR License Exceptions and other EAR provisions will
be addressed in separate Federal Register notices. Changes in country
scope of certain provisions reflect the limitations set forth in part
746 of the EAR (Embargoes and Special Controls) unless otherwise noted.
References to exports of items controlled for missile technology
reasons were deleted because such exports are restricted by Sec.
740.2(a)(5). Temporary exports under License Exception TMP to a U.S.
subsidiary, affiliate, or facility abroad would no longer be limited to
exports to Country Group B countries in order to make TMP consistent
with Sec. 123.16(b)(9) of the ITAR.
This rule would add notes to the temporary imports paragraph of
License Exception TMP that incorporate concepts explicit in Sec. Sec.
123.19 and 123.13 of the ITAR. In this paragraph, notes are added
stating that a shipment originating in Canada or Mexico that
incidentally transits the United States en route to a delivery point in
the same country does not require a license, and that a shipment by air
or vessel from one location in the United States to another location in
the United States via a foreign country does not require a license.
This rule proposes to add a note to TMP referencing the USMIL and a
conforming change to part 734 noting that defense articles on the USMIL
are controlled by the Bureau of Alcohol, Tobacco, Firearms and
Explosives (ATF) for purpose of permanent import under its regulations
at 27 CFR part 447. This rule also proposes to delete references to
outdated forms in this paragraph. Finally, this rule proposes to remove
the term ``unwanted'' from Sec. 740.9(b)(3), because the term, which
was undefined, was confusing to the public.
BIS welcomes comments on both substantive and structural aspects of
the proposed clarifying changes to TMP.
License Exception RPL
This rule proposes to revise RPL to allow export or reexport of
spares up to $500 in total value. RPL would also be revised to remove
the requirement that the ability to return serviced commodities and
software or replace defective or unacceptable U.S.-origin equipment be
limited to the original exporters. These revisions would correspond to
Sec. 123.16(b)(2) of the ITAR, the availability of which is not
limited to original exporters. The July 15 rule proposed to revise
Sec. 740.10, License Exception Repair and Replacement (RPL) to reflect
the proposed new definitions of certain terms, such as ``part'' or
``component,'' and to allow replacement parts for defense articles to
be exported under RPL. This rule does not modify the proposed July 15
RPL revisions.
License Exception GOV
Consistent with the retrospective review and regulatory improvement
directed in Executive Order 13563, this rule proposes a complete
revision of Sec. 740.11, License Exception GOV (Governments;
International Organizations; International Inspections under the
Chemical Weapons Convention; and the International Space Station).
Because existing GOV contains many provisions that exclude items on the
Wassenaar Arrangement's Sensitive and Very Sensitive Lists, and those
provisions were always intended to match the Wassenaar Arrangement's
Sensitive and Very Sensitive Lists, this rule proposes to add those
lists to the EAR as supplements to the Commerce Control List and revise
GOV to refer to the new supplements. This revision would shorten and
simplify GOV, allowing its current supplement to Sec. 740.11 text to
be consolidated in the main section. The supplements containing the
Sensitive and Very Sensitive Lists would be new Supplement Nos. 6 and 7
to part 774 of the EAR, as discussed below.
The July 15 proposed rule restricted ``600 series'' items'
eligibility for GOV to governments of those 36 countries listed in
Sec. 740.20(c)(1) (License Exception STA) and the United States. The
November 7 rule proposed certain changes to License Exception GOV with
respect to restricting certain aircraft-related software and
technology. This rule modifies those proposed provisions by excluding
``software'' prohibited by proposed Supplement No. 4 to part 740 from
eligibility for GOV. However, proposed Supplement No. 4 to part 740 is
not republished in this rule; nor does BIS seek comment on its content.
The July 15 rule proposed, and the November 7 rule proposed a
modification to a provision in License Exception STA to allow exports,
reexports, or transfers (in-country) of ``600 series'' items to non-
governmental end users as long as the items were for ultimate
government end use. This rule similarly proposes expanding GOV to
authorize items consigned to non-governmental end users, such as U.S.
Government contractors, acting on behalf of the U.S. Government in
certain situations, subject to written authorization from the
appropriate agency and additional export clearance requirements. This
rule also adds provisions for exports made under the direction of the
U.S. Department of Defense consistent with Sec. Sec. 125.4(b)(1),
125.4(b)(3) and 126.6(a) of the ITAR. This rule also proposes a note
clarifying the authority for foreign military sales consistent with
Sec. 126.6(c) of the ITAR.
Generally, this rule does not propose expansion of License
Exception GOV beyond the broadening necessary to create equivalent EAR
authorizations to correspond to existing ITAR authorizations. This rule
does propose, however, an expansion to the scope of countries eligible
to receive items on the Sensitive List under the proposed revised Sec.
740.11(a) (International Safeguards) and (c) (Cooperating Governments).
The revised country scope for governments eligible to receive items on
the Sensitive List under the proposed revised Sec. 740.11(c) would be
the same governments of those 36 countries listed in Sec. 740.20(c)(1)
(License Exception STA).
[[Page 37528]]
BIS welcomes comments on both substantive and structural aspects of
the proposed clarifying changes to License Exception GOV.
License Exception TSU
This rule would revise Sec. 740.13 License Exception Technology
and Software--Unrestricted (TSU) to include explicitly training
information in the operation technology authorized, as it is in Sec.
125.4(b)(5) of the ITAR. This rule also proposes adding TSU
authorization for the release of software and technology in the United
States by U.S. universities to their bona fide and full-time regular
foreign national employees and other foreign nationals to correspond
with a similar authorization in Sec. 125.4(b)(10) of the ITAR and an
authorization at Sec. 125.4(b)(4) of the ITAR for copies of technology
previously authorized for export to same recipient. This authorization
would, however, be subject to the end-use and end-user restrictions in
part 744 of the EAR, would not be available for encryption-related
software controlled for ``EI'' and other software and technology
controlled for ``MT'' (Missile Technology) reasons, and would not be
eligible for nationals of countries subject to U.S. arms embargoes for
``600 series'' items.
Such changes are part of the broader, long-term Export Control
Reform Initiative effort to harmonize the EAR's and the ITAR's
definitions, terms, and, to the extent warranted, license exceptions.
Efforts to harmonize other EAR and ITAR terms will be addressed in
future Federal Register notices. BIS nonetheless encourages comments on
all ITAR and EAR terms, phrases, and provisions that warrant
harmonization.
License Exception STA
This rule proposes an additional limitation on use of License
Exception Strategic Trade Authorization (STA) in Sec. 740.20. This
proposed revision would limit use of License Exception STA for ``600
series'' items to foreign parties that have received U.S. items under a
license issued either by BIS or DDTC. This ensures that such parties
will have been vetted by a U.S. Government licensing process. For
purchasers, intermediate consignees, ultimate consignees, and end users
that have not been so vetted, a license would be required even for STA-
eligible items. Once that license has been issued, subsequent eligible
exports may be made under STA.
This rule also proposes that for ``600 series'' items, the prior
consignee statement set forth in Sec. 740.20(d)(2) contain the
consignee's confirmation that the items are for ultimate government end
use and agreement to permit the U.S. Government to conduct end-use
checks. These revisions provide a structure for verifying that ``600
series'' items are used as intended and an assurance that end-use
checks can be performed expeditiously.
License Issuance
Current ITAR licenses are generally valid for four years compared
to two years under the EAR. Agreements under the ITAR may be valid as
long as ten years. In order to harmonize the EAR with the ITAR, this
rule proposes to revise Sec. 750.7(g) to extend the validity period of
BIS licenses from two years to four years, with some exceptions, unless
otherwise specified on the license at the time that it is issued.
Exporters may request an extended validity period pursuant to Sec.
750.7(g)(1) beyond four years. Such requests will be reviewed on a
case-by-case basis. Grounds for requesting extension would include
having agreements previously approved by the Department of State for a
longer period of time. BIS licenses generally designate one ultimate
consignee and may have many designated end users. DDTC authorizations
may designate multiple foreign end users. This rule proposes to revise
Sec. 750.7(c) explicitly to allow direct shipments to approved end
users.
License Review Policy
License applications made to BIS receive interagency review. For
``600 series'' items, this rule proposes to modify the section
describing regional stability controls by adding to Sec. 742.6(b)(1) a
policy of case-by-case review to determine whether the transaction is
contrary to the national security or foreign policy interests of the
United States. This proposed policy is consistent with the policy for
State and Defense review of ITAR licenses. The July 15 and November 7
rules proposed certain changes to the license review policy in Sec.
742.6(b)(1). The July 15 proposal was adopted without change and
published in final form on April 13, 2012 (77 FR 22199). This rule does
not modify the proposed provisions from the November 7 rule, but the
proposed provision is restated here for the public's convenience and to
facilitate a complete understanding of BIS's license review policy
proposal. As such, BIS is not seeking additional public comments on
that provision in this rule.
Reporting and Notifications
The current EAR require reporting for exports of items on the
Wassenaar Arrangement's Sensitive List under license exception, and
those provisions were always intended to match the Wassenaar
Arrangement's Sensitive List. This rule would shorten the Wassenaar
Arrangement reporting requirements section, found at Sec. 743.1, and
would include a cross reference to the Sensitive List rather than
setting forth ECCN paragraphs, much as was done in this rule's proposed
License Exception GOV.
As set forth in Sec. 123.15 of the ITAR, Section 36(c) of the Arms
Export Control Act requires that a certification be provided to the
Congress prior to approval of certain high-value exports of major
defense equipment, other defense articles, or firearms. Major defense
equipment (MDE), for purposes of Sec. Sec. 743.5 and 750.4 of the EAR,
means any item of significant military equipment having a nonrecurring
research and development cost of more than $50,000,000 or a total
production cost of more than $200,000,000. Approvals may not be granted
when the Congress has enacted a joint resolution prohibiting the
export. While this process is not required for items subject to the
EAR, BIS would institute these procedures in the EAR for such MDE items
subject to the EAR. This rule proposes the creation of a new Sec.
743.5, which would require exporters to notify BIS of such transactions
for all exports except those made under License Exception GOV. When a
license application is submitted, BIS would be able to, and will, draw
the necessary information from the application to make the
congressional notification. Section 740.2, restrictions on license
exceptions, discussed above, would be revised to preclude use of
license exceptions for such transactions.
To reflect the proposed changes to part 743, this rule proposes
amending the title of this part to read, ``Special Reporting and
Notification.''
De Minimis U.S. Content in Foreign-Made Items and Foreign-Produced
Direct Products of U.S. Technology
Section 734.4 of the EAR sets forth the de minimis provisions,
which provide that foreign-made items incorporating below de minimis
levels of U.S. content are not subject to the EAR. The July 15 rule
proposed a 10% de minimis level for ``600 series'' content. Many
commenters found these proposed provisions confusing and anticipated
difficulty implementing them, primarily due to having different de
minimis levels for different items going to the same country. Several
of the public comments in response to the July 15 rule suggested
simplifying the proposed de minimis provisions by allowing a
[[Page 37529]]
25% level for those countries eligible for paragraph (c)(1) of License
Exception Strategic Trade Authorization (STA) (see Sec. 740.20). Two
commenters to the November 7 proposed rule suggested that BIS adopt the
existing 25% de minimis rule described in the Export Administration Act
for all countries except those subject to U.S. arms embargoes, which
would be subject to a zero percent de minimis rule. Based on a review
of those comments and further interagency deliberation, this rule
proposes a rule suggested by commenters to the November 7 rule, i.e.,
an exclusion of ``600 series'' U.S. content from eligibility for de
minimis when the foreign-made items are destined to U.S. arms embargoed
countries and, consistent with current EAR provisions, a 25% de minimis
for all other destinations. This proposal, in addition to its relative
simplicity, retains the status quo for ``600 series'' content destined
to U.S. embargoed countries in that the ITAR effectively has a zero
percent de minimis rule.
BIS believes that this proposal simultaneously addresses the
calculation concerns of the commenters while tightening reexport
controls over foreign-made items that contain any ``600 series''
content destined for countries subject to U.S. arms embargoes. This
approach would advance the cause of the reform effort by reducing the
negative impact of the ``see-through'' rule in place under the ITAR
with respect to trade with most of the world; would be simpler to
calculate; would maintain the EAR's 25 percent de minimis rule for
reexports to most countries; and would carry forward the ITAR's zero
percent de minimis rule with respect to reexports of military items to
countries subject to U.S. arms embargoes. The latter aspect of the
proposal furthers U.S. national security and foreign policy interests
by discouraging, indeed prohibiting, the reexport of foreign-made items
containing ``600 series'' content to countries subject to U.S. arms
embargoes while removing the incentive the ITAR creates for foreign
buyers to avoid U.S.-origin content with respect to trade by and
between other countries.
This rule also proposes changes to the regulations that address
foreign-produced direct products of U.S. technology, which was a
subject that was not addressed in the July 15 rule. Currently, certain
foreign-produced direct products of U.S. technology are subject to the
EAR: National security controlled items that are direct products of
U.S. national security-controlled technology, when those products are
destined to countries of concern for national security reasons (Country
Group D:1) or terrorist-supporting countries (Country Group E:1). This
proposed rule would expand these provisions by adding an additional
country and product scope. Foreign-produced direct products of U.S.-
origin ``600 series'' technology, or of a plant that is a direct
product of U.S.-origin ``600 series'' technology, that are ``600
series'' items would be subject to the EAR when reexported to countries
of concern for national security, chemical and biological weapons,
missile technology or anti-terrorism reasons (Country Groups D:1, D:3,
D:4 or E:1 in Supplement No 1 to part 740) or to a U.S. arms embargoed
country (see Sec. 740.2(a)(12)). Foreign-made items subject to the EAR
because of this rule would be subject to the same license requirements
to the new country of destination as if of U.S. origin.
Because of the expansion of the provisions at Sec. 736.2(b)(3) to
include ``600 series'' items, this rule proposes to remove the
penultimate paragraph in Supplement No. 1 to part 764 that states that
the standard denial order ``does not prohibit any export, reexport, or
other transaction subject to the EAR where the only items involved that
are subject to the EAR are the foreign-produced direct product of U.S.-
origin technology.''
China Military End Use
Section 744.21 of the EAR imposes a restriction on certain items
destined for the People's Republic of China for a ``military end use,''
defined as for incorporation into military items or for the use,
development or production of military items. The July 15 rule proposed:
(1) Expanding the description of military items in the Sec. 744.21(f)
definition of ``military end use'' to include ``600 series'' items; and
(2) adding items controlled by the .y paragraphs in the ``600 series''
ECCNs to the list of items subject to this restriction (those listed in
Supplement No. 2 to part 744 (List of Items Subject to the Military
End-Use License Requirement of Sec. 744.21)). Three commenters
requested clarification of whether 600 series and subparagraph .y items
being exported to China would be subject to a policy of denial under
the military end use controls. One commenter suggested that because
such items have little or no military significance, they should be
excluded from China military end use controls.
Based on the comments' request for clarification and BIS's internal
analysis, this rule proposes to expand Sec. 744.21 to state explicitly
that all ``600 series'' items are subject to this restriction. The
basis for this revision is that items ``specially designed'' for a
defense article or other military end item are presumptively for a
military end use. If an item were ``specially designed'' for a civil or
a dual-use application, it would not be controlled by the .y lists
within some of the 600 series ECCNs. Therefore, the effect of this
proposed change would be to impose a license requirement for all ``600
series'' items, including .y items, destined to China, which would be
reviewed pursuant to Sec. 744.21. This proposal replaces the July 15
proposed amendment to Supplement No. 2 to part 744; the July 15
proposed amendment to Sec. 744.21(f) is unchanged.
Export Clearance
Exporters enter information for both State- and Commerce-controlled
transactions into the Automated Export System (AES). Many exports worth
less than $2500 are exempted from the requirement to enter information
on the transaction into AES. This rule proposes to revise Sec. 758.1
to remove the low-value exemption for ``600 series'' items for all
destinations, including Canada, and require AES filing for all ``600
series'' items. Requiring entry of ``600 series'' information
regardless of value or destination will provide the U.S. Government
with the same information on exports of these items under Commerce
control as is now available for such items when they are subject to the
ITAR. This rule also proposes to revise Sec. 758.1 to require AES
filing for all exports under License Exception Strategic Trade
Authorization (STA), regardless of value, to enable the U.S. Government
to obtain information about low-value shipments of these items.
This rule proposes to preclude the option of post-departure filing
for exports of ``600 series'' items because this option is not
permitted for ITAR-controlled exports now. This rule also proposes
removing the option of post-departure filing for License Exception STA
and Authorization VEU because the nature of these authorizations
requires pre-departure filing of this information to ensure compliance
with their terms and conditions.
The provisions of Sec. 758.6 require exports to be accompanied by
a Destination Control Statement (DCS) identifying the items as subject
to the EAR. Given the nature of the ``600 series'' items and
requirements related to them, this rule proposes a more specific DCS
for ``600 series'' items that would require exporters to identify the
ECCNs of all ``600 series'' items being exported in the text to ensure
that consignees are aware that they have such items.
[[Page 37530]]
ECCN 0A919 and Supplement Nos. 6 and 7 to the Commerce Control List
This rule proposes to revise ECCN 0A919, which controls certain
military commodities produced outside the United States, to conform to
the proposed revisions of the de minimis and foreign-produced direct
product rules set forth in this rule.
As described above, this rule proposes creating two new supplements
to part 774, the Commerce Control List. New Supplement Nos. 6 and 7
would append to the Commerce Control List the Wassenaar Arrangement's
Sensitive and Very Sensitive Lists. These lists would be referenced by
proposed revised provisions in License Exception GOV and Wassenaar
Arrangement reporting requirements in part 743. While the items on the
lists would be identified by ECCN rather than by Wassenaar Arrangement
numbering, the item descriptions would be drawn directly from the
Wassenaar Arrangement.
Relationship to the July 15 and November 7 Proposed Rules
As referenced above, the purpose of the July 15 proposed rule was
to set up the framework to support the transfer of items from the USML
to the CCL. To facilitate that goal, the July 15 proposed rule
contained concepts that were meant to be applied across the EAR.
However, as BIS undertakes rulemakings to move specific categories of
items from the USML to the CCL, there may be unforeseen issues or
complications that may require BIS to reexamine those concepts. The
comment period for the July 15 proposed rule closed on September 13,
2011.
The November 7 proposed rule proposed modifications to that
framework. The comment period for the November 7 rule closed on
December 22, 2011.
To the extent that this rule's proposals affect any provision in
the July 15 or November 7 proposed rules or any provision in those
proposed rules affects this proposed rule, BIS will consider comments
on those provisions so long as they are within the context of the
changes proposed in this rule.
BIS believes that the following aspects of the July 15 and November
7 proposed rules are among those that could affect or be affected by
this proposed rule:
De minimis provisions in Sec. 734.4;
Restrictions on use of license exceptions in Sec. Sec.
740.2, 740.10, 740.11, and 740.20;
Licensing policy under Sec. 742.6(b)(1);
Reporting requirements under part 743;
Addition of ``600'' series items to Supplement No. 2 to
Part 744--List of Items Subject to the Military End-Use Requirement of
Sec. 744.21; and
Records to be retained under Sec. 762.2.
Although the Export Administration Act expired on August 20, 2001,
the President, through Executive Order 13222 of August 17, 2001, 3 CFR,
2001 Comp., p. 783 (2002), as extended by the Notice of August 12,
2011, 76 FR 50661 (August 16, 2011), has continued the Export
Administration Regulations 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.
Regulatory 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, distribute impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated a ``significant regulatory
action,'' although not economically significant, under section 3(f) of
Executive Order 12866. Accordingly, the rule has been reviewed by the
Office of Management and Budget (OMB).
2. Notwithstanding any other provision of law, no person is
required to respond to, nor is 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 OMB
control number. This proposed rule would affect the following approved
collections: Simplified Network Application Processing System (control
number 0694-0088), which includes, among other things, license
applications; license exceptions (0694-0137); voluntary self-disclosure
of violations (0694-0058); recordkeeping (0694-0096); export clearance
(0694-0122); and the Automated Export System (0607-0152).
As stated in the proposed rule published at 76 FR 41958 (July 15,
2011), BIS believed that the combined effect of all rules to be
published adding items to the EAR that would be removed from the ITAR
as part of the administration's Export Control Reform Initiative would
increase the number of license applications to be submitted by
approximately 16,000 annually. As the review of the USML has
progressed, the interagency group has gained more specific information
about the number of items that would come under BIS jurisdiction
whether those items would be eligible for export under license
exception. As of June 21, 2012, BIS believes the increase in license
applications may be 30,000 annually, resulting in an increase in burden
hours of 8,500 (30,000 transactions at 17 minutes each) under control
number 0694-0088.
3. This rule does not contain policies with Federalism implications
as that term is defined under E.O. 13132.
4. The Regulatory Flexibility Act (RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C.
601 et seq., generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to the notice and comment
rulemaking requirements under the Administrative Procedure Act (5
U.S.C. 553) or any other statute, unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities. Under section 605(b) of the RFA, however, if
the head of an agency certifies that a rule will not have a significant
impact on a substantial number of small entities, the statute does not
require the agency to prepare a regulatory flexibility analysis.
Pursuant to section 605(b), the Chief Counsel for Regulations,
Department of Commerce, certified to the Chief Counsel for Advocacy,
Small Business Administration that this proposed rule, if promulgated,
will not have a significant impact on a substantial number of small
entities for the reasons explained below. Consequently, BIS has not
prepared a regulatory flexibility analysis. A summary of the factual
basis for the certification is provided below.
Number of Small Entities
The Bureau of Industry and Security (BIS) does not collect data on
the size of entities that apply for and are issued export licenses.
Although BIS is unable to estimate the exact number of small entities
that would be affected by this rule, it acknowledges that this rule
would affect some unknown number.
Economic Impact
This proposed rule is part of the Administration's Export Control
Reform Initiative. Under that initiative, the USML would be revised to
be a
[[Page 37531]]
``positive'' list, i.e., a list that does not use generic, catch-all
controls on any part, component, accessory, attachment, or end item
that was in any way specifically modified for a defense article,
regardless of the article's military or intelligence significance or
non-military applications. At the same time, articles that are
determined to no longer warrant control on the USML would become
controlled on the CCL. Such items, along with certain military items
that currently are on the CCL, will be identified in specific Export
Control Classification Numbers (ECCNs) known as the ``600 series''
ECCNs. In addition, some items currently on the Commerce Control List
would move from existing ECCNs to the new 600 series ECCNs.
In particular, this rule proposes certain measures to ease the
transition for those items moving from State to Commerce jurisdiction.
The changes include establishing a General Order regarding continued
use of State authorizations for a specified period, broadening license
exceptions consistent with ITAR exemptions, and extending the two-year
validity period of Commerce licenses to match State's four-year period.
In the course of broadening certain license exceptions, this rule
streamlines and updates existing text to reduce undue complexity. This
rule also addresses specific concerns raised in public comments on
recent rules by proposing a revised de minimis rule for ``600 series''
items. Moreover, this rule proposes additional conforming changes that
are necessary to implement the Export Control Reform Initiative, but
also would affect items currently subject to the EAR, such as changes
to reporting thresholds for the Automated Export System. Finally, in
response to the President's directive in Executive Order 13563, which
directed agencies to conduct retrospective reviews of existing
regulations, this rule proposes revisions to license exceptions for
government uses and temporary exports that streamline and update unduly
complex or outmoded provisions in addition to broadening certain
provisions to implement Export Control Reform.
In practice, the greatest impact of this rule on small entities
would likely be reduced administrative costs and reduced delay for
exports of items that are now on the USML but would become subject to
the EAR. By streamlining provisions of the EAR, BIS would make it
easier to understand and comply with certain license exceptions, which
in turn would allow exporters to avail themselves of these exceptions
and reduce their licensing and compliance burdens. This rule also
proposes broadening license exceptions and extending license validity
periods to correspond to those available under the ITAR to avoid
imposing burdens on exporters as a result of their items' changing
jurisdictional status. These proposed changes may also reduce the
burden small companies (and all other entities) who export non-``600
series'' items on the CCL.
In addition, parts and components controlled under the ITAR remain
under ITAR control when incorporated into foreign-made items,
regardless of the significance or insignificance of the item,
discouraging foreign buyers from incorporating such U.S. content. The
availability of a de minimis rule under the EAR may reduce the
incentive for foreign manufacturers to design out or avoid purchasing
U.S.-origin parts and components. In response to comments on the July
15 rule, this rule proposes a simpler method of calculating de minimis
value for ``600 series'' content. A simpler method of calculating de
minimis reduces the likelihood of foreign manufacturers' designing out
U.S.-origin parts and components, thus increasing the ability of U.S.
firms to compete in the global marketplace and to strengthen the U.S.
defense industrial base.
In spite of the benefits detailed above, the need for exporters to
change established licensing and compliance procedures as their items
change jurisdiction will likely incur short-term costs (e.g., for
database changes). This rule proposes an implementation plan to
mitigate these short-term costs by allowing affected entities to
continue operating under their existing authorizations and procedures
over a two-year transition period should they choose to do so, while
allowing the option to transition as of the effective date of the final
rule.
Conclusion
BIS is unable to determine the precise number of small entities
that would be affected by this rule. Based on the facts and conclusions
set forth above, BIS believes that any burdens imposed by this rule
would be offset by a reduction in the number of items that would
require a license, increased opportunities for use of license
exceptions for exports to certain countries, simpler export license
applications, reduced or eliminated registration fees and application
of a de minimis threshold for foreign-made items incorporating U.S.-
origin parts and components, which would reduce the incentive for
foreign buyers to design out or avoid U.S.-origin content. For these
reasons, the Chief Counsel for Regulations of the Department of
Commerce certified to the Chief Counsel for Advocacy of the Small
Business Administration that this rule, if adopted in final form, would
not have a significant economic impact on a substantial number of small
entities. Accordingly, no IRFA is required and none has been prepared.
List of Subjects
15 CFR Part 734
Administrative practice and procedure, Exports, Inventions and
patents, Research, Science and technology.
15 CFR Part 736
Exports.
15 CFR Parts 740, 750 and 758
Administrative practice and procedure, Exports, Reporting and
recordkeeping requirements.
15 CFR Part 742
Exports, Terrorism.
15 CFR Part 743
Administrative practice and procedure, Reporting and recordkeeping
requirements.
15 CFR Part 744
Exports, Reporting and recordkeeping requirements, Terrorism.
15 CFR Part 762
Administrative practice and procedure, Business and industry,
Confidential business information, Exports, Reporting and recordkeeping
requirements.
15 CFR Part 764
Administrative practice and procedure, Exports, Law enforcement,
Penalties.
15 CFR Part 774
Exports, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, the Export Administration
Regulations (15 CFR parts 730 through 774) are proposed to be amended
as follows:
PART 734--[AMENDED]
1. The authority citations paragraph for part 734 continues to read
as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 61
FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026, 61 FR 58767, 3 CFR,
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001
[[Page 37532]]
Comp., p. 783; Notice of August 12, 2011, 76 FR 50661 (August 16,
2011); Notice of November 9, 2011, 76 FR 70319 (November 10, 2011).
2. Section 734.3 is amended by adding a new paragraph (b)(1)(vi) to
read as follows:
Sec. 734.3 Items subject to the EAR.
* * * * *
(b) * * *
(vi) Bureau of Alcohol, Tobacco, Firearms and Explosives. Unless
otherwise noted, all references to the United States Munitions List
(``USML'') are to the list of defense articles that are controlled for
purposes of export and temporary import pursuant to the International
Traffic in Arms Regulations (``ITAR''), 22 CFR Parts 120 et seq., and
not to the list of defense articles on the USML that are controlled by
the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for
purpose of permanent import under its regulations at 27 CFR Part 447.
Pursuant to section 38(a)(1) of the Arms Export Control Act (AECA), 22
U.S.C. Sec. 2779, all defense articles controlled for export or import
are part of the ``USML'' under the AECA. For the sake of clarity, the
list of defense articles controlled by ATF for purposes of permanent
import are on the United States Munitions Import List (USMIL). The
transfer of defense articles from the ITAR's USML to the EAR's CCL for
purposes of export controls does not affect the list of defense
articles controlled on the USMIL under the AECA for purposes of
permanent import controls.
* * * * *
3. Section 734.4 is amended by redesignating paragraph (a)(6) as
paragraph (a)(7), and by adding a new paragraph (a)(6) to read as
follows:
Sec. 734.4 De minimis U.S. content.
(a) Items for which there is no de minimis level.
* * * * *
(6) There is no de minimis level for foreign-made items that
incorporate U.S.-origin ``600 series'' items when destined for a
country subject to a U. S. arms embargo (see Sec. 740.2(a)(12) of the
EAR).
* * * * *
PART 736--[AMENDED]
4. The authority citations paragraph for part 736 continues to read
as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
22 U.S.C. 2151 note; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026,
61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3
CFR, 2001 Comp., p. 783; E.O. 13338, 69 FR 26751, 3 CFR, 2004 Comp.,
p. 168; Notice of August 12, 2011, 76 FR 50661 (August 16, 2011);
Notice of November 9, 2011, 76 FR 70319 (November 10, 2011).
5. Section 736.2 is amended by revising paragraph (b)(3) to read as
follows:
Sec. 736.2 General prohibitions and determination of applicability.
* * * * *
(3) General Prohibition Three--Reexport and Export From Abroad of the
Foreign-Produced Direct Product of U.S. Technology and Software
(Foreign-Produced Direct Product Reexports)
* * * * *
(iv) Additional country scope of prohibition for ``600 series''
items. You may not, except as provided in paragraphs (b)(3)(vi) or
(vii) of this section, reexport any ``600 series'' item subject to the
scope of this General Prohibition 3 to a destination in Country Groups
D:1, D:3, D:4, or E:1 (See Supplement No.1 to part 740 of the EAR) or
to a U. S. arms embargoed country (see Sec. 740.2(a)(12) of the EAR).
(v) Product scope of foreign-made items in the ``600 series''
subject to prohibition. This General Prohibition 3 applies if a ``600
series'' item meets either the conditions defining the direct product
of technology or the conditions defining the direct product of a plant
in paragraph (b)(3)(v)(A) or (B) of this section:
(A) Conditions defining direct product of technology for ``600
series'' items. Foreign-made ``600 series'' items are subject to this
General Prohibition 3 if the foreign-made items meet both of the
following conditions:
(1) They are the direct product of technology or software that is
in the ``600 series'' as designated on the applicable ECCN of the
Commerce Control List at part 774 of the EAR, and
(2) They are in the ``600 series'' as designated on the applicable
ECCN of the Commerce Control List at part 774 of the EAR.
(B) Conditions defining direct product of a plant for ``600
series'' items. Foreign-made ``600 series'' items are also subject to
this General Prohibition 3 if they are the direct product of a complete
plant or any major component of a plant if both of the following
conditions are met:
(1) Such plant or component is the direct product of technology
that is in the ``600 series'' as designated on the applicable ECCN of
the Commerce Control List at part 774 of the EAR, and
(2) Such foreign-made direct products of the plant or component are
in the ``600 series'' as designated on the applicable ECCN of the
Commerce Control List at part 774 of the EAR.
(vi) License Exceptions. Each license exception described in part
740 of the EAR supersedes this General Prohibition 3 if all terms and
conditions of a given exception are met and the restrictions in Sec.
740.2 do not apply.
(vii) ``600 series'' foreign-produced direct products of U.S.
technology subject to this General Prohibition 3 do not require a
license for reexport to the new destination unless the same item, if
exported from the U.S. to the new destination, would have been
prohibited or made subject to a license requirement by part 742, 744,
746, or 764 of the EAR.
6. Supplement No. 1 to part 736 is amended by adding General Order
No. 5, to read as follows:
Supplement No. 1 to Part 736 General Orders
* * * * *
General Order No. 5
General Order No. 5 of [INSERT DATE OF PUBLICATION OF FINAL
RULE]; Authorization for Items the President Determines No Longer
Warrant Control Under the United States Munitions List (USML)
(a) Continued use of DDTC authorizations for items that become
subject to the EAR. Items the President has determined no longer
warrant control under the USML will become subject to the EAR as
rules that effect this transition are published and effective.
Authorizations issued by the Directorate of Defense Trade Controls
(DDTC) of the Department of State for transactions involving these
items may continue in effect as specified by DDTC in [INSERT CITE TO
STATE'S FINAL EXPORT CONTROL REFORM TRANSITION PLAN]. To use BIS
authorizations for these items, exporters, reexporters, and
transferors of such items may return DDTC licenses in accordance
with Sec. 123.22 of the ITAR or terminate Technical Assistance
Agreements, Manufacturing License Agreements, or Distribution and
Warehousing Agreements in accordance with Sec. 124.6 of the ITAR
and thereafter export, reexport, or transfer (in-country) such items
under applicable provisions of the EAR. No transfer (in-country) may
be made of an item exported under a DDTC authorization containing
provisos or other limitations without a license issued by BIS unless
(i) the transfer (in-country) is authorized by an EAR License
Exception and the terms and conditions of the License Exception have
been satisfied or (ii), no license would otherwise be required under
the EAR to export or reexport the item to the new end user.
(b) Voluntary Self-Disclosure. Parties to transactions involving
transitioning items are cautioned to monitor closely their
compliance with the EAR and the ITAR. Should a possible or actual
violation of the EAR or ITAR, or of any license or authorization
issued thereunder, be
[[Page 37533]]
discovered, the person or persons involved are strongly encouraged
to submit a Voluntary Self-Disclosure to the Office of Export
Enforcement, in accordance with Sec. 764.5 of the EAR, or to DDTC,
in accordance with Sec. 127.12 of the ITAR, as appropriate.
Permission from the Office of Exporter Services, in accordance with
Sec. 764.5(f) of the EAR, to engage in further activities in
connection with that item may also be necessary.
(c) Method of disclosure. For violations involving items the
President has determined no longer warrant control under the USML
that occur or are discovered in the period during which DDTC allows
continued use of State authorization for these items, disclosures
and requests for permission to engage in further activities should
be submitted to DDTC or BIS as appropriate.
PART 740--[AMENDED]
7. The authority citations paragraph for part 740 continues to read
as follows:
Authority: 50 U.S.C. app. 2401 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 12, 2011, 76 FR 50661 (August 16, 2011).
8. Section 740.2 is amended by adding new paragraphs (a)(12),
(a)(15) and (a)(16) to read as follows:
Sec. 740.2 Restrictions on all license exceptions.
(a) * * *
(12) Items classified under the ``600 series'' that are destined
to, or were shipped from or manufactured in a country subject to a
United States arms embargo (Afghanistan, Belarus, Burma, China, Cote
d'Ivoire, Cuba, Cyprus, Democratic Republic of Congo, Eritrea, Fiji,
Haiti, Iraq, Iran, Lebanon, Liberia, Libya, North Korea, Somalia, Sri
Lanka, Sudan, Syria, Venezuela, Vietnam, Yemen, and Zimbabwe) may not
be authorized under any license exception except by License Exception
TMP under Sec. 740.9(a)(12) or License Exception BAG under Sec.
740.14(h)(2) for exports to Afghanistan and Iraq, and License Exception
GOV under Sec. 740.11(b)(2)(ii).
Note to paragraph (a)(12):
Countries subject to U.S. arms embargoes are identified by the
State Department through notices published in the Federal Register.
The list of arms embargoed destinations in this paragraph is drawn
from 22 CFR Sec. 126.1 and State Department Federal Register
notices related to arms embargoes (compiled at http://www.pmddtc.state.gov/embargoed_countries/index.html) and will be
amended when the State Department publishes subsequent notices. If
there are any discrepancies between the list of countries in this
paragraph and the countries identified by the State Department as
subject to a U.S. arms embargo (in the Federal Register), the State
Department's list of countries subject to U.S. arms embargoes shall
be controlling.
* * * * *
(15) Items classified under the ``600 series'' are not eligible for
any license exception, except to U.S. government end users under
License Exception GOV (Sec. 740.11(b)), when they are destined to a
country outside the countries listed in Sec. 740.20(c)(1) (License
Exception STA) and are:
(i) Major defense equipment sold under a contract in the amount of
$14,000,000 or more;
(ii) Other ``600 series'' items sold under a contract in the amount
of $50,000,000 or more; or
(iii) Firearms controlled under ECCN 0A601 under a contract in the
amount of $1,000,000 or more.
(16) Items classified under the ``600 series'' are not eligible for
any license exception, except to U.S. government end users under
License Exception GOV (Sec. 740.11(b)), when they are destined to a
country listed in Sec. 740.20(c)(1) (License Exception STA) and are:
(i) Major defense equipment sold under a contract in the amount of
$25,000,000;
(ii) Other ``600 series'' items sold under a contract in the amount
of $100,000,000 or more; or
(iii) Firearms controlled under ECCN 0A601 under a contract in the
amount of $1,000,000 or more.
9. Section 740.9 is amended by revising paragraphs (a) and (b) to
read as follows:
Sec. 740.9 Temporary imports, exports, and reexports (TMP).
(a) Temporary exports, reexports, and transfers (in-country).
License Exception TMP authorizes exports, reexports, and transfers (in-
country) of items for temporary use abroad (including use in or above
international waters) subject to the conditions specified in this
paragraph (a). No item may be exported or reexported under this
paragraph (a) if an order to acquire the item has been received before
shipment; with prior knowledge that the item will stay abroad beyond
the terms of this License Exception; or when the item is for subsequent
lease or rental abroad.
(1) Tools of trade. Exports, reexports, or transfers (in-country)
of commodities and software as tools of trade for use by the exporter
or employees of the exporter may be made only to destinations other
than Country Group E:2, Sudan or Syria; for Sudan, see paragraph (a)(2)
of this section. The tools of trade must remain under the ``effective
control'' of the exporter or the exporter's employee. Eligible items
are usual and reasonable kinds and quantities of tools of trade for use
in a lawful enterprise or undertaking of the exporter. Tools of trade
include, but are not limited to, equipment and software as is necessary
to commission or service items, provided that the equipment or software
is appropriate for this purpose and that all items to be commissioned
or serviced are of foreign origin, or if subject to the EAR, have been
lawfully exported or reexported. Tools of trade may accompany the
individual departing from the United States or may be shipped
unaccompanied within one month before the individual's departure from
the United States, or at any time after departure. Software used as a
tool of trade must be protected against unauthorized access. Examples
of security precautions to help prevent unauthorized access include the
following:
(A) Use of secure connections, such as Virtual Private Network
connections, when accessing IT networks for activities that involve the
transmission and use of the software authorized under this license
exception;
(B) Use of password systems on electronic devices that store the
software authorized under this license exception; and
(C) Use of personal firewalls on electronic devices that store the
software authorized under this license exception.
(2) Sudan: Tools of Trade. (i) Permissible users. A non-
governmental organization or an individual staff member, employee or
contractor of such organization traveling to Sudan at the direction or
with the knowledge of such organization may export, reexport, or
transfer (in-country) under this paragraph (a)(2).
(ii) Authorized purposes. Any tools of trade exported, reexported,
or transferred (in-country) under this paragraph must be used to
support activities to implement the Doha Document for Peace in Darfur;
to provide humanitarian or development assistance in Sudan, to support
activities to relieve human suffering in Sudan, or to support the
actions in Sudan for humanitarian or development purposes; by an
organization authorized by the Department of the Treasury, Office of
Foreign Assets Control (OFAC) pursuant to 31 CFR 538.521 in support of
its OFAC-authorized activities; or to support the activities to relieve
human suffering in Sudan in areas that are exempt from the Sudanese
Sanctions Regulations by virtue of the Darfur Peace and Accountability
Act and Executive Order 13412.
(iii) Method of export and maintenance of control. The tools of
[[Page 37534]]
trade must accompany (either hand carried or as checked baggage) a
traveler who is a permissible user of this provision or be shipped or
transmitted to such user by a method reasonably calculated to assure
delivery to the permissible user of this provision. The permissible
user of this provision must maintain ``effective control'' of the tools
of trade while in Sudan.
(iv) Eligible items. The only tools of trade that may be exported
to Sudan under this paragraph (a)(2) are:
(A) Commodities controlled under ECCNs 4A994.b (not exceeding an
adjusted peak performance of 0.008 weighted teraFLOPS), 4A994.d,
4A994.e (other than industrial controllers for chemical processing),
4A994.g and 4A994.h and ``software'' controlled under ECCNs 4D994 or
5D992 to be used on such commodities. Software must be loaded onto such
commodities prior to export or reexport or be exported or reexported
solely for servicing or in-kind replacement of legally exported or
reexported software. All such software must remain loaded on such
commodities while in Sudan;
(B) Telecommunications equipment controlled under ECCN 5A991 and
``software'' controlled under ECCN 5D992 to be used in the operation of
such equipment. Software must be loaded onto such equipment prior to
export or be exported or reexported solely for servicing or in-kind
replacement of legally exported or reexported software. All such
software must remain loaded on such equipment while in Sudan;
(C) Global positioning systems (GPS) or similar satellite receivers
controlled under ECCN 7A994; and
(D) Parts and components that are controlled under ECCN 5A992, that
are installed with, or contained in, commodities in paragraphs
(a)(2)(iv)(A) and (B) of this section and that remain installed with or
contained in such commodities while in Sudan.
(3) Tools of trade: temporary exports and reexports of technology
by U.S. persons. (i) This paragraph authorizes usual and reasonable
kinds and quantities of technology for use in a lawful enterprise or
undertaking of a U.S. person to destinations other than Country Group
E:2, Sudan or Syria. Only U.S. persons or their employees traveling or
on temporary assignment abroad may export, reexport, transfer (in-
country) or receive technology under the provisions of this paragraph
(a)(3).
(A) Because this paragraph (a)(3) does not authorize any new
release of technology, employees traveling or on temporary assignment
abroad who are not U.S. persons may only receive under TMP such
technology abroad that they are already eligible to receive through a
current license, a license exception other than TMP, or because no
license is required;
(B) A U.S. employer of individuals who are not U.S. persons must
demonstrate and document for recordkeeping purposes the reason that the
technology is needed by such employees in their temporary business
activities abroad on behalf of the U.S. person employer, prior to using
this paragraph (a)(3). This documentation must be created and
maintained in accordance with the recordkeeping requirements of part
762 of the EAR; and
(C) The U.S. person must retain supervision over the technology
that has been authorized for export or reexport under these or other
provisions.
(ii) The exporting, reexporting, or transferring party and the
recipient of the technology must take security precautions to protect
against unauthorized release of the technology while the technology is
being shipped or transmitted and used overseas. Examples of security
precautions to help prevent unauthorized access include the following:
(A) Use of secure connections, such as Virtual Private Network
connections, when accessing IT networks for email and other business
activities that involve the transmission and use of the technology
authorized under this license exception;
(B) Use of password systems on electronic devices that will store
the technology authorized under this license exception; and
(C) Use of personal firewalls on electronic devices that will store
the technology authorized under this license exception.
(iii) Technology authorized under these provisions may not be used
for foreign production purposes or for technical assistance unless
authorized by BIS.
(iv) Encryption technology controlled by ECCN 5E002 is ineligible
for this license exception.
(4) Kits consisting of replacement parts. Kits consisting of
replacement parts may be exported, reexported, or transferred (in-
country) to all destinations except Country Group E:2 (see Supplement
No. 1 to part 740), provided that:
(i) The parts would qualify for shipment under paragraph
(a)(4)(iii) of this section if exported as one-for-one replacements;
(ii) The kits remain under effective control of the exporter or an
employee of the exporter; and
(iii) All parts in the kit are returned, except that one-for-one
replacements may be made in accordance with the requirements of License
Exception RPL and the defective parts returned (see ``parts'', Sec.
740.10(a) of this part).
(5) Exhibition and demonstration. This paragraph (a)(5) authorizes
exports, reexports, and transfers (in-country) of commodities and
software for exhibition or demonstration in all destinations except
Country Group E:1 (see Supplement No. 1 to this part) provided that the
exporter maintains ownership of the commodities and software while they
are abroad and provided that the exporter, an employee of the exporter,
or the exporter's designated sales representative retains ``effective
control'' over the commodities and software while they are abroad. The
commodities and software may not be used when abroad for more than the
minimum extent required for effective demonstration. The commodities
and software may not be exhibited or demonstrated at any one site more
than 120 days after installation and debugging, unless authorized by
BIS. However, before or after an exhibition or demonstration, pending
movement to another site, return to the United States or the foreign
reexporter, or BIS approval for other disposition, the commodities and
software may be placed in a bonded warehouse or a storage facility
provided that the exporter retains ``effective control'' over their
disposition. The export documentation for this type of transaction must
show the exporter as ultimate consignee, in care of the person who will
have control over the commodities and software abroad.
(6) Inspection and calibration. Commodities to be inspected,
tested, calibrated, or repaired abroad may be exported and reexported
under this paragraph (a)(6) to all destinations except Country Group
E:1.
(7) Containers. Containers for which another license exception is
not available and that are necessary for shipment of commodities may be
exported, reexported, and transferred (in-country) under this paragraph
(a)(7). However, this paragraph does not authorize the export of the
container's contents, which, if not exempt from licensing, must be
separately authorized for export under either a license exception or a
license.
(8) Assembly in Mexico. Commodities may be exported to Mexico under
Customs entries that require return to the United States after
processing, assembly, or incorporation into end products by companies,
factories, or facilities participating in Mexico's in-
[[Page 37535]]
bond industrialization program (Maquiladora) under this paragraph
(a)(8), provided that all resulting end-products (or the commodities
themselves) are returned to the United States.
(9) News media. (i) Commodities necessary for news-gathering
purposes (and software necessary to use such commodities) may be
temporarily exported or reexported for accredited news media personnel
(i.e., persons with credentials from a news gathering or reporting
firm) to Cuba, North Korea, Sudan, or Syria (see Supplement No. 1 to
part 740) if the commodities:
(A) Are retained under ``effective control'' of the exporting news
gathering firm in the country of destination;
(B) Remain in the physical possession of the news media personnel
in the country of destination. The term physical possession for
purposes of this paragraph (a)(9) means maintaining effective measures
to prevent unauthorized access (e.g., securing equipment in locked
facilities or hiring security guards to protect the equipment); and
(C) Are removed with the news media personnel at the end of the
trip.
(ii) When exporting under this paragraph (a)(9) from the United
States, the exporter must email a copy of the packing list or similar
identification of the exported commodities, to
bis.compliance@bis.doc.gov specifying the destination and estimated
dates of departure and return. The Office of Export Enforcement (OEE)
may spot check returns to assure that the provisions of this paragraph
(a)(9) are being used properly.
(iii) Commodities or software necessary for news-gathering purposes
that accompany news media personnel to all other destinations shall be
exported or reexported under paragraph (a)(1), tools of trade, of this
section if owned by the news gathering firm, or if they are personal
property of the individual news media personnel. Note that paragraphs
(a)(1), tools of trade and (a)(9), news media, of this section do not
preclude independent accredited contract personnel, who are under
control of news gathering firms while on assignment, from using these
provisions, provided that the news gathering firm designates an
employee of the contract firm to be responsible for the equipment.
(10) Temporary exports to a U.S. person's foreign subsidiary,
affiliate, or facility abroad. Components, parts, tools, accessories,
or test equipment exported by a U.S. person to a subsidiary, affiliate,
or facility owned or controlled by the U.S. person, if the components,
parts, tools, accessories, or test equipment are to be used to
manufacture, assemble, test, produce, or modify items, provided that
such components, parts, tools, accessories or test equipment are not
transferred (in-country) or reexported from such subsidiary, affiliate,
or facility, alone or incorporated into another item, without prior
authorization by BIS.
(11) U.S. persons. For purposes of this section 740.9, a U.S.
person is defined as follows: an individual who is a citizen of the
United States, an individual who is a lawful permanent resident as
defined by 8 U.S.C. 1101(a)(2) or an individual who is a protected
individual as defined by 8 U.S.C. 1324b(a)(3). U.S. person also means
any juridical person organized under the laws of the United States, or
any jurisdiction within the United States (e.g., corporation, business
association, partnership, society, trust, or any other entity,
organization or group that is incorporated to do business in the United
States).
(12) Body armor. (i) Exports to countries not identified in Sec.
740.2(a)(12). U.S. persons may temporarily export one set of body armor
classified under ECCN 1A613.d to countries not identified in Sec.
740.2(a)(12), provided that:
(A) A declaration by the U.S. person and an inspection by a customs
officer are made;
(B) The body armor is with the U.S. person's baggage or effects,
whether accompanied or unaccompanied (but not mailed); and
(C) The body armor is for that person's exclusive use and not for
reexport or other transfer of ownership.
(ii) Exports to Afghanistan or Iraq. U.S. persons may temporarily
export one set of body armor classified under ECCN 1A613.d to
Afghanistan or Iraq, provided that:
(A) A declaration by the U.S. person and an inspection by a customs
officer are made;
(B) The body armor is with the U.S. person's baggage or effects,
whether accompanied or unaccompanied (but not mailed);
(C) The body armor is for that person's exclusive use and not for
reexport or other transfer of ownership; and
(D) For temporary exports to Iraq, the U.S. person utilizing the
license exception is either a person affiliated with the U.S.
Government traveling on official business or is a person not affiliated
with the U.S. Government but traveling to Iraq under a direct
authorization by the Government of Iraq and engaging in humanitarian
activities for, on behalf of, or at the request of the Government of
Iraq.
(iii) Body armor controlled under ECCN 1A005 is eligible for this
license exception under paragraph (a)(1) of this section.
(13) Destinations. Destination restrictions apply to temporary
exports to and for use on any vessel, aircraft or territory under
ownership, control, lease, or charter by any country specified in any
authorizing paragraph of this section, or any national thereof.
(14) Return or disposal of items. All items exported, reexported,
or transferred (in-country) under these provisions must, if not
consumed or destroyed in the normal course of authorized temporary use
abroad, be returned as soon as practicable but no later than one year
after the date of export, reexport, or transfer to the United States or
other country from which the items were so transferred. Items not
returned shall be disposed of or retained in one of the following ways:
(i) Permanent export or reexport. An exporter or reexporter who
wants to sell or otherwise dispose of the items abroad, except as
permitted by this or other applicable provision of the EAR, must apply
for a license in accordance with Sec. Sec. 748.1, 748.4 and 748.6 of
the EAR. (Part 748 of the EAR contains for more information about
license applications.) The application must be supported by any
documents that would be required in support of an application for
export license for shipment of the same items directly from the United
States to the proposed destination.
(ii) Use of a license. An outstanding license may also be used to
dispose of items covered by the provisions of this paragraph (a),
provided that the outstanding license authorizes direct shipment of the
same items to the same new ultimate consignee in the new country of
destination.
(iii) Authorization to retain item abroad beyond one year. An
exporter who wants to retain an item abroad beyond one year must apply
for a license in accordance with Sec. Sec. 748.1, 748.4 and 748.6 of
the EAR to BIS 90 days prior to the expiration of the one-year period.
The application must include the name and address of the exporter, the
date the items were exported, a brief product description, and the
justification for the extension. If BIS approves the extension, the
exporter will receive authorization for a one-time extension not to
exceed six months. BIS normally will not allow an extension for items
that have been abroad more than one year, nor will a second six-month
extension be authorized. Any request for retaining the items abroad for
a period
[[Page 37536]]
exceeding 18 months must be made in accordance with the requirements of
paragraph (a)(14)(i) of this section.
(b) Exports of items temporarily in the United States.
Note 1 to paragraph (b):
A commodity withdrawn from a bonded warehouse in the United
States under a `withdrawal for export' customs entry is considered
as `moving in transit'. It is not considered as `moving in transit'
if it is withdrawn from a bonded warehouse under any other type of
customs entry or if its transit has been broken for a processing
operation, regardless of the type of customs entry.
Note 2 to paragraph (b):
Items shipped on board a vessel or aircraft and passing through
the United States from one foreign country to another may be
exported without a license provided that (a) while passing in
transit through the United States, they have not been unladen from
the vessel or aircraft on which they entered, and (b) they are not
originally manifested to the United States.
Note 3 to paragraph (b):
A shipment originating in Canada or Mexico that incidentally
transits the United States en route to a delivery point in the same
country does not require a license.
Note 4 to paragraph (b):
A shipment by air or vessel from one location in the United
States to another location in the United States via a foreign
country does not require a license.
Note 5 to paragraph (b):
All references to the United States Munitions List (``USML'') in
this rule are to the list of defense articles that are controlled
for purposes of export or temporary import pursuant to the
International Traffic in Arms Regulations (``ITAR''), 22 CFR Parts
120 et seq., and not to the list of defense articles on the USML
that are controlled by the Bureau of Alcohol, Tobacco, Firearms and
Explosives (ATF) for purpose of permanent import under its
regulations at 27 CFR Part 447. Pursuant to section 38(a)(1) of the
Arms Export Control Act (AECA), 22 U.S.C. Sec. 2779, all defense
articles controlled for export or import are part of the ``USML''
under the AECA. For the sake of clarity, the list of defense
articles controlled by ATF for purposes of permanent import are on
the United States Munitions Import List (USMIL). The transfer of
defense articles from the ITAR's USML to the EAR's CCL for purposes
of export controls does not affect the list of defense articles
controlled on the USMIL under the AECA for purposes of permanent
import controls.
(1) Items moving in transit through the United States. Subject to
the following conditions, the provisions of paragraph (b)(1) authorize
export of items moving in transit through the United States under a
Transportation and Exportation (T.&E.) customs entry or an Immediate
Exportation (I.E.) customs entry made at a U.S. Customs and Border
Protection Office.
(i) Items controlled for national security (NS) reasons, nuclear
proliferation (NP) reasons, or chemical and biological weapons (CB)
reasons may not be exported to Country Group D:1, 2, or 3 (see
Supplement No. 1 to part 740), respectively, under this paragraph
(b)(1).
(ii) Items may not be exported to Country Group E:1 under this
section.
(iii) The following may not be exported from the United States
under this paragraph (b)(1):
(A) Commodities shipped to the United States under an International
Import Certificate, Form BIS-645P;
(B) Chemicals controlled under ECCN 1C350; or
(C) Horses for export by sea (refer to short supply controls in
part 754 of the EAR).
(iv) The authorization to export in paragraph (b)(1) shall apply to
all shipments from Canada moving in transit through the United States
to any foreign destination, regardless of the nature of the commodities
or software or their origin, notwithstanding any other provision of
paragraph (b)(1).
(2) Items imported for marketing, or for display at U.S.
exhibitions or trade fairs. Subject to the following conditions, the
provisions of this paragraph (b)(2) authorize the export of items that
were imported into the United States for marketing, or for display at
an exhibition or trade fair and were either entered under bond or
permitted temporary free import under bond providing for their export
and are being exported in accordance with the terms of that bond.
(i) Items may be exported to the country from which imported into
the United States. However, items originally imported from Cuba may not
be exported unless the U.S. Government had licensed the import from
that country.
(ii) Items may be exported to any destination other than the
country from which imported except:
(A) Items imported into the United States under an International
Import Certificate;
(B) Exports to Country Group E:1 (see Supplement No. 1 to part
740); or
(C) Exports to Country Group D:1, 2, or 3 (see Supplement No. 1 to
part 740) of items controlled for national security (NS) reasons,
nuclear nonproliferation (NP) reasons, or chemical and biological
weapons (CB) reasons, respectively.
(3) Return of foreign-origin items. A foreign-origin item may be
returned under this license exception to the country from which it was
imported if its characteristics and capabilities have not been enhanced
while in the United States, except that no foreign-origin items may be
returned to Cuba.
(4) Return of shipments refused entry. Shipments of items refused
entry by the U.S. Customs and Border Protection, the Food and Drug
Administration, or other U.S. Government agency may be returned to the
country of origin, except to:
(i) A destination in Cuba; or
(ii) A destination from which the shipment has been refused entry
because of the Foreign Assets Control Regulations of the Treasury
Department, unless such return is licensed or otherwise authorized by
the Treasury Department, Office of Foreign Assets Control (31 CFR parts
500-599).
10. Section 740.10 is amended:
a. By removing and reserving paragraph (b)(2)(iii);
b. By removing and reserving paragraph (b)(3)(ii); and
c. By revising paragraph (a)(3)(ii), to read as follows:
Sec. 740.10 License Exception Servicing and replacement of parts and
equipment (RPL).
(a) * * *
(3) * * *
(ii) No ``parts,'' ``components,'' ``accessories,'' or
``attachments'' may be exported to be held abroad as spares for future
use, unless the value of the ``parts,'' ``components,''
``accessories,'' or ``attachments'' is less than $500 per shipment and
no more than 24 shipments per year are made to each approved end user.
Replacements may be exported to replace spares that were authorized to
accompany the export of equipment or other end items, as those spares
are used in the repair of the equipment or other end item. This allows
maintenance of the stock of spares at a consistent level as the parts,
components, accessories, or attachments are used.
* * * * *
11. Section 740.11 is revised to read as follows:
Sec. 740.11 Governments, International Organizations, International
Inspections under the Chemical Weapons Convention, and the
International Space Station (GOV).
This License Exception authorizes exports and reexports for
international nuclear safeguards; U.S. government agencies or
personnel; agencies of cooperating governments; international
inspections under the Chemical Weapons Convention; and the
International Space Station.
(a) International Safeguards. (1) Scope. The International Atomic
Energy Agency (IAEA) is an international organization that establishes
and administers safeguards, including Additional Protocols, designed to
ensure that special nuclear materials
[[Page 37537]]
and other related nuclear facilities, equipment, and material are not
diverted from peaceful purposes to non-peaceful purposes.
Euratom is an international organization of European countries with
headquarters in Luxembourg. Euratom establishes and administers
safeguards designed to ensure that special nuclear materials and other
related nuclear facilities, equipment, and material are not diverted
from peaceful purposes to non-peaceful purposes. This paragraph (a)
authorizes exports and reexports of commodities or software to the IAEA
and Euratom, and reexports by IAEA and Euratom for official
international safeguard use, as follows:
(i) Commodities or software consigned to the IAEA at its
headquarters in Vienna, Austria or its field offices in Toronto,
Ontario, Canada or in Tokyo, Japan for official international
safeguards use.
(ii) Commodities or software consigned to the Euratom Safeguards
Directorate in Luxembourg, Luxembourg for official international
safeguards use.
(iii) Commodities or software consigned to IAEA or Euratom may be
reexported to any country for IAEA or Euratom international safeguards
use provided that IAEA or Euratom maintains control of or otherwise
safeguards the commodities or software and returns the commodities or
software to the locations described in paragraphs (a)(1)(i) and
(a)(1)(ii) of this section when they become obsolete, are no longer
required, or are replaced.
(iv) Commodity or software shipments may be made by persons under
direct contract with IAEA or Euratom, or by Department of Energy
National Laboratories as directed by the Department of State or the
Department of Energy.
(v) The monitoring functions of IAEA and Euratom are not subject to
the restrictions on prohibited safeguarded nuclear activities described
in Sec. 744.2(a)(3) of the EAR.
(vi) When commodities or software originally consigned to IAEA or
Euratom are no longer in IAEA or Euratom official safeguards use, such
commodities may be disposed of by destruction or by reexport or
transfer in accordance with the EAR.
(2) Restrictions. (i) Items on the Sensitive List (see Supplement
No. 6 to part 774) may not be exported or reexported under this
paragraph (a), except to the countries listed in Sec. 740.20(c)(1)
(License Exception STA).
(ii) Items on the Very Sensitive List (see Supplement No. 7 to part
774) may not be exported or reexported under this paragraph (a).
(iii) Encryption items controlled for EI reasons under ECCNs 5A002,
5D002, or 5E002 may not be exported or reexported under this paragraph
(a).
(iv) Without prior authorization from the Bureau of Industry and
Security, nationals of countries in Country Group E:1 may not
physically or computationally access computers that have been enhanced
by ``electronic assemblies,'' which have been exported or reexported
under License Exception GOV and have been used to enhance such
computers by aggregation of processors so that the APP of the
aggregation exceeds the APP parameter set forth in ECCN 4A003.b. of the
Commerce Control List in Supplement No. 1 to part 774 of the EAR.
(v) ``600 series'' items may not be exported or reexported under
this paragraph (a), except to the countries listed in Sec.
740.20(c)(1) (License Exception STA).
(iv) Technology or software prohibited by Supplement No. 4 to this
part may not be exported or reexported under this paragraph (a).
(b) United States Government. (1) Scope. The provisions of
paragraph (b) authorize exports and reexports to personnel and agencies
of the U.S. Government and certain exports by the Department of
Defense. ``Agency of the U.S. Government'' includes all civilian and
military departments, branches, missions, government-owned
corporations, and other agencies of the U.S. Government, but does not
include such national agencies as the American Red Cross or
international organizations in which the United States participates
such as the Organization of American States. Therefore, shipments may
not be made to these non-government national or international agencies,
except as provided in paragraph (b)(2)(i) of this section for U.S.
representatives to these organizations.
(2) Eligibility. (i) Items for personal use by personnel and
agencies of the U.S. Government. This provision is available for items
in quantities sufficient only for the personal use of members of the
U.S. Armed Forces or civilian personnel of the U.S. Government
(including U.S. representatives to public international organizations),
and their immediate families and household employees. Items for
personal use include household effects, food, beverages, and other
daily necessities.
(ii) Exports, reexports, and transfers made by or consigned to a
department or agency of the U.S. Government. This paragraph authorizes
exports, reexports, and transfers of items when made by or consigned to
a department or agency of the U.S. Government solely for its official
use or for carrying out any U.S. Government program with foreign
governments or international organizations that is authorized by law
and subject to control by the President by other means. This paragraph
does not authorize a department or agency of the U.S. Government to
make any export, reexport, or transfer that is otherwise prohibited by
other administrative provisions or by statute. Contractor Support
Personnel of a department or agency of the U.S. Government are eligible
for this authorization when in the performance of their duties pursuant
to the applicable contract or other official duties. ``Contractor
Support Personnel'' for the purpose of this provision means those
persons who provide administrative, managerial, scientific or technical
support under contract to a U.S. Government department or agency (e.g.,
contractor employees of Federally Funded Research Facilities or Systems
Engineering and Technical Assistance contractors). This authorization
is not available when a department or agency of the U.S. Government
acts as a transmittal agent on behalf of a non-U.S. Government person,
either as a convenience or in satisfaction of security requirements.
(iii) Exports, reexports and transfers made for or on behalf of a
department or agency of the U.S. Government.
(A) This paragraph authorizes exports, reexports and transfers of
items solely for use by a department or agency of the U.S. Government,
when:
(1) The items are destined to a U.S. person; and
(2) The item is exported, reexported, or transferred pursuant to a
contract between the exporter and a department or agency of the U.S.
Government;
(B) This paragraph authorizes exports, reexports, and transfers of
items to implement or support any U.S. Government cooperative program,
project, agreement, or arrangement with a foreign government or
international organization or agency that is authorized by law and
subject to control by the President by other means, when:
(1) The agreement is in force and in effect, or the arrangement is
in operation;
(2) The exporter, reexporter, or transferor obtains a written
authorization from the Secretary or agency head of the U.S. Government
department or agency responsible for the program, agreement, or
arrangement, or his or her designee, authorizing the exporter,
reexporter, or transferor to use this license exception. The written
authorization must include the scope of
[[Page 37538]]
items to be shipped under this license exception; the end users and
consignees of the items; and any restrictions on the export, reexport,
or transfer (including any restrictions on the foreign release of
technology);
(3) The exporter, reexporter, or transferor has a contract with a
department or agency of the U.S. Government for the provision of the
items in furtherance of the agreement, or arrangement; and
(4) The items being exported, reexported, or transferred are not
controlled for CW or CB reasons;
(C) This paragraph authorizes the temporary export, reexport, or
transfer of an item in support of any foreign assistance or sales
program authorized by law and subject to the control of the President
by other means, when:
(1) The item is provided pursuant to a contract between the
exporter and a department or agency of the U.S. Government; and
(2) The exporter, reexporter, or transferor obtains a written
authorization from the Secretary or agency head of the U.S. Government
department or agency responsible for the program, or his or her
designee, authorizing the exporter, reexporter, or transferor to use
this license exception. The written authorization must include the
scope of items to be shipped under this license exception; the end
users and consignees of the items; and any restrictions on the export,
reexport, or transfer (including any restrictions on the foreign
release of technology);
(D) This paragraph authorizes the export of commodities or software
at the direction of the U.S. Department of Defense for an end use in
support of an Acquisition and Cross Servicing Agreement (ACSA), when:
(1) The ACSA is between the U.S. Government and a foreign
government or an international organization and is in force and in
effect;
(2) The exporter, reexporter, or transferor has a contract with the
department or agency of the U.S. government in furtherance of the ACSA;
and
(3) The exporter, reexporter, or transferor obtains a written
authorization from the Secretary or agency head of the U.S. Government
department or agency responsible for the ACSA, or his or her designee,
authorizing the exporter, reexporter, or transferor to use this license
exception. The written authorization must include the scope of items to
be shipped under this license exception; the end-users and consignees
of the items; and any restrictions on the export, reexport, or
transfer;
(E) This paragraph authorizes the export, reexport, or transfer of
an item to implement or support a program directed by the Secretary of
Defense, with the concurrence of the Secretary of State, to build the
capacity of: A foreign government's national military forces in order
for that country to conduct counterterrorist operations or participate
in or support military and stability operations in which the U.S. Armed
Forces are a participant; or a foreign country's maritime security
forces to conduct counterterrorism operations, when:
(1) The program is in operation;
(2) The exporter, reexporter, or transferor has a contract with a
department or agency of the U.S. Government in furtherance of the
program; and
(3) The exporter, reexporter, or transferor obtains a written
authorization from the Secretary or agency head of the U.S. Government
department or agency authorized to implement the program, or his or her
designee, authorizing the exporter, reexporter, or transferor to use
this license exception. The written authorization must also include the
scope of items to be shipped under this license exception; the end
users and consignees of the items; and any restrictions on the export,
reexport, or transfer (including any restrictions on the foreign
release of technology);
(F) This paragraph authorizes the export, reexport, or transfer of
Government Furnished Equipment (GFE) made by a U.S. Government
contractor, when:
(1) The GFE will not be provided to any foreign person; and
(2) The export, reexport, or transfer is pursuant to a contract
with a department or agency of the U.S. Government.
(G) Electronic Export Information. (1) Electronic Export
Information (EEI) must be filed in the Automated Export System (AES)
for any export made pursuant to paragraph (b)(iii) of this section. The
EEI must identify License Exception GOV as the authority for the export
and indicate that the applicant has received the relevant documentation
from the contracting U.S. Government department, agency, or service.
The Internal Transaction Number must be properly annotated on shipping
documents (bill of lading, airway bill, other transportation documents,
or commercial invoice) and shipment documents must include the
following statement, ``Property of [insert U.S. Government department,
agency, or service]. Property may not enter the trade of the country to
which it is shipped. Authorized under License Exception GOV. U.S.
Government point of contact: [Insert name and telephone number].''
(H) The exporter, reexporter, or transferor must obtain an
authorization, if required, before any item previously exported,
reexported, or transferred under this paragraph is resold, transferred,
reexported, transshipped, or disposed of to an end user for any end
use, or to any destination other than as authorized by this paragraph
(e.g., property disposal of surplus defense articles outside of the
United States), unless:
(1) The transfer is pursuant to a grant, sale, lease, loan, or
cooperative project under the Arms Export Control Act or the Foreign
Assistance Act of 1961, as amended; or
(2) The item has been destroyed or rendered useless beyond the
possibility of restoration.
(iv) Items exported at the direction of the U.S. Department of
Defense. This paragraph authorizes technology to be released pursuant
to an official written request or directive from the U.S. Department of
Defense.
(v) This paragraph authorizes items sold, leased, or loaned by the
U.S. Department of Defense to a foreign country or international
organization pursuant to the Arms Export Control Act or the Foreign
Assistance Act of 1961 when the items are delivered to representatives
of such a country or organization in the United States and exported on
a military aircraft or naval vessel of that government or organization
or via the Defense Transportation Service.
(vi) This paragraph authorizes transfer of technology in
furtherance of a contract between the exporter and an agency of the
U.S. government, if the contract provides for such technology and the
technology is not ``development'' or ``production'' technology for
``600 series'' items.
Note to paragraph (b)(2) to this section:
Foreign Military Sales (FMS). The export of items subject to the
EAR that are sold, leased, or loaned by the Department of Defense to
a foreign country or international organization must be made in
accordance with the FMS Program carried out under the Arms Export
Control Act.
(c) Cooperating Governments. (1) Scope. The provisions of paragraph
(c) authorize exports and reexports of the items listed in paragraph
(c)(2) of this section to agencies of cooperating governments. ``Agency
of a cooperating government'' includes all civilian and military
departments, branches, missions, and other governmental agencies of a
cooperating national
[[Page 37539]]
government. Cooperating governments are the national governments of
countries listed in Country Group A:1 (see Supplement No. 1 to part
740) and the national governments of Argentina, Austria, Finland, Hong
Kong, Ireland, Korea (Republic of), New Zealand, Singapore, Sweden,
Switzerland and Taiwan.
(2) Eligibility. (i) Items for official use within national
territory by agencies of cooperating governments. This license
exception is available for all items consigned to and for the official
use of any agency of a cooperating government within the territory of
any cooperating government, except items excluded by paragraph (c)(3)
of this section.
(ii) Diplomatic and consular missions of a cooperating government.
This license exception is available for all items consigned to and for
the official use of a diplomatic or consular mission of a cooperating
government located in any country in Country Group B (see Supplement
No. 1 to part 740), except items excluded by paragraph (c)(3) of this
section.
(3) Exclusions. The following items may not be exported or
reexported under this paragraph (c):
(i) Items on the Sensitive List (see Supplement No. 6 to part 774),
except to the countries listed in Sec. 740.20(c)(1) (License Exception
STA);
(ii) Items on the Very Sensitive List (see Supplement No. 7 to part
774);
(iii) Encryption items controlled for EI reasons under ECCNs 5A002,
5D002, or 5E002;
(iv) Regional stability items controlled under Export Control
Classification Numbers (ECCNs) 6A002.a.1.c, 6E001 ``technology''
according to the General Technology Note for the ``development'' of
equipment in 6A002.a.1.c, and 6E002 ``technology'' according to the
General Technology Note for the ``production'' of equipment in
6A002.a.1.c.;
(v) ``600 series'' items, except to the countries listed in Sec.
740.20(c)(1) (License Exception STA);
(vi) Items controlled for nuclear nonproliferation (NP) reasons;
(vii) Technology or software prohibited by Supplement No. 4 to this
part;
(viii) Items listed as not eligible for STA in Sec.
740.20(b)(2)(ii).
(4) Reporting requirements. See Sec. 743.1 of the EAR for
reporting requirements for exports of certain items under this
paragraph (c)(2).
(d) International inspections under the Chemical Weapons Convention
(CWC or Convention).
(1) The Organization for the Prohibition of Chemical Weapons (OPCW)
is an international organization that establishes and administers an
inspection and verification regime under the Convention designed to
ensure that certain chemicals and related facilities are not diverted
from peaceful purposes to non-peaceful purposes. This paragraph (d)
authorizes exports and reexports to the OPCW and exports and reexports
by the OPCW for official international inspection and verification use
under the terms of the Convention as follows:
(i) Commodities and software consigned to the OPCW at its
headquarters in The Hague for official international OPCW use for the
monitoring and inspection functions set forth in the Convention, and
technology relating to the maintenance, repair, and operation of such
commodities and software. The OPCW must maintain effective control of
such commodities, software and technology.
(ii) Controlled technology relating to the training of the OPCW
inspectorate.
(iii) Controlled technology relating to a CWC inspection site,
including technology released as a result of:
(A) Visual inspection of U.S.-origin equipment or facilities by
foreign nationals of the inspection team;
(B) Oral communication of controlled technology to foreign
nationals of the inspection team in the U.S. or abroad; and
(C) The application to situations abroad of personal knowledge or
technical experience acquired in the U.S.
(2) Exclusions. The following items may not be exported or
reexported under the provisions of this paragraph (d):
(i) Inspection samples collected in the U.S. pursuant to the
Convention;
(ii) Commodities and software that are no longer in OPCW official
use. Such items must be transferred in accordance with the EAR.
(iii) ``600 series'' items, except to the countries listed in Sec.
740.20(c)(1) (License Exception STA).
(iv) Technology or software prohibited by Supplement No. 4 to this
part.
(3) Confidentiality. The application of the provisions of this
paragraph (d) is subject to the condition that the confidentiality of
business information is strictly protected in accordance with
applicable provisions of the EAR and other U.S. laws regarding the use
and transfer of U.S. goods and services.
(4) Restrictions. Without prior authorization from the Bureau of
Industry and Security, nationals of countries in Country Group E:1 may
not physically or computationally access computers that have been
enhanced by ``electronic assemblies,'' which have been exported or
reexported under License Exception GOV and have been used to enhance
such computers by aggregation of processors so that the APP of the
aggregation exceeds the APP parameter set forth in ECCN 4A003.b. of the
Commerce Control List in Supplement No. 1 to part 774 of the EAR.
(e) International Space Station (ISS). (1) Scope. The ISS is a
research facility in a low-Earth orbit approximately 190 miles (350 km)
above the surface of the Earth. The ISS is a joint project among the
space agencies of the United States, Russia, Japan, Canada, Europe and
Italy. This paragraph (e) authorizes exports and reexports required on
short notice of certain commodities subject to the EAR that are
classified under ECCN 9A004 to launch sites for supply missions to the
ISS.
(2) Eligible commodities. Any commodity subject to the EAR that is
classified under ECCN 9A004 and that is required for use on the ISS on
short notice.
Note 1 to paragraph (e)(2):
This license exception is not available for the export or
reexport of parts and components to overseas manufacturers for the
purpose of incorporation into other items destined for the ISS.
Note 2 to paragraph (e)(2):
For purposes of this paragraph (e), `short notice' means the
exporter is required to have a commodity manifested and at the
scheduled launch site for hatch-closure (final stowage) no more than
forty-five (45) days from the time the exporter or reexporter
received complete documentation. `Complete documentation' means the
exporter or reexporter received the technical description of the
commodity and purpose for use of the commodity on the ISS. `Hatch-
closure (final stowage)' means the final date specified by a launch
provider by which items must be at a specified location in a launch
country in order to be included on a mission to the ISS. The
exporter or reexporter must receive the notification to supply the
commodity for use on the ISS in writing. That notification must be
kept in accordance with paragraph (e)(8) of this section and the
Recordkeeping requirements in part 762 of the EAR.
(3) Eligible destinations. Eligible destinations are France, Japan,
Kazakhstan, and Russia. To be eligible, a destination needs to have a
launch for a supply mission to the ISS scheduled by a country
participating in the ISS.
(4) Requirement for commodities to be launched on an eligible space
launch vehicle (SLV). Only commodities that will be delivered to the
ISS using United States, Russian, ESA (French), or Japanese space
launch vehicles (SLVs) are eligible under this authorization.
Commodities to be delivered to the ISS
[[Page 37540]]
using SLVs from any other countries are excluded from this
authorization.
(5) Authorizations. (i) Authorization to retain commodity at or
near launch site for up to six months. If there are unexpected delays
in a launch schedule for reasons such as mechanical failures in a
launch vehicle or weather, commodities exported or reexported under
this paragraph (e) may be retained at or near the launch site for a
period of six (6) months from the time of initial export or reexport
before the commodities must be destroyed, returned to the exporter or
reexporter, or be the subject of an individually validated license
request submitted to BIS to authorize further disposition of the
commodities.
(ii) Authorization to retain commodity abroad at launch country
beyond six months. If, after the commodity is exported or reexported
under this authorization, a delay occurs in the launch schedule that
would exceed the 6-month deadline in paragraph (e)(5)(i) of this
section, the exporter or reexporter or the person in control of the
commodities in the launch country may request a one-time 6-month
extension by submitting written notification to BIS requesting a 6-
month extension and noting the reason for the delay. If the requestor
is not contacted by BIS within 30 days from the date of the postmark of
the written notification and if the notification meets the requirements
of this subparagraph, the request is deemed granted. The request must
be sent to BIS at the address listed in part 748 of the EAR and should
include the name and address of the exporter or reexporter, the name
and address of the person who has control of the commodity, the date
the commodities were exported or reexported, a brief product
description, and the justification for the extension. To retain a
commodity abroad beyond the 6-month extension period, the exporter,
reexporter or person in control of the commodity must request
authorization by submitting a license application in accordance with
Sec. Sec. 748.1, 748.4 and 748.6 of the EAR to BIS 90 days prior to
the expiration of the 6-month extension period.
(iii) Items not delivered to the ISS because of a failed launch. If
the commodities exported or reexported under this paragraph (e) of this
section are not delivered to the ISS because a failed launch causes the
destruction of the commodity prior to its being delivered, exporters
and reexporters must make note of the destruction of the commodities in
accordance with the recordkeeping requirements under paragraph
(e)(8)(ii) of this section and part 762 of the EAR.
(6) Reexports to an alternate launch country. If a mechanical or
weather related issue causes a change from the scheduled launch country
to another foreign country after a commodity was exported or
reexported, then that commodity may be subsequently reexported to the
new scheduled launch country, provided all of the terms and conditions
of paragraph (e) of this section are met, along with any other
applicable EAR provisions. In such instances, the 6-month time
limitation described in paragraph (e)(5)(i) of this section would start
over again at the time of the subsequent reexport transaction. Note
that if the subsequent reexport may be made under the designation No
License Required (NLR) or some other authorization under the EAR, a
reexporter does not need to rely on the provisions contained in this
paragraph (e).
(7) Eligible recipients. Only persons involved in the launch of
commodities to the ISS may receive and have access to commodities
exported or reexported pursuant to this paragraph (e), except that:
(i) No commodities may be exported, reexported, or transferred (in-
country) under paragraph (e) to any national of an E:1 country listed
in Supplement No. 1 to part 740 of the EAR, and
(ii) No person may receive commodities authorized under paragraph
(e) of this section who is subject to an end-user or end-use control
described in part 744 of the EAR, including the entity list in
Supplement No. 4 to part 744.
(8) Recordkeeping requirements. Exporters and reexporters must
maintain records regarding exports or reexports made using this
paragraph (e) of this section as well as any other applicable
recordkeeping requirements under part 762 of the EAR.
(i) Exporters and reexporters must retain a record of the initial
written notification they received requesting these commodities be
supplied on short notice for a supply mission to the ISS, including the
date the exporter or reexporter received complete documentation (i.e.,
the day on which the 45-day clock begins).
(ii) Exporters and reexporters must maintain records of the date of
any exports or reexports made using this paragraph (e) and the date on
which the commodities were launched into space for delivery to the ISS.
If the commodities are not delivered to the ISS because of a failed
launch whereby the item is destroyed prior to being delivered to the
ISS, this must be noted for recordkeeping purposes.
(iii) The return or destruction of defective or worn out parts or
components is not required. However, if defective or worn out parts or
components originally exported or reexported pursuant to this paragraph
(e) are returned from the ISS, then those parts and components may be
either: Returned to the original country of export or reexport;
destroyed; or reexported or transferred (in-country) to a destination
that has been designated by NASA for conducting a review and analysis
of the defective or worn part or component. Documentation for this
activity must be kept for recordkeeping purposes. No commodities that
are subject to the EAR may be returned, under the provisions of this
paragraph, to a country listed in Country Group E:1 in Supplement No. 1
to part 740 or to any person if that person is subject to an end-user
or end-use control described in part 744 of the EAR. For purposes of
paragraph (e) of this section, a `defective or worn out' part or
component is a part or component that no longer performs its intended
function.
12. Section 740.13 is amended by adding a sentence to paragraph
(a)(1), redesignating paragraph (f) as paragraph (h), and by adding new
paragraphs (f) and (g) to read as follows:
Sec. 740.13 Technology and Software--Unrestricted (TSU).
(a) * * * This paragraph (a) authorizes training, provided the
training is limited to the operation, maintenance and repair technology
identified in this paragraph.
* * * * *
(f) Release of technology and source code in the U.S. by U.S.
universities to their bona fide and full time regular employees.
(1) Scope. This paragraph authorizes the release in the United
States of ``technology'' and source code that is subject to the EAR by
U.S. universities to foreign persons who are their bona fide and full
time regular employees.
(2) Eligible ``technology''and source code. Any ``technology'' or
source code that is subject to the EAR may be released, except for
``technology'' or source code that is subject to a missile technology
or EI reason for control or otherwise restricted from the use of
license exceptions under Sec. 740.2 of the EAR.
(3) Eligible foreign nationals (i.e., bona fide and full time
regular employees of U.S. universities). This exception is only
available if:
[[Page 37541]]
(i) The employee's permanent abode throughout the period of
employment is in the U.S.;
(ii) The employee is not a national of a country subject to a U.S.
arms embargo (see Sec. 740.2(a)(12)); and
(iii) The university informs the individual in writing that the
``technology'' or source code may not be transferred to other foreign
persons without prior U.S. Government authorization.
(4) Exclusions. (i) No ``technology'' or source code may be
released to a foreign national for purposes of establishing or
producing items subject to the EAR;
(ii) No ``technology'' or source code may be released to a foreign
person subject to a part 744 end-use or end-user control or where the
release would otherwise be inconsistent with part 744; and
(iii) No ``technology'' or source code controlled for ``EI''
(encryption) or ``MT'' (Missile Technology) reasons may be released
under this paragraph (f).
(g) Copies of technology previously authorized for export to same
recipient. This paragraph authorizes the export, reexport, or transfer
(in-country) of copies of technology previously authorized for export,
reexport, or in-country transfer to the same recipient. This paragraph
also authorizes the export, reexport, or transfer (in-country) of
revised copies of such technology provided the following four
conditions are met:
(1) The item that the technology pertains to is the identical item;
(2) The revisions to the technology are solely editorial and do not
add to the content of technology previously exported, reexported, or
transferred (in-country) or authorized for export, reexport, or
transfer (in-country) to the same recipient;
(3) The same recipient is not currently subject to an end-use
control under the EAR (e.g., being subject to a Denial Order or Listed
on the Entity List in Supplement No. 4 to part 744); and
(4) The exporter, reexporter, or transferor has reason to believe
the same recipient has used the technology in accordance with the
original authorization.
13. Section 740.20 is revised to read as follows:
Sec. 740.20 License Exception Strategic Trade Authorization (STA).
* * * * *
(c) * * *
Note 2 to paragraph (c). License Exception STA under Sec.
740.20(c)(1) may be used to authorize the export, reexport, or
transfer (in-country) of ``600 series'' items only if the purchaser,
intermediate consignee, ultimate consignee, and end user have
previously been approved on a license issued by BIS or the
Directorate of Defense Trade Controls (DDTC), U.S. Department of
State.
* * * * *
(d) * * *
(1) * * *
(2) Prior consignee statement.
* * * * *
(vi) For ``600 series items,'' confirms that the items are for
ultimate end use by a government of a country listed in Sec.
740.20(c)(1), the United States Government, or a person in the United
States, and agrees to permit an end-use check.
PART 742--[AMENDED]
14. The authority citations paragraph for part 742 continues to
read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22
U.S.C. 7210; Sec. 1503, Pub. L. 108-11, 117 Stat. 559; E.O. 12058,
43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3
CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp.,
p. 950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O.
13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Presidential
Determination 2003-23 of May 7, 2003, 68 FR 26459, May 16, 2003;
Notice of August 12, 2011, 76 FR 50661 (August 16, 2011); Notice of
November 9, 2011, 76 FR 70319 (November 10, 2011).
15. Section 742.6 is revised to read as follows:
Sec. 742.6 Regional stability.
(a) * * *
* * * * *
(b) Licensing policy. Applications for exports and reexports of
``600 series'' items will be reviewed on a case-by-case basis to
determine whether the transaction is contrary to the national security
or foreign policy interests of the United States. Other applications
for exports and reexports described in paragraph (a)(1), (a)(2), (a)(6)
or (a)(7) of this section will be reviewed on a case-by-case basis to
determine whether the export or reexport could contribute directly or
indirectly to any country's military capabilities in a manner that
would alter or destabilize a region's military balance contrary to the
foreign policy interests of the United States. Applications for
reexports of items described in paragraph (a)(3) of this section will
be reviewed applying the policies for similar commodities that are
subject to the ITAR. Applications for export or reexport of items
classified under any ``600 series'' ECCN listed in paragraph (a)(1) of
this section will also be reviewed in accordance with U.S. arms embargo
policies and generally will be denied if destined for a destination set
forth in Sec. 740.2(a)(12) of the EAR. Applications for export or
reexport of ``parts,'' ``components,'' ``accessories,''
``attachments,'' software, or technology ``specially designed'' or
otherwise required for the F-14 aircraft will generally be denied.
PART 743--[AMENDED]
16. The authority citations paragraph for part 743 continues to
read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August
12, 2011, 76 FR 50661 (August 16, 2011).
17. Part 743 is amended by revising its title to read:
PART 743--SPECIAL REPORTING AND NOTIFICATION
18. Section 743.1 is amended by revising paragraph (c) to read as
follows:
Sec. 743.1 Wassenaar Arrangement.
* * * * *
(c) Items for which reports are required. You must submit reports
to BIS under the provisions of this section only for exports controlled
on the Sensitive List (see Supplement No. 6 to part 774).
* * * * *
19. New Section 743.5 is added to read as follows:
Sec. 743.5 Prior notifications to Congress of Exports of Major
Defense Equipment and other transactions.
(a) General requirement. Applications to export items on the
Commerce Control List that are Major Defense Equipment (MDE) and
certain other controlled transactions will be notified to Congress as
provided in this section before licenses for such items are issued.
`Major Defense Equipment' means any item having a nonrecurring research
and development cost of more than $50,000,000 or a total production
cost of more than $200,000,000. Exports to U.S. government end users
under License Exception GOV (Sec. 740.11(b)) do not require such
notification.
(b) BIS will notify Congress prior to issuing a license authorizing
the export of items controlled to a country outside the countries
listed in Sec. 740.20(c)(1) (License Exception STA) that are:
(1) Major Defense Equipment sold under a contract in the amount of
$14,000,000 or more;
(2) Other ``600 series'' items sold under a contract in the amount
of $50,000,000 or more; or
[[Page 37542]]
(3) Firearms controlled under ECCN 0A601 under a contract in the
amount of $1,000,000 or more.
(c) BIS will notify Congress prior to issuing a license authorizing
the export of items controlled to a country listed in Sec.
740.20(c)(1) (License Exception STA) that are:
(1) Major Defense Equipment sold under a contract in the amount of
$25,000,000 or more;
(2) Other ``600 series'' items sold under a contract in the amount
of $100,000,000 or more; or
(3) Firearms controlled under ECCN 0A601 under a contract in the
amount of $1,000,000 or more.
(d) In addition to information required on the application, the
exporter must include a copy of the signed contract (including a
statement of the contract's value) for any proposed export described in
paragraphs (b) or (c).
(e) Address. Munitions Control Division at
bis.compliance@bis.doc.gov.
(f) BIS will hold the case without action (HWA) until the
notification period has expired.
PART 744--[AMENDED]
20. The authority citations paragraph for part 744 continues to
read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 22 U.S.C. 7201 et seq.; 22
U.S.C. 7210; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179;
E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59
FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 12947, 60 FR 5079, 3 CFR,
1995 Comp., p. 356; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p.
228; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 208; E.O. 13222,
66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13224, 66 FR 49079, 3
CFR, 2001 Comp., p. 786; Notice of August 12, 2011, 76 FR 50661
(August 16, 2011); Notice of September 21, 2011, 76 FR 59001
(September, 22, 2011); Notice of November 9, 2011, 76 FR 70319
(November 10, 2011); Notice of January 19, 2012, 77 FR 3067 (January
20, 2012).
21. Section 744.21 is amended by redesignating paragraphs (a),
(a)(1) and (a)(2) as paragraphs (a)(1), (a)(1)(i) and (a)(1)(ii) and by
adding a new paragraph (a)(2) to read as follows:
Sec. 744.21 Restrictions on Certain Military End-Uses in the People's
Republic of China (PRC).
(a)(1) * * *
(a)(2) General prohibition. In addition to the license requirements
for ``600 series'' items specified on the Commerce Control List (CCL),
you may not export, reexport, or transfer any ``600 series'' item,
including .y items described in a ``600 series'' ECCN, to the PRC
without a license.
PART 750--[AMENDED]
22. The authority citations paragraph for part 750 continues to
read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
Sec 1503, Public Law 108-11, 117 Stat. 559; E.O. 13026, 61 FR 58767,
3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001
Comp., p. 783; Presidential Determination 2003-23 of May 7, 2003, 68
FR 26459, May 16, 2003; Notice of August 12, 2011, 76 FR 50661
(August 16, 2011).
23. Section 750.4 is amended by adding paragraph (b)(7) to read as
follows:
Sec. 750.4 Procedures for processing license applications.
* * * * *
(b) Actions not included in processing time calculations. * * *
(7) Major Defense Equipment. Congressional notification, including
consultations prior to notification, prior to the issuance of an
authorization to export Major Defense Equipment (as defined inSec.
743.5 of the EAR).
24. Section 750.7 is amended:
(a) By adding a new paragraph (c)(1)(ix); and
(b) By revising both the introductory text in paragraphs (g) and
paragraph (g)(1) to read as follows:
Sec. 750.7 Issuance of licenses.
(c) Changes to the license. * * *
* * * * *
(ix) Direct exports or reexports to approved end users on an export
or reexport license, provided those end users are listed by name and
location on such export or reexport license and the license does not
contain any conditions that are specific to the ultimate consignee that
cannot be complied with by the end user, such as a reporting
requirement that must be made by the ultimate consignee.
(A) Restriction. Export and reexport licenses where a class of
authorized end users is identified (e.g., by industry or by location),
but specific end users are not identified by name on the export or
reexport license are specifically excluded from this paragraph
(c)(1)(ix). Direct exports or reexports to these types of end users are
a material change to the export or reexport license. If exporters or
reexporters wish to make such direct exports, they will need to submit
an application for a new license in accordance with the instructions
contained in Supplement No. 1 to part 748 of the EAR.
(B) [RESERVED].
* * * * *
(g) License validity period. Licenses involving the export or
reexport of items will generally have a four-year validity period,
unless a different validity period has been requested and specifically
approved by BIS or is otherwise specified on the license at the time
that it is issued. Exceptions from the four-year validity period
include license applications reviewed and approved as an ``emergency''
(see Sec. 748.4(h) of the EAR) and license applications for items
controlled for short supply reasons, which will be limited to a 12-
month validity period. Emergency licenses will expire no later than the
last day of the calendar month following the month in which the
emergency license is issued. The expiration date will be clearly stated
on the face of the license. If the expiration date falls on a legal
holiday (Federal or State), the validity period is automatically
extended to midnight of the first day of business following the
expiration date.
(1) Extended validity period. BIS will consider granting a validity
period exceeding 4 years on a case-by-case basis when extenuating
circumstances warrant such an extension. Requests for such extensions
may be made at the time of application or after the license has been
issued and it is still valid. BIS will not approve changes regarding
other aspects of the license, such as the parties to the transaction
and the countries of ultimate destination. An extended validity period
will generally be granted where, for example, the transaction is
related to a multi-year project; when the period corresponds to the
duration of a manufacturing license agreement, technical assistance
agreement, warehouse and distribution agreement, or license issued
under the International Traffic in Arms Regulations; when production
lead time will not permit an export or reexport during the original
validity period of the license; when an unforeseen emergency prevents
shipment within the 4-year validity of the license; or for other
similar circumstances.
* * *
* * * * *
PART 758--[AMENDED]
25. The authority citations paragraph for part 758 continues to
read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August
12, 2011, 76 FR 50661 (August 16, 2011).
26. Section 758.1 is amended by revising the section heading,
redesignating paragraphs (b)(3) through (b)(5) as (b)(5) through (b)(7)
and by
[[Page 37543]]
adding new paragraphs (b)(3) and (b)(4), to read as follows:
Sec. 758.1 The Automated Export System (AES) record.
* * * * *
(b) * * *
(1) * * *
(2) * * *
(3) For all exports of ``600 series'' items, regardless of value or
destination, including exports to Canada;
(4) For all exports under License Exceptions Strategic Trade
Authorization (STA);
* * * * *
27. Section 758.2(c) is revised by adding paragraph (c)(4) to read
as follows:
Sec. 758.2 Automated Export System (AES).
* * * * *
(a) * * *
(b) * * *
(4) Exports are made under Strategic Trade Authorization; are made
under Authorization Validated End User (VEU); or are of ``600 series''
items.
28. Section 758.6 is revised to read as follows:
Sec. 758.6 Destination control statement.
(a) General requirement. The Destination Control Statement (DCS)
must be entered on the invoice and on the bill of lading, air waybill,
or other export control document that accompanies the shipment from its
point of origin in the United States to the ultimate consignee or end-
user abroad. The person responsible for preparation of those documents
is responsible for entry of the DCS. The DCS is required for all
exports from the United States of items on the Commerce Control List
that are not classified as EAR99, unless the export may be made under
License Exception BAG or GFT (see part 740 of the EAR). At a minimum,
and except as provided in paragraph (b), the DCS must state:
``These commodities, technology, or software were exported from the
United States in accordance with the Export Administration Regulations.
Diversion contrary to U.S. law is prohibited.''
(b) ``600 series'' items. For exports of ``600 series'' items, at a
minimum, the DCS must state:
``These commodities, technology, or software controlled under
[INSERT ECCN(s)] were exported from the United States in accordance
with the Export Administration Regulations. Diversion contrary to U.S.
law is prohibited.''
PART 762--[AMENDED]
29. The authority citations paragraph for part 762 continues to
read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August
12, 2011, 76 FR 50661 (August 16, 2011).
30. Section 762.2 is amended by adding paragraph (b)(48) to read as
follows:
Sec. 762.2 Records to be retained.
(a) * * *
(b) * * *
(48) Sec. 740.11(b)(2)(iii) and (iv), License Exception GOV.
PART 764--[AMENDED]
31. The authority citations paragraph for part 764 continues to
read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August
12, 2011, 76 FR 50661 (August 16, 2011).
32. Supplement No. 1 to part 764 is amended by removing the
penultimate paragraph: ``Fourth, that this order does not prohibit any
export, reexport, or other transaction subject to the EAR where the
only items involved that are subject to the EAR are the foreign-
produced direct product of U.S.-origin technology.''
PART 774--[AMENDED]
33. The authority citations paragraph for part 774 continues to
read as follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et
seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42
U.S.C. 6212; 43 U.S.C. 1354; 15 U.S.C. 1824a; 50 U.S.C. app. 5; 22
U.S.C. 7201 et seq.; 22 U.S.C. 7210; 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 12, 2011, 76 FR 50661 (August 16, 2011).
34. In Supplement No. 1 to part 774 (the Commerce Control List),
Category 0--Nuclear Materials, Facilities, and Equipment (and
Miscellaneous Items), ECCN 0A919 is amended by revising the ``Items''
paragraph to read as follows:
0A919 ``Military commodities'' as follows (see list of items
controlled).
* * * * *
Items: ``Military commodities'' with all of the following
characteristics:
a. Described on either the United States Munitions List (22 CFR
Part 121) or the Munitions List that is published by the Wassenaar
Arrangement on Export Controls for Conventional Arms and Dual-Use
Goods and Technologies (as set out on its Web site at http://www.wassenaar.org), but not any item listed in any Export Control
Classification Number for which the last three characters are 018 or
any item in the ``600 series'';
b. Produced outside the United States;
c. Not subject to the International Traffic in Arms Regulations
(22 CFR Parts 120-130) for a reason other than presence in the
United States; and
d. One or more of the following characteristics:
d.1. Incorporate one or more cameras classified under ECCN
6A003.b.4.b;
d.2. Incorporate more than a de minimis amount of ``600 series''
controlled content (see Sec. 734.4 of the EAR); or
d.3. Are direct products of U.S.-origin ``600 series''
technology (see Sec. 736.2(b)(3) of the EAR).
35. Part 774 is amended by adding new Supplement Nos. 6 and 7 to
read as follows:
Supplement No. 6 to Part 774--Sensitive List
(Note to Supplement No. 6: If text accompanies an ECCN below,
then the Sensitive List is limited to a subset of items classified
under the ECCN.)
(1) Category 1
(i) 1A002 (entire entry).
(ii) 1C001 (entire entry).
(iii) 1C007.c and .d.
(iv) 1C010.c and .d.
(v) 1C012 (entire entry).
(vi) 1D002--``software'' for the ``development'' of organic
``matrix'', metal ``matrix'', or carbon ``matrix'' laminates or
composites controlled under 1A002, 1C007.c, 1C007.d, 1C010.c or
1C010.d.
(vii) 1E001--``Technology'' according to the General Technology
Note for the ``development'' or ``production'' of equipment and
materials controlled under 1A002, 1C001, 1C007.c, 1C007.d, 1C010.c,
1C010.d, or 1C012.
(viii) 1E002.e and .f.
(2) Category 2
(i) 2D001--``software'', other than that controlled by 2D002,
specially designed for the ``development'' or ``production'' of
equipment as follows:
(A) Machine tools for turning (ECCN 2B001.a) having all of the
following:
(1) Positioning accuracy with ``all compensations available''
equal to or less (better) than 3.6 [mu]m according to ISO 230/2
(2006) or national equivalents along any linear axis; and
(2) Two or more axes which can be coordinated simultaneously for
``contouring control'';
(B) Machine tools for milling (ECCN 2B001.b) having any of the
following:
(1) Positioning accuracy with ``all compensations available''
equal to or less (better) than 3.6 [mu]m according to ISO 230/2
(2006) or national equivalents along any linear axis, and three
linear axes plus one rotary axis which can be coordinated
simultaneously for ``contouring control'';
(2) Five or more axes which can be coordinated simultaneously
for ``contouring control'' and have a positioning accuracy with
``all compensations available'' equal to or less (better) than 3.6
[mu]m according to ISO 230/2 (2006) or national equivalents along
any linear axis; or
[[Page 37544]]
(3) A positioning accuracy for jig boring machines, with ``all
compensations available'', equal to or less (better) than 3 [mu]m
according to ISO 230/2 (2006) or national equivalents along any
linear axis;
(C) Electrical discharge machines (EDM) controlled under
2B001.d;
(D) Deep-hole-drilling machines controlled under 2B001.f;
(E) ``Numerically controlled'' or manual machine tools
controlled under 2B003.
(ii) 2E001--``technology'' according to the General Technology
Note for the ``development'' of ``software'' controlled within the
specific provisions of 2D001 described in this Supplement or for the
``development'' of equipment as follows:
(A) Machine tools for turning (ECCN 2B001.a) having all of the
following:
(1) Positioning accuracy with ``all compensations available''
equal to or less (better) than 3.6 [mu]m according to ISO 230/2
(2006) or national equivalents along any linear axis; and
(2) Two or more axes which can be coordinated simultaneously for
``contouring control'';
(B) Machine tools for milling (ECCN 2B001.b) having any of the
following:
(1) Positioning accuracy with ``all compensations available''
equal to or less (better) than 3.6 [mu]m according to ISO 230/2
(2006) or national equivalents along any linear axis, and three
linear axes plus one rotary axis which can be coordinated
simultaneously for ``contouring control'';
(2) Five or more axes which can be coordinated simultaneously
for ``contouring control'' and have a positioning accuracy with
``all compensations available'' equal to or less (better) than 3.6
[mu]m according to ISO 230/2 (2006) or national equivalents along
any linear axis; or
(3) A positioning accuracy for jig boring machines, with ``all
compensations available'', equal to or less (better) than 3 [mu]m
according to ISO 230/2 (2006) or national equivalents along any
linear axis;
(C) Electrical discharge machines (EDM) controlled under
2B001.d;
(D) Deep-hole-drilling machines controlled under 2B001.f;
(E) ``Numerically controlled'' or manual machine tools
controlled under 2B003.
(iii) 2E002--``technology'' according to the General Technology
Note for the ``production'' of equipment as follows:
(A) Machine tools for turning (ECCN 2B001.a) having all of the
following:
(1) Positioning accuracy with ``all compensations available''
equal to or less (better) than 3.6 [micro]m according to ISO 230/2
(2006) or national equivalents along any linear axis; and
(2) Two or more axes which can be coordinated simultaneously for
``contouring control'';
(B) Machine tools for milling (ECCN 2B001.b) having any of the
following:
(1) Positioning accuracy with ``all compensations available''
equal to or less (better) than 3.6 [micro]m according to ISO 230/2
(2006) or national equivalents along any linear axis, and three
linear axes plus one rotary axis which can be coordinated
simultaneously for ``contouring control'';
(2) Five or more axes which can be coordinated simultaneously
for ``contouring control'' and have a positioning accuracy with
``all compensations available'' equal to or less (better) than 3.6
[micro]m according to ISO 230/2 (2006) or national equivalents along
any linear axis; or
(3) A positioning accuracy for jig boring machines, with ``all
compensations available'', equal to or less (better) than 3 [micro]m
according to ISO 230/2 (2006) or national equivalents along any
linear axis;
(C) Electrical discharge machines (EDM) controlled under
2B001.d;
(D) Deep-hole-drilling machines controlled under 2B001.f;
(E) ``Numerically controlled'' or manual machine tools
controlled under 2B003.
(3) Category 3
(i) 3A002.g.1.
(ii) 3D001--``software'' specially designed for the
``development'' or ``production'' of equipment controlled under
3A002.g.1.
(iii) 3E001--``technology'' according to the General Technology
Note for the ``development'' or ``production'' of equipment
controlled under 3A002.g.1.
(4) Category 4
(i) 4A001.a.2.
(ii) 4D001--``software'' specially designed for the
``development'' or ``production'' of equipment controlled under ECCN
4A001.a.2 or for the ``development'' or ``production'' of ``digital
computers'' having an `Adjusted Peak Performance' (`APP') exceeding
0.5 Weighted TeraFLOPS (WT).
(iii) 4E001--``technology'' according to the General Technology
Note for the ``development'' or ``production'' of any of the
following equipment or ``software'': equipment controlled under ECCN
4A001.a.2, ``digital computers'' having an `Adjusted Peak
Performance' (`APP') exceeding 0.5 Weighted TeraFLOPS (WT), or
``software'' controlled under the specific provisions of 4D001
described in this Supplement.
(5) Category 5--Part 1
(i) 5A001.b.3, .b.5, and .h.
(ii) 5B001.a--equipment and specially designed components or
accessories therefor, specially designed for the ``development'',
``production'' or ``use'' of equipment, functions or features
controlled under 5A001.b.3, b.5, or .h.
(iii) 5D001.a--``software'' specially designed for the
``development'' or ``production'' of equipment, functions or
features controlled under 5A001.b.3, b.5, or .h.
(iv) 5D001.b--``software'' specially designed or modified to
support ``technology'' controlled by this Supplement's description
of 5E001.a.
(v) 5E001.a--``technology'' according to the General Technology
Note for the ``development'' or ``production'' of equipment,
functions or features controlled under 5A001.b.3, b.5, or .h or
``software'' described in this Supplement's description of 5D001.a.
(6) Category 6
(i) 6A001.a.1.b--systems or transmitting and receiving arrays,
designed for object detection or location, having any of the
following:
(A) A transmitting frequency below 5 kHz or a sound pressure
level exceeding 224 dB (reference 1 [micro]Pa at 1 m) for equipment
with an operating frequency in the band from 5 kHz to 10 kHz
inclusive;
(B) Sound pressure level exceeding 224 dB (reference 1 [micro]Pa
at 1 m) for equipment with an operating frequency in the band from
10 kHz to 24 kHz inclusive;
(C) Sound pressure level exceeding 235 dB (reference 1 [micro]Pa
at 1 m) for equipment with an operating frequency in the band
between 24 kHz and 30 kHz;
(D) Forming beams of less than 1[deg] on any axis and having an
operating frequency of less than 100 kHz;
(E) Designed to operate with an unambiguous display range
exceeding 5,120 m; or
(F) Designed to withstand pressure during normal operation at
depths exceeding 1,000 m and having transducers with any of the
following:
(1) Dynamic compensation for pressure; or
(2) Incorporating other than lead zirconate titanate as the
transduction element;
(ii) 6A001.a.1.e.
(iii) 6A001.a.2.a.1, a.2.a.2, a.2.a.3, a.2.a.5, and a.2.a.6.
(iv) 6A001.a.2.b.
(v) 6A001.a.2.c--processing equipment, specially designed for
real time application with towed acoustic hydrophone arrays, having
``user accessible programmability'' and time or frequency domain
processing and correlation, including spectral analysis, digital
filtering and beamforming using Fast Fourier or other transforms or
processes.
(vi) 6A001.a.2.d.
(vii) 6A001.a.2.e.
(viii) 6A001.a.2.f--processing equipment, specially designed for
real time application with bottom or bay cable systems, having
``user accessible programmability'' and time or frequency domain
processing and correlation, including spectral analysis, digital
filtering and beamforming using Fast Fourier or other transforms or
processes.
(ix) 6A002.a.1.a, a.1.b, and a.1.c.
(x) 6A002.a.1.d.
(xi) 6A002.a.2.a--image intensifier tubes having all of the
following:
(A) A peak response in the wavelength range exceeding 400 nm but
not exceeding 1,050 nm;
(B) Electron image amplification using any of the following:
(1) A microchannel plate for electron image amplification with a
hole pitch (center-to-center spacing) of 12 [mu]m or less; or
(2) An electron sensing device with a non-binned pixel pitch of
500 [mu]m or less, specially designed or modified to achieve `charge
multiplication' other than by a microchannel plate; and
(C) Any of the following photocathodes:
(1) Multialkali photocathodes (e.g., S-20 and S-25) having a
luminous sensitivity exceeding 700 [mu]A/lm;
(2) GaAs or GaInAs photocathodes; or
(3) Other ``III-V compound'' semiconductor photocathodes having
a
[[Page 37545]]
maximum ``radiant sensitivity'' exceeding 10 mA/W.
(xii) 6A002.a.2.b.
(xiii) 6A002.a.3--subject to the following additional notes:
Note 1: 6A002.a.3 does not apply to the following ``focal plane
arrays'' in this Supplement:
a. Platinum Silicide (PtSi) ``focal plane arrays'' having less
than 10,000 elements;
b. Iridium Silicide (IrSi) ``focal plane arrays''.
Note 2: 6A002.a.3 does not apply to the following ``focal plane
arrays'' in this Supplement:
a. Indium Antimonide (InSb) or Lead Selenide (PbSe) ``focal
plane arrays'' having less than 256 elements;
b. Indium Arsenide (InAs) ``focal plane arrays'';
c. Lead Sulphide (PbS) ``focal plane arrays'';
d. Indium Gallium Arsenide (InGaAs) ``focal plane arrays''.
Note 3: 6A002.a.3 does not apply to Mercury Cadmium Telluride
(HgCdTe) ``focal plane arrays'' as follows in this Supplement:
a. `Scanning Arrays' having any of the following:
1. 30 elements or less; or
2. Incorporating time delay-and-integration within the element
and having 2 elements or less;
b. `Staring Arrays' having less than 256 elements.
Technical Notes: a. `Scanning Arrays' are defined as ``focal
plane arrays'' designed for use with a scanning optical system that
images a scene in a sequential manner to produce an image;
b. `Staring Arrays' are defined as ``focal plane arrays''
designed for use with a non-scanning optical system that images a
scene.
Note 6: 6A002.a.3 does not apply to the following ``focal plane
arrays'' in this List:
a. Gallium Arsenide (GaAs) or Gallium Aluminum Arsenide (GaAlAs)
quantum well ``focal plane arrays'' having less than 256 elements;
b. Microbolometer ``focal plane arrays'' having less than 8,000
elements.
Note 7: 6A002.a.3.g does not apply to the linear (1-
dimensional) ``focal plane arrays'' specially designed or modified
to achieve `charge multiplication' having 4,096 elements or less.
Note 8: 6A002.a.3.g. does not apply to the non-linear (2-
dimensional) ``focal plane arrays'' specially designed or modified
to achieve `charge multiplication' having a maximum linear dimension
of 4,096 elements and a total of 250,000 elements or less.
(xiv) 6A002.b.
(xv) 6A002.c--`direct view' imaging equipment incorporating any
of the following:
(A) Image intensifier tubes having the characteristics listed in
this Supplement's description of 6A002.a.2.a or 6A002.a.2.b;
(B) ``Focal plane arrays'' having the characteristics listed in
this Supplement's description of 6A002.a.3; or
(C) Solid-state detectors having the characteristics listed in
6A002.a.1.
(xvi) 6A003.b.3--imaging cameras incorporating image intensifier
tubes having the characteristics listed in this Supplement's
description of 6A002.a.2.a or 6A002.a.2.b.
Note: 6A003.b.3 does not apply to imaging cameras specially
designed or modified for underwater use.
(xvii) 6A003.b.4--imaging cameras incorporating ``focal plane
arrays'' having any of the following:
(A) Incorporating ``focal plane arrays'' specified by this
Supplement's description of 6A002.a.3.a to 6A002.a.3.e;
(B) Incorporating ``focal plane arrays'' specified by this
Supplement's description of 6A002.a.3.f; or
(C) Incorporating ``focal plane arrays'' specified by this
Supplement's description of 6A002.a.3.g.
Note 1: `Imaging cameras' described in 6A003.b.4 include
``focal plane arrays'' combined with sufficient ``signal
processing'' electronics, beyond the read out integrated circuit, to
enable as a minimum the output of an analog or digital signal once
power is supplied.
Note 2: 6A003.b.4.a does not control imaging cameras
incorporating linear ``focal plane arrays'' with 12 elements or
fewer, not employing time-delay-and-integration within the element,
and designed for any of the following:
a. Industrial or civilian intrusion alarm, traffic or industrial
movement control or counting systems;
b. Industrial equipment used for inspection or monitoring of
heat flows in buildings, equipment or industrial processes;
c. Industrial equipment used for inspection, sorting or analysis
of the properties of materials;
d. Equipment specially designed for laboratory use; or
e. Medical equipment.
Note 3: 6A003.b.4.b does not control imaging cameras having any
of the following characteristics:
a. A maximum frame rate equal to or less than 9 Hz;
b. Having all of the following:
1. Having a minimum horizontal or vertical `Instantaneous-Field-
of-View (IFOV)' of at least 10 mrad/pixel (milliradians/pixel);
2. Incorporating a fixed focal-length lens that is not designed
to be removed;
3. Not incorporating a `direct view' display; and
Technical Note: `Direct view' refers to an imaging camera
operating in the infrared spectrum that presents a visual image to a
human observer using a near-to-eye micro display incorporating any
light-security mechanism.
4. Having any of the following:
a. No facility to obtain a viewable image of the detected field-
of-view; or
b. The camera is designed for a single kind of application and
designed not to be user modified; or
Technical Note: `Instantaneous Field of View (IFOV)' specified
in Note 3.b is the lesser figure of the `Horizontal FOV' or the
`Vertical FOV'.
`Horizontal IFOV' = horizontal Field of View (FOV)/number of
horizontal detector elements
`Vertical IFOV'= vertical Field of View (FOV)/number of vertical
detector elements.
c. Where the camera is specially designed for installation into
a civilian passenger land vehicle of less than 3 tonnes three tons
(gross vehicle weight) and having all of the following:
1. Is operable only when installed in any of the following:
a. The civilian passenger land vehicle for which it was
intended; or
b. A specially designed, authorized maintenance test facility;
and
2. Incorporates an active mechanism that forces the camera not
to function when it is removed from the vehicle for which it was
intended.
Note: When necessary, details of the items will be provided,
upon request, to the Bureau of Industry and Security in order to
ascertain compliance with the conditions described in Note 3.b.4 and
Note 3.c in this Note to 6A003.b.4.b.
Note 4: 6A003.b.4.c does not apply to `imaging cameras' having
any of the following characteristics:
a. Having all of the following:
1. Where the camera is specially designed for installation as an
integrated component into indoor and wall-plug-operated systems or
equipment, limited by design for a single kind of application, as
follows:
a. Industrial process monitoring, quality control, or analysis
of the properties of materials;
b. Laboratory equipment specially designed for scientific
research;
c. Medical equipment;
d. Financial fraud detection equipment; and
2. Is only operable when installed in any of the following:
a. The system(s) or equipment for which it was intended; or
b. A specially designed, authorized maintenance facility; and
3. Incorporates an active mechanism that forces the camera not
to function when it is removed from the system(s) or equipment for
which it was intended;
b. Where the camera is specially designed for installation into
a civilian passenger land vehicle of less than 3 tonnes (gross
vehicle weight), or passenger and vehicle ferries having a length
overall (LOA) 65 m or greater, and having all of the following:
1. Is only operable when installed in any of the following:
a. The civilian passenger land vehicle or passenger and vehicle
ferry for which it was intended; or
b. A specially designed, authorized maintenance test facility;
and
2. Incorporates an active mechanism that forces the camera not
to function when it is removed from the vehicle for which it was
intended;
c. Limited by design to have a maximum ``radiant sensitivity''
of 10 mA/W or less for wavelengths exceeding 760 nm, having all of
the following:
[[Page 37546]]
1. Incorporating a response limiting mechanism designed not to
be removed or modified; and
2. Incorporates an active mechanism that forces the camera not
to function when the response limiting mechanism is removed; and
3. Not specially designed or modified for underwater use; or
d. Having all of the following:
1. Not incorporating a `direct view' or electronic image
display;
2. Has no facility to output a viewable image of the detected
field of view;
3. The ``focal plane array'' is only operable when installed in
the camera for which it was intended; and
4. The ``focal plane array'' incorporates an active mechanism
that forces it to be permanently inoperable when removed from the
camera for which it was intended.
Note: When necessary, details of the item will be provided, upon
request, to the Bureau of Industry and Security in order to
ascertain compliance with the conditions described in Note 4 above.
Note 5: 6A003.b.4.c does not apply to imaging cameras specially
designed or modified for underwater use.
(xviii) 6A003.b.5.
(xix) 6A004.c.
(xx) 6A004.d.
(xxi) 6A006.a.1.
(xxii) 6A006.a.2--``magnetometers'' using optically pumped or
nuclear precession (proton/Overhauser) ``technology'' having a
`sensitivity' lower (better) than 2 pT (rms) per square root Hz.
(xxiii) 6A006.c.1--``magnetic gradiometers'' using multiple
``magnetometers'' specified by 6A006.a.1 or this Supplement's
description of 6A006.a.2.
(xxiv) 6A006.d--``compensation systems'' for the following:
(A) Magnetic sensors specified by 6A006.a.2 and using optically
pumped or nuclear precession (proton/Overhauser) ``technology'' that
will permit these sensors to realize a 'sensitivity' lower (better)
than 2 pT rms per square root Hz.
(B) Underwater electric field sensors specified by 6A006.b.
(C) Magnetic gradiometers specified by 6A006.c. that will permit
these sensors to realize a `sensitivity' lower (better) than 3 pT/m
rms per square root Hz.
(xxv) 6A006.e--underwater electromagnetic receivers
incorporating magnetometers specified by 6A006.a.1 or this
Supplement's description of 6A006.a.2.
(xxvi) 6A008.d, .h, and .k.
(xxvii) 6B008.
(xxviii) 6D001--``software'' specially designed for the
``development'' or ``production'' of equipment specified by 6A004.c,
6A004.d, 6A008.d, 6A008.h, 6A008.k, or 6B008.
(xxix) 6D003.a.
(xxx) 6E001.
(xxxi) 6E002--``technology'' according to the General Technology
Note for the ``production'' of equipment specified by the 6A or 6B
provisions described in this Supplement.
(7) Category 7
(i) 7D002.
(ii) 7D003.a.
(iii) 7D003.b.
(iv) 7D003.c.
(v) 7D003.d.1 to d.4, d.7.
(vi) 7E001.
(vii) 7E002.
(8) Category 8
(i) 8A001.b to .d.
(ii) 8A002.b--systems specially designed or modified for the
automated control of the motion of submersible vehicles specified by
8A001.b through .d using navigation data having closed loop servo-
controls and having any of the following:
(A) Enabling a vehicle to move within 10 m of a predetermined
point in the water column;
(B) Maintaining the position of the vehicle within 10 m of a
predetermined point in the water column; or
(C) Maintaining the position of the vehicle within 10 m while
following a cable on or under the seabed.
(iii) 8A002.h and .j.
(iv) 8A002.o.3.
(v) 8A002.p.
(vi) 8D001--``software'' specially designed for the
``development'' or ``production'' of equipment in 8A001.b to .d,
8A002.b (as described in this Supplement), 8A002.h, 8A002.j,
8A002.o.3, or 8A002.p.
(vii) 8D002.
(viii) 8E001--``technology'' according to the General Technology
Note for the ``development'' or ``production'' of equipment
specified by 8A001.b to .d, 8A002.b (as described in this
Supplement), 8A002.h, 8A002.j, 8A002.o.3, or 8A002.p.
(ix) 8E002.a.
(9) Category 9
(i) 9A011.
(ii) 9B001.b.
(iii) 9D001--``software'' specially designed or modified for the
``development'' of equipment or ``technology'', specified by 9A011,
9B001.b. 9E003.a.1, 9E003.a.2 to a.5 or 9E003.a.8 or 9E003.h.
(iv) 9D002--``software'' specially designed or modified for the
``production'' of equipment specified by 9A011 or 9B001.b.
(v) 9D004.a and .c.
(vi) 9E001.
(vii) 9E002.
(viii) 9E003.a.1.
(ix) 9E003.a.2 to a.5, a.8, .h.
Supplement No. 7 to Part 774--Very Sensitive List
(Note to Supplement No. 7: If text accompanies an ECCN below,
then the Very Sensitive List is limited to a subset of items
classified under the ECCN).
(1) Category 1
(i) 1A002.a.
(ii) 1C001 (entire entry).
(iii) 1C012 (entire entry).
(iv) 1E001--``technology'' according to the General Technology
Note for the ``development'' or ``production'' of equipment and
materials specified by 1A002.a, 1C001, or 1C012.
(2) Category 5--Part 1
(i) 5A001.b.5.
(ii) 5A001.h.
(iii) 5D001.a--``software'' specially designed for the
``development'' or ``production'' of equipment, functions or
features specified by 5A001.b.5 or 5A001.h.
(iv) 5E001.a--``technology'' according to the General Technology
Note for the ``development'' or ``production'' of equipment,
functions, features or ``software'' specified by 5A001.b.5, 5A001.h,
or 5D001.a.
(3) Category 6
(i) 6A001.a.1.b.1--systems or transmitting and receiving arrays,
designed for object detection or location, having a sound pressure
level exceeding 210 dB (reference 1 [mu]Pa at 1 m) and an operating
frequency in the band from 30 Hz to 2 kHz.
(ii) 6A001.a.2.a.1 to a.2.a.3, a.2.a.5, or a.2.a.6.
(iii) 6A001.a.2.b.
(iv) 6A001.a.2.c--processing equipment, specially designed for
real time application with towed acoustic hydrophone arrays, having
``user accessible programmability'' and time or frequency domain
processing and correlation, including spectral analysis, digital
filtering and beamforming using Fast Fourier or other transforms or
processes.
(v) 6A001.a.2.e.
(vi) 6A001.a.2.f--processing equipment, specially designed for
real time application with bottom or bay cable systems, having
``user accessible programmability'' and time or frequency domain
processing and correlation, including spectral analysis, digital
filtering and beamforming using Fast Fourier or other transforms or
processes.
(vii) 6A002.a.1.c.
(viii) 6B008.
(ix) 6D001--``software'' specially designed for the
``development'' or ``production'' of equipment specified by 6B008.
(x) 6D003.a.
(xi) 6E001--``technology'' according to the General Technology
Note for the ``development'' of equipment or ``software'' specified
by the 6A, 6B, or 6D provisions described in this Supplement.
(xii) 6E002--``technology'' according to the General Technology
Note for the ``production'' of equipment specified by the 6A or 6B
provisions described in this Supplement.
(4) Category 7
(i) 7D003.a.
(ii) 7D003.b.
(5) Category 8
(i) 8A001.b.
(ii) 8A001.d.
(iii) 8A002.o.3.b.
(iv) 8D001--``software'' specially designed for the
``development'' or ``production'' of equipment specified by 8A001.b,
8A001.d, or 8A002.o.3.b.
(v) 8E001--``technology'' according to the General Technology
Note for the ``development'' or ``production'' of equipment
specified by 8A001.b, 8A001.d, or 8A002.o.3.b.
(6) Category 9
(i) 9A011.
[[Page 37547]]
(ii) 9D001--``software'' specially designed or modified for the
``development'' of equipment or ``technology'' specified by 9A011,
9E003.a.1, or 9E003.a.3.a.
(iii) 9D002--``software'' specially designed or modified for the
``production'' of equipment specified by 9A011.
(iv) 9E001--``technology'' according to the General Technology
note for the ``development'' of equipment or ``software'' specified
by 9A011 or this Supplement's description of 9D001 or 9D002.
(v) 9E002--``technology'' according to the General Technology
Note for the ``production'' of equipment specified by 9A011.
(vi) 9E003.a.1.
(vii) 9E003.a.3.a.
Dated: June 15, 2012.
Kevin J. Wolf,
Assistant Secretary of Commerce for Export Administration.
[FR Doc. 2012-15074 Filed 6-20-12; 8:45 am]
BILLING CODE 3510-33-P