[Title 15 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 1999 Edition]
[From the U.S. Government Printing Office]


          15



          Commerce and Foreign Trade



[[Page i]]

          PARTS 300 TO 799

                         Revised as of January 1, 1999

          CONTAINING
          A CODIFICATION OF DOCUMENTS
          OF GENERAL APPLICABILITY
          AND FUTURE EFFECT

          AS OF JANUARY 1, 1999
          With Ancillaries
          Published by
          the Office of the Federal Register
          National Archives and Records
          Administration

          as a Special Edition of
          the Federal Register



[[Page ii]]

                                      




                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 1999



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 15:

    Subtitle B--Regulations Relating to Commerce and Foreign 
      Trade (Continued):

            Chapter III--International Trade Administration, 
          Department of Commerce.............................        5

            Chapter IV--Foreign-Trade Zones Board, Department 
          of Commerce........................................       47

            Chapter VII--Bureau of Export Administration, 
          Department of Commerce.............................       67

  Finding Aids:

      Table of CFR Titles and Chapters........................     663

      Alphabetical List of Agencies Appearing in the CFR......     681

      Redesignation Table.....................................     691

      List of CFR Sections Affected...........................     693



[[Page iv]]





                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  15 CFR 301.1 refers 
                       to title 15, part 301, 
                       section 1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 1999), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I), and Acts Requiring Publication 
in the Federal Register (Table II). A list of CFR titles, chapters, and 
parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
[email protected]

SALES

    The Government Printing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call 202-512-1800, 
M-F 8 a.m. to 4 p.m. e.s.t. or fax your order to 202-512-2233, 24 hours 
a day. For payment by check, write to the Superintendent of Documents, 
Attn: New Orders, P.O. Box 371954, Pittsburgh, PA 15250-7954. For GPO 
Customer Service call 202-512-1803.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Weekly Compilation of Presidential Documents and 
the Privacy Act Compilation are available in electronic format at 
www.access.gpo.gov/nara (``GPO Access''). For more information, contact 
Electronic Information Dissemination Services, U.S. Government Printing 
Office. Phone 202-512-1530, or 888-293-6498 (toll-free). E-mail, 
[email protected]

[[Page vii]]

    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.nara.gov/fedreg. The NARA 
site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

January 1, 1999.



[[Page ix]]



                               THIS TITLE

    Title 15--Commerce and Foreign Trade is composed of three volumes. 
The parts in these volumes are arranged in the following order: parts 0-
299, 300-799, and part 800-End. The first volume containing parts 0-299 
is comprised of Subtitle A--Office of the Secretary of Commerce, 
Subtitle B, chapter I--Bureau of the Census, Department of Commerce, and 
chapter II--National Institute of Standards and Technology, Department 
of Commerce. The second volume containing parts 300-799 is comprised of 
chapter III--International Trade Administration, Department of Commerce, 
chapter IV--Foreign-Trade Zones Board, and chapter VII--Bureau of Export 
Administration, Department of Commerce. The third volume containing part 
800-End is comprised of chapter VIII--Bureau of Economic Analysis, 
Department of Commerce, chapter IX--National Oceanic and Atmospheric 
Administration, Department of Commerce, chapter XI--Technology 
Administration, Department of Commerce, chapter XIII--East-West Foreign 
Trade Board, chapter XIV--Minority Business Development Agency, chapter 
XX--Office of the United States Trade Representative, and chapter 
XXIII--National Telecommunications and Information Administration, 
Department of Commerce. The contents of these volumes represent all 
current regulations codified under this title of the CFR as of January 
1, 1999.

    A redesignation table appears in the Finding Aids section of the 
volume containing Parts 300-799.

    For this volume, Carol Conroy was Chief Editor. The Code of Federal 
Regulations publication program is under the direction of Frances D. 
McDonald, assisted by Alomha S. Morris.

[[Page x]]





[[Page 1]]




                 TITLE 15--COMMERCE AND FOREIGN TRADE



                   (This book contains parts 300-799)

  --------------------------------------------------------------------
                                                                    Part

     SUBTITLE B--Regulations Relating to Commerce and Foreign Trade 
                               (Continued):

Chapter III--International Trade Administration, Department 
  of Commerce...............................................         301

Chapter IV--Foreign-Trade Zones Board, Department of 
  Commerce..................................................         400

Chapter VII--Bureau of Export Administration, Department of 
  Commerce..................................................         700

[[Page 3]]

     Subtitle B--Regulations Relating to Commerce and Foreign Trade 
                               (Continued)

[[Page 5]]




CHAPTER III--INTERNATIONAL TRADE ADMINISTRATION, DEPARTMENT OF COMMERCE



  --------------------------------------------------------------------


  Editorial Note: Nomenclature changes to Chapter III appear at 51 FR 
34586, Sept. 30, 1986.

                 SUBCHAPTER A--MISCELLANEOUS REGULATIONS
Part                                                                Page
301             Instruments and apparatus for educational 
                    and scientific institutions.............           7
302             [Reserved]
303             Watches and watch movements.................          19
310             Official U.S. Government recognition of and 
                    participation in international 
                    expositions held in the United States...          30
315             Determination of bona fide motor-vehicle 
                    manufacturer............................          35
325             Export trade certificates of review.........          36

[[Page 7]]



                 SUBCHAPTER A--MISCELLANEOUS REGULATIONS





PART 301--INSTRUMENTS AND APPARATUS FOR EDUCATIONAL AND SCIENTIFIC INSTITUTIONS--Table of Contents




Sec.
301.1  General provisions.
301.2  Definitions.
301.3  Application for duty-free entry of scientific instruments.
301.4  Processing of applications by the Department of the Treasury 
          (U.S. Customs Service).
301.5  Processing of applications by the Department of Commerce.
301.6  Appeals.
301.7  Final disposition of an application.
301.8  Instructions for entering instruments through U.S. Customs under 
          tariff item 851.60.
301.9  Uses and disposition of instruments entered under item 851.60, 
          TSUS.
301.10  Importation of repair components under item 851.65 for article 
          previously entered under item 851.60.

    Authority: Sec. 6(c), Pub. L. 89-651, 80 Stat. 897 (19 U.S.C. 1202).

    Source: 47 FR 32517, July 28, 1982, unless otherwise noted.



Sec. 301.1  General provisions.

    (a) Purpose. This part sets forth the regulations of the Department 
of Commerce and the Department of the Treasury applicable to the duty-
free importation of scientific instruments and apparatus by public or 
private nonprofit institutions.
    (b) Background. (1) The Agreement on the importation of Educational, 
Scientific and Cultural Materials (Florence Agreement; ``the 
Agreement'') is a multinational treaty, contracted to by approximately 
89 countries, which seeks to further the cause of peace through the 
freer exchange of ideas and knowledge across national boundaries, 
primarily by eliminating tariffs on certain educational, scientific and 
cultural materials.
    (2) Annex D of the Agreement provides that scientific instruments 
and apparatus intended exclusively for educational purposes or pure 
scientific research use by qualified nonprofit institutions shall enjoy 
duty-free entry if instruments or apparatus of equivalent scientific 
value are not being manufactured in the country of importation.
    (3) Pub. L. 89-651, the Educational, Scientific, and Cultural 
Materials Importation Act of 1966 (19 U.S.C. 1202; ``the Act''), 
implements the Agreement in the United States. Section 6(c) of the Act 
gives effect to Annex D of the Agreement. This section added tariff item 
851.60 to the Tariff Schedules of the United States (TSUS) to provide 
for the duty-free importation of instruments and apparatus ``entered for 
the use of any nonprofit institution, whether public or private, 
established for educational or scientific purposes * * * if no 
instrument or apparatus of equivalent scientific value for the purposes 
for which the instrument or apparatus is intended to be used is being 
manufactured in the United States.'' Headnote 1 to Schedule 8, part 4, 
TSUS, was amended by Pub. L. 89-651 and provides for the use, 
disposition and transfer of articles and their repair components 
accorded duty-free entry under tariff items 851.60 and 851.65, 
respectively, and Headnote 6, added by Pub. L. 89-651, sets forth the 
duty-free procedures and responsibilities.
    (c) Summary of statutory procedures and requirements. (1) Headnote 1 
provides, among other things, that articles covered by tariff items 
851.60 (scientific instruments and apparatus) and 851.65 (repair 
components therefor) must be exclusively for the use of the institutions 
involved and not for distribution, sale or other commercial use within 
five years after being entered. These articles may be transferred by a 
qualified nonprofit institution to another such institution without duty 
liability being incurred. However, if such article is transferred other 
than as provided by the preceding sentence, or is used for commercial 
purposes within five years after having been entered, duty shall be 
assessed in accordance with the procedures established in Headnote 1.
    (2) Pursuant to Headnote 6 an institution desiring to enter an 
instrument or apparatus under tariff item 851.60 TSUS must file an 
application with the

[[Page 8]]

Secretary of the Treasury (U.S. Customs Service) in accordance with 
these regulations. If the application is made in accordance with the 
regulations, notice of the application is published in the Federal 
Register to provide an opportunity for interested persons and government 
agencies to present views. The application is reviewed by the Secretary 
of Commerce (Director, Statutory Import Programs Staff) whose decision 
as to whether or not duty-free entry may be accorded the instrument is 
published in the Federal Register. An appeal of the final decision may 
be filed with the United States Court of Customs and Patent Appeals, on 
questions of law only, within 20 days after publication of the decision 
in the Federal Register.
    (3) Repair components for instruments or apparatus admitted duty-
free under tariff item 851.60 require no application and may be entered 
duty-free in accordance with the procedures prescribed in Sec. 301.10.
    (d) Authority and delegations. The Act authorizes the Secretaries of 
Commerce and the Treasury to prescribe joint regulations to carry out 
their functions under Headnote 6, TSUS. The Secretary of the Treasury 
has delegated authority to the Assistant Secretary for Enforcement and 
Operations, who has retained rulemaking authority and further delegated 
administration of the regulations to the Commissioner of the U.S. 
Customs Service. The authority of the Secretary of Commerce has been 
delegated to the Deputy Assistant Secretary for Import Administration 
who has retained rulemaking authority and further delegated 
administration of the regulations to the Director of the Statutory 
Import Programs Staff.

[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982]



Sec. 301.2  Definitions.

    For the purposes of these regulations and the forms used to 
implement them:
    (a) Director means the Director of the Statutory Import Programs 
Staff, International Trade Administration, U.S. Department of Commerce.
    (b) Customs means the U.S. Customs Service and the ``The 
Commissioner'' means Commissioner of the U.S. Customs Service, or the 
official(s) designated to act on the Commissioner's behalf.
    (c) Customs Port or the Port means the port where a particular claim 
has been or will be made for duty-free entry of a scientific instrument 
or apparatus under tariff item 851.60.
    (d) Entry means entry of an instrument into the Customs territory of 
the United States for consumption or withdrawal of an instrument from a 
Customs bonded warehouse for consumption.
    (e) United States includes only the several States, the District of 
Columbia and the Commonwealth of Puerto Rico.
    (f) Instrument means only instruments and apparatus classifiable 
under the tariff items specified in headnote 6(a) of part 4 of Schedule 
8. A combination of basic instrument or apparatus and accompanying 
accessories shall be treated as a single instrument provided that, under 
normal commercial practice, such combination is considered to be a 
single instrument and provided further that the applicant has ordered 
or, upon favorable action on its application, firmly intends to order 
the combination as a unit. Unless the context indicates otherwise, 
instrument or apparatus shall mean a foreign ``instrument or apparatus'' 
for which duty-free entry is sought under tariff item 851.60. Spare 
parts typically ordered and delivered with an instrument are also 
considered part of an instrument for purposes of these regulations. The 
term ``instruments'' shall not include:
    (1) Materials or supplies used in the operation of instruments and 
apparatus such as paper, cards, tapes, ink, recording materials, 
expendable laboratory materials, apparatus that loses identity or is 
consumed by usage or other materials or supplies.
    (2) Ordinary equipment for use in building construction or 
maintenance; or equipment for use in supporting activities of the 
institution, such as its administrative offices, machine shops, 
libraries, centralized computer facilities, eating facilities, or 
religious facilities; or support equipment such as copying machines, 
glass working apparatus and film processors.

[[Page 9]]

    (3) General purpose equipment such as air conditioners, electric 
typewriters, electric drills, refrigerators.
    (4) General-purpose computers. Accessories to computers which are 
not eligible for duty-free treatment are also ineligible. Scientific 
instruments containing embedded computers which are to be used in a 
dedicated process or in instrument control, as opposed to general data 
processing or computation, are, however, eligible for duty-free 
consideration.
    (5) Instruments initially imported solely for testing or review 
purposes which were entered under bond under tariff item 864.30, subject 
to the provisions of Headnote 1(a) of subpart C, part 5, schedule 8 TSUS 
and must be exported or destroyed within the time period specified in 
that headnote.
    (g) Domestic instrument means an instrument which is manufactured in 
the United States. A domestic instrument need not be made exclusively of 
domestic components or accessories.
    (h) Accessory has the meaning which it has under normal commercial 
usage. An accessory, whether part of an instrument or an attachment to 
an instrument, adds to the capability of an instrument. An accessory for 
which duty-free entry is sought under item 851.60 shall be the subject 
of a separate application when it is not an accompanying accessory.
    (i) Accompanying accessory means an accessory for an instrument that 
is listed as an item in the same purchase order and that is necessary 
for accomplishment of the purposes for which the instrument is intended 
to be used.
    (j) Ancillary equipment means an instrument which may be 
functionally related to the foreign instrument but is not operationally 
linked to it. Examples of ancillary equipment are vacuum evaporators or 
ultramicrotomes, which can be used to prepare specimens for electron 
microscopy. Further, equipment which is compatible with the foreign 
instrument, but is also clearly compatible with similar domestic 
instruments, such as automatic sampling equipment sold for use with a 
variety of mass spectrometers, will be treated as ancillary equipment. A 
separate application will be required for ancillary equipment even if 
ordered with the basic instrument.
    (k) Components of an instrument means parts or assemblies of parts 
which are substantially less than the instrument to which they relate. A 
component enables an instrument to function at a specified minimum 
level, while an accessory adds to the capability of an instrument. 
Applications shall not be accepted for components of instruments that 
did not enter duty-free under tariff item 851.60 or for components of 
instruments being manufactured or assembled by a commercial firm or 
entity in the U.S. In determining whether an item is a component 
ineligible for duty-free consideration or an accessory eligible for such 
consideration, Customs shall take into account such factors as the 
item's complexity, novelty, degree of integration and pertinency to the 
research purposes to be performed by the instrument as a whole.
    (l) Produced for stock means an instrument which is manufactured, on 
sale and available from a stock.
    (m) Produced on order means an instrument which a manufacturer lists 
in current catalog literature and is able and willing to produce and 
have available without unreasonable delay to the applicant.
    (n) Custom-made means an instrument which a manufacturer is willing 
and able to make to purchaser's specifications. Instruments resulting 
from a development effort are treated as custom-made for the purposes of 
these regulations. Also, a special-order variant of a produced on order 
instrument, with significant modifications specified by the applicant, 
may be treated as custom-made.
    (o) Same general category means the category in which an instrument 
is customarily classified in trade directories and product-source lists, 
e.g., scanning electron microscope, mass spectrometer, light microscope, 
x-ray spectrometer.
    (p) Comparable domestic instrument means a domestic instrument 
capable or potentially capable of fulfilling the applicant's technical 
requirements or intended uses, whether or not in the same general 
category as the foreign instrument.

[[Page 10]]

    (q) Specifications means the particulars of the structural, 
operational and performance characteristics or capabilities of a 
scientific instrument.
    (r) Guaranteed specifications are those specifications which are an 
explicit part of the contractual agreement between the buyer and the 
seller (or which would become part of the agreement if the buyer 
accepted the seller's offer), and refer only to the minimum and 
routinely achievable performance levels of the instrument under 
specified conditions. If a capability is listed or quoted as a range 
(e.g., ``5 to 10 angstroms'') or as a minimum that may be exceeded 
(e.g., ``5 angstroms or better''), only the inferior capability may be 
considered the guaranteed specification. Evidence that specifications 
are ``guaranteed'' will normally consist of their being printed in a 
brochure or other descriptive literature of the manufacturer; being 
listed in a purchase agreement upon which the purchase is conditioned; 
or appearing in a manufacturer's formal response to a request for quote. 
If, however, no opportunity to submit a bid was afforded the domestic 
manufacturer or if, for any other reason, comparable guaranteed 
specifications of the foreign and domestic instruments do not appear on 
the record, other evidence relating to a manufacturer's ability to 
provide an instrument with comparable specifications may, at the 
discretion of the Director, be considered in the comparison of the 
foreign and domestic instruments' capabilities.
    (s) Pertinent specifications are those specifications necessary for 
the accomplishment of the specific scientific research and/or science-
related educational purposes described by the applicant. Specifications 
of features (even if guaranteed) which afford greater convenience, 
satisfy personal preferences, accommodate institutional commitments or 
limitations, or assure lower costs of acquisition, installation, 
operation, servicing or maintenance are not pertinent. For example, a 
design feature, such as a small number of knobs or controls on an 
instrument primarily designed for research purposes, would be a 
convenience. The ability to fit an instrument into a small room, when 
the required operations could be performed in a larger room, would be 
either a cost consideration or a matter of convenience and not a 
pertinent specification. In addition, mere difference in design (which 
would, for example, broaden the educational experience of students but 
not provide superior scientific capability) would not be pertinent. 
Also, unless the applicant demonstrates it is necessary for the 
accomplishment of its specific scientific purposes, the terms does not 
extend to such characteristics as size, weight, appearance, durability, 
reliability, complexity or (simplicity), ease of operation, ease of 
maintenance, productivity, versatility, ``state of the art'' design, 
specific design, or other such characteristics.

[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982]



Sec. 301.3  Application for duty-free entry of scientific instruments.

    (a) Who may apply. An applicant for duty-free entry of an instrument 
under tariff item 851.60 must be a public or private nonprofit 
institution which is established for educational or scientific purposes 
and which has placed a bona fide order or has a firm intention to place 
a bona fide order for a foreign instrument within 60 days following a 
favorable decision on the institution's application.
    (b) Application forms. Applications must be made on form ITA-338P 
which may be obtained from the Statutory Import Programs Staff, 
International Trade Administration, U.S. Department of Commerce, 
Washington, DC 20230, or from the various District Offices of the U.S. 
Department of Commerce. (Approved by the Office of Management and Budget 
under control number 0625-0037.)
    (c) Where to apply. Applications must be filed with the U.S. Customs 
Service, Department of the Treasury, at the address specified on page 1 
of the form.
    (d) Five copies of the form, including relevant supporting 
documents, must be submitted. One copy of the form shall be signed in 
the original by the person in the applicant institution under whose 
direction and control the foreign instrument will be used and who is 
familiar with the intended uses

[[Page 11]]

of the instrument. The remaining four copies of the form may be copies 
of the original. Attachments should be fully identified and referenced 
to the question(s) on the form to which they relate.
    (e) A single application (in the requisite number of copies) may be 
submitted for any quantity of the same type or model of foreign 
instrument provided that the entire quantity is intended to be used for 
the same purposes and provided that all units are included on a single 
purchase order. A separate application shall be submitted for each 
different type or model or variation in the type or model of instrument 
for which duty-free entry is sought even if covered by a single purchase 
order. Orders calling for multiple deliveries of the same type or model 
of instrument over a substantial period of time may, at the discretion 
of the Director, require multiple applications.
    (f) Failure to answer completely all questions on the form in 
accordance with the instructions on the form or to supply the requisite 
number of copies of the form and supporting documents may result in 
delays in processing of the application while the deficiencies are 
remedied, return of the application without processing, or denial of the 
application without prejudice to resubmission. Any questions on these 
regulations or the application form should be addressed to the Director.

[47 FR 32517, July 28, 1982, as amended at 50 FR 11501, Mar. 22, 1985]



Sec. 301.4  Processing of applications by the Department of the Treasury (U.S. Customs Service).

    (a) Review and determination. The Commissioner shall date each 
application when received by Customs. If the application appears to be 
complete, the Commissioner shall determine:
    (1) Whether the institution is a nonprofit private or public 
institution established for research and educational purposes and 
therefore authorized to import instruments into the U.S. under tariff 
item 851.60. In making this determination the Commissioner will 
generally review the application to determine if the applicant has 
attached a copy of the letter from the Internal Revenue Service (IRS) 
granting the institution nonprofit status (exemption from Federal income 
tax) under section 501(c)(3) of the IRS Code or will determine if the 
institution is listed in a current edition of ``Cumulative List of 
Exempt Organizations'';
    (2) Whether the instrument falls within the classes of instruments 
eligible for duty-free entry consideration under tariff item 851.60 (For 
eligible classes see Headnote 6(a), part 4, Schedule 8, TSUS); and
    (3) Whether the instrument which is the subject of the application 
is intended for the exclusive use of the applicant institution and is 
not intended to be used for commercial purposes. For the purposes of 
this section, commercial uses would include, but not necessarily be 
limited to: Distribution or sale of the instrument by the applicant 
institution; any use by, or for the primary benefit of, a commercial 
entity; or use of the instrument for demonstration purposes in return 
for a fee or other valuable consideration. In making the above 
determination, the Commissioner may consider, among other things, 
whether the results of any research to be performed with the instrument 
will be fully and timely made available to the public. For the purposes 
of this section, use of an instrument for the treatment of patients is 
considered noncommercial.

If any of the Commissioner's determinations is in the negative, the 
application shall be found to be outside the scope of the Act and shall 
be returned to the applicant with a statement of the reason(s) for such 
findings.

    (b) Forwarding of applications to the Department of Commerce. If the 
Commissioner finds the application to be within the scope of the Act and 
these regulations, the Commissioner shall (1) assign a number to the 
application and (2) forward one copy to the Secretary of the Department 
of Health and Human Services (HHS), and two copies, including the one 
that has been signed in the original, to the Director. The Commissioner 
shall retain one copy and return the remaining copy to the applicant 
stamped ``Accepted for Transmittal to the Department of Commerce.'' The 
applicant shall file the stamped copy of the form with the Port when 
formal entry of the article is made. If entry has already occurred

[[Page 12]]

under a claim of tariff item 851.60, the applicant (directly or through 
his/her agent) shall at the earliest possible date supply the stamped 
copy to the Port. Further instructions for entering instruments are 
contained in Sec. 301.8 of the regulations.

[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 50 
FR 11501, Mar. 22, 1985]



Sec. 301.5  Processing of applications by the Department of Commerce.

    (a) Public notice and opportunity to present views. (1) Within 10 
days of receipt of an application from the Commissioner, the Director 
shall make a copy available for public inspection during ordinary 
business hours of the Department of Commerce. Unless the Director 
determines that an application has deficiencies which preclude 
consideration on its merits (e.g., insufficient description of intended 
purposes to rule on the scientific equivalency of the foreign instrument 
and potential domestic equivalents), he shall publish in the Federal 
Register a notice of the receipt of the application to afford all 
interested persons a reasonable opportunity to present their views with 
respect to the question ``whether an instrument or apparatus of 
equivalent scientific value for the purpose for which the article is 
intended to be used is being manufactured in the United States.'' The 
notice will include the application number, the name and address of the 
applicant, a description of the instrument(s) for which duty-free entry 
is requested, the name of the foreign manufacturer and a brief summary 
of the applicant's intended purposes extracted from the applicant's 
answer to question 7 of the application. In addition, the notice shall 
specify the date the application was accepted by the Commissioner for 
transmittal to the Department of Commerce.
    (2) If the Director determines that an application is incomplete or 
is otherwise deficient, he may request the applicant to supplement the 
application, as appropriate, prior to publishing the notice of 
application in the Federal Register. Supplemental information/material 
requested under this provision shall be supplied to the Director in two 
copies within 20 days of the date of the request and shall be subject to 
the certification contained in Question 11 of the form. Failure to 
provide the requested information on time shall result in a denial of 
the application without prejudice to resubmission.
    (3) Requirement for presentation of views (comments) by interested 
persons. Any interested person or government agency may make written 
comments to the Director with respect to the question whether an 
instrument of equivalent scientific value, for the purposes for which 
the foreign instrument is intended to be used, is being manufactured in 
the United States. Except for comments specified in paragraph (a)(4) of 
this section, comments should be in the form of supplementary answers to 
the applicable questions on the application form. Comments must be 
postmarked no later than 20 days from the date on which the notice of 
application is published in the Federal Register. In order to be 
considered, comments and related attachments must be submitted to the 
Director in duplicate; shall state the name, affiliation and address of 
the person submitting the comment; and shall specify the application to 
which the comment applies. In order to preserve the right to appeal the 
Director's decision on a particular application pursuant to Sec. 301.6 
of these regulations, a domestic manufacturer or other interested person 
must make timely comments on the application. Separate comments should 
be supplied on each application in which a person has an interest. 
However, brochures, pamphlets, printed specifications and the like, 
included with previous comments, if properly identified, may be 
incorporated by reference in subsequent comments. If the Director knows 
of the availability of a domestic instrument which may be comparable to 
the foreign instrument, he may: (i) Require the applicant to compare the 
domestic instrument with the foreign instrument; or (ii) compare the two 
instruments whether or not comments are received from a domestic 
manufacturer on the specific application.
    (4) Comments by domestic manufacturers. Comments of domestic 
manufacturers opposing the granting of an application should:

[[Page 13]]

    (i) Specify the domestic instrument considered to be scientifically 
equivalent to the foreign article for the applicant's specific intended 
purposes and include documentation of the domestic instrument's 
guaranteed specifications and date of availability.
    (ii) Show that the specifications claimed by the applicant in 
response to question 8 to be pertinent to the intended purpose can be 
equaled or exceeded by those of the listed domestic instrument(s) 
whether or not it has the same design as the foreign instrument; that 
the applicant's alleged pertinent specifications should not be 
considered pertinent within the meaning of Sec. 301.2(s) of the 
regulations for the intended purposes of the instrument described in 
response to question 7 of the application; or that the intended purposes 
for which the instrument is to be used do not qualify the instrument for 
duty-free consideration under the Act.
    (iii) Where the comments regarding paragraphs (a)(4)(i) and 
(a)(4)(ii) of this section relate to a particular accessory or optional 
device offered by a domestic manufacturer, cite the type, model or other 
catalog designation of the accessory device and include the 
specification therefor in the comments.
    (iv) Where the justification for duty-free entry is based on 
excessive delivery time, show whether:
    (A) The domestic instrument is as a general rule either produced for 
stock, produced on order, or custom-made and;
    (B) An instrument or apparatus of equivalent scientific value to the 
article, for the purposes described in response to question 7, could 
have been produced and delivered to the applicant within a reasonable 
time following the receipt of the order.
    (v) Indicate whether the applicant afforded the domestic 
manufacturer an opportunity to furnish an instrument or apparatus of 
equivalent scientific value to the article for the purposes described in 
response to question 7 and, if such be the case, whether the applicant 
submitted a formal invitation to bid that included the technical 
requirements of the applicant.
    (5) Untimely comments. Comments must be made on a timely basis to 
ensure their consideration by the Director and the technical 
consultants, and to preserve the commenting person's right to appeal the 
Director's decision on an application. The Director, in his discretion, 
may entertain comments filed untimely to the extent that they contain 
factual information, as opposed to arguments, explanations or 
recommendations.
    (6) Provision of general comments. A domestic manufacturer who does 
not wish to oppose duty-free entry of a particular application, but who 
desires to apprise the Director of the availability and capabilities of 
its instrument(s), may at any time supply documentation to the Director 
without reference to a particular application. Such documentation shall 
be routinely taken into account by the Director when applications 
involving comparable foreign instruments are received. The provision of 
general comments does not preserve the commentor's right to appeal the 
Director's decision on a particular application.
    (7) Provision of application to domestic manufacturers. To 
facilitate timely comments, the Director may furnish copies of certain 
applications to domestic manufacturers who intend to comment on 
applications, provided:
    (i) The manufacturer requests the service in writing;
    (ii) The manufacturer provides copies of current company literature 
regarding the domestic instrument and its guaranteed capabilities; and
    (iii) The manufacturer identifies the specific models or types of 
comparable foreign instrument(s) that it proposes to comment on. The 
Director may furnish for comment copies of the appropriate applications 
to the domestic manufacturer until the firm requests that the service be 
discontinued, provided the firm utilizes the service to supply written 
comments on applications. If the recipient of the service fails to avail 
itself of the opportunity to comment on appropriate applications for a 
period of one year, the Director may at his discretion discontinue the 
service. For reasons of cost and administrative burden, the service may 
be discontinued at the discretion of the Director. In such case the 
Director shall notify all recipients

[[Page 14]]

of the service in writing of such discontinuance.
    (b) Additions to the record. The Director may solicit from the 
applicant or from foreign or domestic manufacturers, and agents thereof, 
or any other person or Government agency considered by the Director to 
have competence on any issue pertaining to an application, any 
additional information the Director deems necessary to the rendering of 
a decision. The Director may attach such conditions and time limitations 
deemed appropriate upon the provision of such information and may draw 
appropriate inferences from a person's failure to provide the requested 
information.
    (c) Advice from technical consultants.
    (1) The Director shall consider any written advice from the 
Secretary of HHS, or his delegate, on the question whether a domestic 
instrument of equivalent scientific value to the foreign instrument, for 
the purposes for which the instrument is intended to be used, is being 
manufactured in the United States.
    (2) After the comment period has ended (Sec. 301.5(a)(3)), the 
complete application and any comments received and related information 
are forwarded to the appropriate technical consultants for their written 
advice.
    (3) The technical consultants are requested to provide their written 
recommendation within 30 days of the date of transmittal. The technical 
consultants relied upon for advice may include, but are not limited to, 
the National Institutes of Health (delegated the function by the 
Secretary of HHS), the National Bureau of Standards and the National 
Oceanographic and Atmospheric Administration.
    (d) Criteria for the determinations of the Department of Commerce--
(1) Scientific equivalency. (i) The determination of scientific 
equivalency shall be based on a comparison of the pertinent 
specifications of the foreign instrument with similar pertinent 
specifications of comparable domestic instruments (see Sec. 301.2(s) for 
the definition of pertinent specification). Ordinarily, the Director 
will consider only those performance characteristics which are 
``guaranteed specifications'' within the meaning of Sec. 301.2(r) of 
this part. In no event, however, shall the Director consider performance 
capabilities superior to the manufacturer's guaranteed specifications or 
their equivalent. In making the comparison the Director may consider a 
reasonable combination of domestic instruments that combines two or more 
functions into an integrated unit if the combination of domestic 
instruments is capable of accomplishing the purposes for which the 
foreign instrument is intended to be used. If the Director finds that a 
domestic instrument possesses all of the pertinent specifications of the 
foreign instrument, he shall find that there is being manufactured in 
the United States an instrument of equivalent scientific value for such 
purposes as the foreign instrument is intended to be used. If the 
Director finds that the foreign instrument possesses one or more 
pertinent specifications not possessed by the comparable domestic 
instrument(s), the Director shall find that there is not being 
manufactured in the United States an instrument of equivalent scientific 
value to the foreign instrument for such purposes as the foreign 
instrument is intended to be used.
    (ii) Programs that may be undertaken at some unspecified future date 
shall not be considered in the Director's comparison. In making the 
comparison, the Director shall consider only the instrument and 
accompanying accessories described in the application and determined 
eligible by the U.S. Customs Service. The Director shall not consider 
the planned purchase of additional accessories or the planned conversion 
of the article at some unspecified future time for such programs.
    (iii) In order for the Director to make a determination with respect 
to the ``scientific equivalency'' of the foreign and domestic 
instruments, the applicant's intended purposes must include either 
scientific research or science-related educational programs. Instruments 
used exclusively for nonscientific purposes have no scientific value, 
thereby precluding the requisite finding by the Director with respect to 
``whether an instrument or apparatus of equivalent scientific value to 
such article, for the purposes for which the article is intended to be 
used, is being

[[Page 15]]

manufactured in the United States.'' In such cases the Director shall 
deny the application for the reason that the instrument has no 
scientific value for the purposes for which it is intended to be used. 
Examples of nonscientific purposes would be the use of an instrument in 
routine diagnosis or patient care and therapy (as opposed to clinical 
research); in teaching a nonscientific trade (e.g., printing, 
shoemaking, metalworking or other types of vocational training); in 
teaching nonscientific courses (e.g., music, home economics, journalism, 
drama); in presenting a variety of subjects or merely for presenting 
coursework, whether or not science related (e.g., video tape editors, 
tape recorders, projectors); and in conveying cultural information to 
the public (e.g., a planetarium in the Smithsonian Institution).
    (2) Manufactured in the United States. An instrument shall be 
considered as being manufactured in the United States if it is 
customarily ``produced for stock,'' ``produced on order'' or ``custom-
made'' within the United States. In determining whether a U.S. 
manufacturer is able and willing to produce an instrument, and have it 
available without unreasonable delay, the normal commercial practices 
applicable to the production and delivery of instruments of the same 
general category shall be taken into account, as well as other factors 
which in the Director's judgment are reasonable to take into account 
under the circumstances of a particular case. For example, in 
determining whether a domestic manufacturer is able to produce a custom-
made instrument, the Director may take into account the production 
experience of the domestic manufacturer including (i) the types, 
complexity and capabilities of instruments the manufacturer has 
produced, (ii) the extent of the technological gap between the 
instrument to which the application relates and the manufacturer's 
customary products, (iii) the manufacturer's technical skills, (iv) the 
degree of saturation of the manufacturer's production capability, and 
(v) the time required by the domestic manufacturer to produce the 
instrument to the purchaser's specification. Whether or not the domestic 
manufacturer has field tested or demonstrated the instrument will not, 
in itself, enter into the decision regarding the manufacturer's ability 
to manufacture an instrument. Similarly, in determining whether a 
domestic manufacturer is willing to produce an instrument, the Director 
may take into account the nature of the bid process, the manufacturer's 
policy toward manufacture of the product(s) in question, the minimum 
size of the manufacturer's production runs, whether the manufacturer has 
bid similar instruments in the past, etc. Also, if a domestic 
manufacturer was formally requested to bid an instrument, without 
reference to cost limitations and within a leadtime considered 
reasonable for the category of instrument involved, and the domestic 
manufacturer failed formally to respond to the request, for the purposes 
of this section the domestic manufacturer would not be considered 
willing to have supplied the instrument.
    (3) Burden of proof. The burden of proof shall be on the applicant 
to demonstrate that no instrument of equivalent scientific value for the 
purposes for which the foreign instrument is to be used is being 
manufactured in the United States. Evidence of applicant favoritism 
towards the foreign manufacturer (advantages not extended to domestic 
firms, such as additional lead time, know-how, methods, data on 
pertinent specifications or intended uses, results of research or 
development, tools, jigs, fixtures, parts, materials or test equipment) 
may be, at the Director's discretion, grounds for rejecting the 
application.
    (4) Excessive delivery time. Duty-free entry of the instrument shall 
be considered justified without regard to whether there is being 
manufactured in the United States an instrument of equivalent scientific 
value for the intended purposes if excessive delivery time for the 
domestic instrument would seriously impair the accomplishment of the 
applicant's intended purposes. For purposes of this section, (i) except 
when objective and convincing evidence is presented that, at the time of 
order, the actual delivery time

[[Page 16]]

would significantly exceed quoted delivery time, no claim of excessive 
delivery time may be made unless the applicant has afforded the domestic 
manufacturer an opportunity to quote and the delivery time for the 
domestic instrument exceeds that for the foreign instrument; and (ii) 
failure by the domestic manufacturer to quote a specific delivery time 
shall be considered a non-responsive bid (see Sec. 301.5(d)(2)). In 
determining whether the difference in delivery times cited by the 
applicant justifies duty-free entry on the basis of excessive delivery 
time, the Director shall take into account (A) the normal commercial 
practice applicable to the production of the general category of 
instrument involved; (B) the efforts made by the applicant to secure 
delivery of the instruments (both foreign and domestic) in the shortest 
possible time; and (C) such other factors as the Director finds relevant 
under the circumstances of a particular case.
    (e) Denial without prejudice to resubmission (DWOP). The Director 
may, at any stage in the processing of an application by the Department 
of Commerce, DWOP an application if the application contains any 
deficiency which, in the Director's judgment, prevents a determination 
on its merits. The Director shall state the deficiences of the 
application in a letter to the applicant in making the provisional 
denial.
    (1) The applicant has 60 days from the date of the DWOP to correct 
the cited deficiencies in the application unless a request for an 
extension of time for submission of the supplemental information has 
been received by the Director prior to the expiration of the 60-day 
period and is approved.
    (2) The written request (letter or telegram) for an extension should 
indicate the reasons for the request and the amount of additional time 
needed. If granted, extensions of time will generally be limited to 30 
days.
    (3) Resubmissions must reference the application number of the 
earlier application. The resubmission shall be made by letter and filed 
in quadruplicate with the Director. The record of a resubmitted 
application shall include the original submission on file with the 
Department. Any new material or information contained in a resubmission, 
which should address the specific deficiencies cited in the DWOP letter, 
should be clearly labeled and referenced to the applicable question(s) 
on the application form. The resubmission should be signed and dated by 
the individual in the applicant institution who signed the original 
application or, in his/her absence, the individual in the applicant 
institution under whose direction and control the foreign instrument 
will be used and who is familiar with the intended uses of the 
instrument. The resubmission must be for the instrument covered by the 
original application unless the DWOP letter specifies to the contrary. 
The resubmission shall be subject to the certification contained in 
question 11 on the original application.
    (4) If the applicant fails to resubmit within the applicable time 
period, the prior DWOP shall, irrespective of the merits of the case, 
result in a denial of the application.
    (5) The Director shall use the postmark date of the fully completed 
resubmission in determining whether the resubmission was made within the 
allowable time period. Certified or registered mail, or some other means 
which can unequivocally establish the date of mailing, is recommended.
    (6) The applicant may, at any time prior to the end of the 
resubmission period, notify the Director in writing that it does not 
intend to resubmit the application. Upon such notification, the 
application will be deemed to have been withdrawn. (See Sec. 301.5(g).)
    (7) Information provided in a resubmission that, in the judgment of 
the Director, contradicts or conflicts with information provided in a 
prior submission, or is not a reasonable extension of the information 
contained in the prior submission, shall not be considered in making the 
decision on an application that has been resubmitted. Accordingly, an 
applicant may elect to reinforce an orginal submission by elaborating in 
the resubmission on the description of the purposes contained in a prior 
submission and may supply additional examples, documentation and/or 
other clarifying detail, but the applicant shall not introduce new 
purposes

[[Page 17]]

or other material changes in the nature of the original application. The 
resubmission should address the specific deficiencies cited in the DWOP. 
The Director may draw appropriate inferences from the failure of an 
applicant to attempt to provide the information requested in the DWOP.
    (8) In the event an applicant fails to address the noted 
deficiencies in the response to the DWOP, the Director may deny the 
application.
    (9) Upon receipt of a responsive resubmission the Director shall 
publish a notice in the Federal Register citing the number of the 
earlier application, the name and address of the applicant institution, 
the instrument(s) involved, and any other information the Director deems 
relevant. The notice will also include the Federal Register citation for 
the original notice of application. Procedures applicable to comments on 
the processing of original applications shall thereafter apply.
    (f) Decisions on applications. The Director shall prepare a written 
decision granting or denying each application. However, when he deems 
appropriate, the Director may issue a consolidated decision on two or 
more applications. The Director shall promptly forward a copy of the 
decision to each applicant institution and to the Federal Register for 
publication.
    (g) Withdrawal of applications. The Director shall discontinue 
processing an application withdrawn by the applicant and shall publish 
notice of such withdrawal in the Federal Register. If at any time while 
its application is pending before the Director, either during the 
intital application or resubmission stage, an applicant cancels an order 
for the instrument to which the application relates or ceases to have a 
firm intention to order such instrument or apparatus, the institution 
shall promptly notify the Director. Such notification shall constitute a 
withdrawal. Withdrawals shall be considered as having been finally 
denied for purposes of Sec. 301.7(c) below.
    (h) Nothing in this subsection shall be construed as limiting the 
Director's discretion at any stage of processing to insert into the 
record and consider in making his decision any information in the public 
domain which he deems relevant.

[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 50 
FR 11501, Mar. 22, 1985]



Sec. 301.6  Appeals.

    (a) An appeal from any decision made pursuant to Sec. 301.5(f) may 
be taken, in accordance with headnote 6(e) to part 4 of Schedule 8, only 
to the U.S. Court of Customs and Patent Appeals and only on questions of 
law, within 20 days after publication of the decision in the Federal 
Register. If at any time while its application is under consideration by 
the Court of Customs and Patent Appeals on an appeal from a finding by 
the Director an institution cancels an order for the instrument to which 
the application relates or ceases to have a firm intention to order such 
instrument, the institution shall promptly notify the court.
    (b) An appeal may be taken by: (1) The institution which makes the 
application;
    (2) A person who, in the proceeding which led to the decision, 
timely represented to the Secretary of Commerce in writing that he/she 
manufactures in the United States an instrument of equivalent scientific 
value for the purposes for which the instrument to which the application 
relates is intended to be used;
    (3) The importer of the instrument, if the instrument to which the 
application relates has been entered at the time the appeal is taken; or
    (4) An agent of any of the foregoing.
    (c) Questions regarding appeal procedures should be addressed 
directly to the U.S. Court of Customs and Patent Appeals, Clerks' 
Office, Washington, DC 20439.



Sec. 301.7  Final disposition of an application.

    (a) Disposition of an application shall be final when 20 days have 
elapsed after publication of the Director's final decision in the 
Federal Register (see Sec. 301.6(a)) and no appeal has been taken 
pursuant to Sec. 301.6 of these regulations, of if such appeal has been 
taken, when final judgment is made and entered by the Court.

[[Page 18]]

    (b) The Director shall notify the Customs Port when disposition of 
an application becomes final. If the Director has not been advised of 
the port of entry of the instrument, or if entry has not been made when 
the decision on the application becomes final, the Director shall notify 
the Commissioner of final disposition of the application.
    (c) An instrument, the duty-free entry of which has been finally 
denied, may not be the subject of a new application from the same 
institution.



Sec. 301.8  Instructions for entering instruments through U.S. Customs under tariff item 851.60.

    Failure to follow the procedures in this section may disqualify an 
instrument for duty-free entry notwithstanding an approval of an 
application on its merits by the Department of Commerce.
    (a) Entry procedures. (1) An applicant desiring duty-free entry of 
an instrument may make a claim at the time of entry of the instrument 
into the Customs territory of the United States that the instrument is 
entitled to duty-free classification under tariff item 851.60.
    (2) If no such claim is made the instrument shall be immediately 
classified without regard to tariff item 851.60, duty will be assessed, 
and the entry liquidated in the ordinary course.
    (3) If a claim is made for duty-free entry under tariff item 851.60, 
the entry shall be accepted without requiring a deposit of estimated 
duties provided that a copy of the form, stamped by Customs as accepted 
for transmittal to the Department of Commerce in accordance with 
Sec. 301.4(b), is filed simultaneously with the entry.
    (4) If a claim for duty-free entry under tariff item 851.60 is made 
but is not accompanied by a copy of the properly stamped form, a deposit 
of the estimated duty is required. Liquidation of the entry shall be 
suspended for a period of 180 days from the date of entry. On or before 
the end of this suspension period the applicant must file with the 
Customs Port a properly stamped copy of the form. In the event that the 
Customs Port does not receive a copy of the properly stamped form within 
180 days the instrument shall be classified and liquidated in the 
ordinary course, without regard to tariff item 851.60.
    (5) Entry of an instrument after the Director's approval of an 
application. Whenever an institution defers entry until after it 
receives a favorable final determination on the application for duty-
free entry of the instrument, the importer shall file with the entry of 
the instrument (i) the stamped copy of the form, (ii) the institution's 
copy of the favorable final determination and (iii) proof that a bona 
fide order for the merchandise was placed on or before the 60th day 
after the favorable decision became final pursuant to Sec. 301.7 of 
these regulations. Liquidation in such case shall be made under tariff 
item 851.60.
    (b) Normal Customs entry requirements. In addition to the above 
entry requirements mentioned in paragraph (a) of this section, the 
normal Customs entry requirements must be met. In most of the cases, the 
value of the merchandise will be such that the formal Customs entry 
requirements, which generally include the filing of a Customs entry 
bond, must be complied with. (For further information, see 19 CFR 142.3 
and 142.4 (TD-221).)
    (c) Late filing. Notwithstanding the preceding provisions of 
Sec. 301.8 any document, form, or statement required by regulations in 
this section to be filed in connection with the entry may be filed at 
any time before liquidation of the entry becomes final, provided that 
failure to file at the time of entry or within the period for which a 
bond was filed for its production was not due to willful negligence or 
fraudulent intent. Liquidation of any entry becomes conclusive upon all 
persons if the liquidation is not protested in writing in accordance 
with 19 CFR part 174, or the necessary document substantiating duty-free 
entry is not produced in accordance with 19 CFR 10.112, within 90 days 
after notice of liquidation. Upon notice of such final and conclusive 
liquidation, the Department of Commerce will cease the processing of any 
pending application for duty-free entry of the subject article. In all 
other respects, the provisions of this section do not apply to 
Department of Commerce

[[Page 19]]

responsibilities and procedures for processing applications pursuant to 
other sections of these regulations.
    (d) Payment of duties. The applicant will be billed for payment of 
duties when Customs determines that such payment is due.



Sec. 301.9  Uses and disposition of instruments entered under item 851.60, TSUS.

    (a) An instrument granted duty-free entry may be transferred from 
the applicant institution to another eligible institution provided the 
latter institution agrees not to use the instrument for commercial 
purposes within 5 years of the date of entry of the instrument. In such 
cases title to the instrument must be transferred directly between the 
institutions involved. An institution transferring a foreign instrument 
entered under item 851.60 within 5 years of its entry shall so inform 
the Customs Port in writing and shall include the following information:
    (1) The name and address of the transferring institution.
    (2) The name and address of the transferee.
    (3) The date of transfer.
    (4) A detailed description of the instrument.
    (5) The serial number of the instrument and any accompanying 
accessories.
    (6) The entry number, date of entry, and port of entry of the 
instrument.
    (b) Whenever the circumstances warrant, and occasionally in any 
event, the fact of continued use for 5 years for noncommercial purposes 
by the applicant institution shall be verified by Customs.
    (c) If an instrument is transferred in a manner other than specified 
above or is used for commercial purposes within 5 years of entry, the 
institution for which such instrument was entered shall promptly notify 
the Customs officials at the Port and shall be liable for the payment of 
duty in an amount determined on the basis of its condition as imported 
and the rate applicable to it.



Sec. 301.10  Importation of repair components under item 851.65 for article previously entered under item 851.60.

    (a) An institution which owns an instrument entered under tariff 
item 851.60 and desires to enter repair components for such instrument 
under tariff item 851.65 may do so without regard to the application 
procedures applicable to entries under item 851.60 provided the 
institution certifies to the customs official at the port of entry upon 
entry of such components that they are needed repair components for an 
instrument owned by that institution and previously entered and 
classified under tariff item 851.60.
    (b) Instruments entered under item 851.60 and subsequently returned 
to the foreign manufacturer for repair, replacement or modification are 
not covered by tariff item 851.65, although they may, in certain 
circumstances, be considered non-dutiable under other Customs provisions 
(e.g., drawback within the specified period pursuant to 19 U.S.C. 
1313(c)). Such instruments, if classified as dutiable by Customs, may 
nevertheless be made the subject of a new application under tariff item 
851.60.

[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982]

                           PART 302 [RESERVED]



PART 303--WATCHES AND WATCH MOVEMENTS--Table of Contents




Sec.
303.1  Purpose.
303.2  Definitions and forms.
303.3  Determination of the total annual duty-exemption.
303.4  Determination of territorial distribution.
303.5  Application for annual allocations of duty-exemptions.
303.6  Allocation and reallocation of exemptions among producers.
303.7  Issuance of licenses and shipment permits.
303.8  Maintenance of duty-exemption entitlements.
303.9  Restrictions on the transfer of duty-exemptions.
303.10-303.11  [Reserved]

[[Page 20]]

303.12  Issuance and use of production incentive certificates.
303.13  Appeals.
303.14  Allocation factors and miscellaneous provisions.

    Authority: Pub. L. 94-241, 90 Stat. 263 (48 U.S.C. 1681, note); Pub. 
L. 97-446, 96 Stat. 2331 (19 U.S.C. 1202, note); Pub. L. 103-465, 108 
Stat. 4991.

    Source: 49 FR 17740, Apr. 25, 1984, unless otherwise noted.



Sec. 303.1  Purpose.

    (a) This part implements the responsibilities of the Secretaries of 
Commerce and the Interior (``the Secretaries'') under Pub. L. 97-446, 
enacted on 12 January 1983, which substantially amended Pub. L. 89-805, 
enacted 10 November 1966, amended by Pub. L. 94-88, enacted 8 August 
1975, and amended by Pub. L. 94-241, enacted 24 March 1976, and amended 
by Pub. L. 103-465, enacted 8 December 1994. The law provides for 
exemption from duty of territorial watches and watch movements without 
regard to the value of the foreign materials they contain, if they 
conform with the provisions of U.S. Legal Note 5 to Chapter 91 of the 
Harmonized Tariff Schedule of the United States (``91/5''). 91/5 denies 
this benefit to articles containing any material which is the product of 
any country with respect to which Column 2 rates of duty apply; 
authorizes the Secretaries to establish the total quantity of such 
articles, provided that the quantity so established does not exceed 
10,000,000 units or one-ninth of apparent domestic consumption, 
whichever is greater, and provided also that the quantity is not 
decreased by more than ten percent nor increased by more than twenty 
percent (or to more than 7,000,000 units, whichever is greater) of the 
quantity established in the previous year.
    (b) The law directs the International Trade Commission to determine 
apparent domestic consumption for the preceding calendar year in the 
first year U.S. insular imports of watches and watch movements exceed 
9,000,000 units. 91/5 authorizes the Secretaries to establish 
territorial shares of the overall duty-exemption within specified 
limits; and provides for the annual allocation of the duty-exemption 
among insular watch producers equitably and on the basis of allocation 
criteria, including minimum assembly requirements, that will reasonably 
maximize the net amount of direct economic benefits to the insular 
possessions.
    (c) The amended law also provides for the issuance to producers of 
certificates entitling the holder (or any transferee) to obtain duty 
refunds on watches and watch movements and parts (except discrete 
watchcases) imported into the customs territory of the United States. 
The amounts of these certificates may not exceed specified percentages 
of the producers' verified creditable wages in the insular possessions 
(90% of wages paid for the production of the first 300,000 units and 
declining percentages, established by the Secretaries, of wages paid for 
incremental production up to 750,000 units by each producer) nor an 
aggregate annual amount for all certificates exceeding $5,000,000 
adjusted for growth by the ratio of the previous year's gross national 
product to the gross national product in 1982. Refund requests are 
governed by regulations issued by the Department of the Treasury. The 
Secretaries are authorized to issue regulations necessary to carry out 
their duties under Headnote 6 and may cancel or restrict the license or 
certificate of any insular manufacturer found violating the regulations.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 
53 FR 52994, Dec. 30, 1988; 61 FR 55884, Oct. 30, 1996]



Sec. 303.2  Definitions and forms.

    (a) Definitions. Unless the context indicates otherwise:
    (1) Act means Pub. L. 97-446, enacted January 12, 1983 (19 U.S.C. 
1202), 96 Stat. 2329, as amended by Pub. L. 103-465, enacted on December 
8, 1994, 108 Stat. 4991.
    (2) Secretaries means the Secretary of Commerce and the Secretary of 
Interior or their delegates, acting jointly.
    (3) Director means the Director of the Statutory Import Programs 
Staff, International Trade Administration, U.S. Department of Commerce.
    (4) Sale or tranfer of a business means the sale or transfer of 
control, whether temporary or permanent, over a firm

[[Page 21]]

to which a duty-exemption has been allocated, to any other firm, 
corporation, partnership, person or other legal entity by any means 
whatsoever, including, but not limited to, merger and transfer of stock, 
assets or voting trusts.
    (5) New firm means an entity which is completely separate from and 
unassociated with (by way of ownership or control) any duty-exempt 
recipient in any territory. A new entrant is a new firm which has 
received an allocation.
    (6) Producer means a duty-exemption holder which has maintained its 
eligibility for further allocations by complying with these regulations.
    (7) Established industry means all producers, including new 
entrants, that have maintained their eligibility for further 
allocations.
    (8) Territories, territorial, and insular possessions refer to the 
insular possessions of the United States (i.e., the U.S. Virgin Islands, 
Guam, and American Samoa) and the Northern Mariana Islands.
    (9) Duty-exemption refers to the authorization of duty-free entry of 
a specified number of watches and watch movements into the Customs 
Territory of the United States.
    (10) Total annual duty-exemption refers to the entire quantity of 
watches or watch components which may enter duty-free into the customs 
territory of the United States from the territories under 91/5 in a 
calendar year, as determined by the Secretaries or by the International 
Trade Commission in accordance with the Act.
    (11) Territorial distribution refers to the apportionment by the 
Secretaries of the total annual duty-exemption among the separate 
territories; territorial share means the portion consigned to each 
territory by this apportionment.
    (12) Allocation refers to the distribution of all parts of a 
territorial share, or a portion thereof, among the several producers in 
a territory.
    (13) Creditable wages means all wages--up to the amount per person 
shown in Sec. 303.14(a)(1)(i)--paid to permanent residents of the 
territories employed in a firm's 91/5 watch and watch movement assembly 
operations, plus any wages paid for the repair of non-91/5 watches up to 
an amount equal to 50 percent of the firm's total creditable wages. 
Excluded, however, are wages paid for special services rendered to the 
firm by accountants, lawyers, or other professional personnel and for 
the repair of non-91/5 watches and movements to the extent that such 
wages exceed the foregoing ratio. Wages paid to persons engaged in both 
creditable and non-creditable assembly and repair activities may be 
credited proportionately provided the firm maintains production and 
payroll records adequate for the Departments' verification of the 
creditable portion.
    (14) Non-91/5 watches and watch movements include, but are not 
limited to, watches and movements which are liquidated as dutiable by 
the U.S. Customs Service; contain any material which is the product of 
any country with respect to which Column 2 rates of duty apply; are 
ineligible for duty-free treatment pursuant to law or regulation; or are 
units the assembly of which the Department has determined not to involve 
substantial and meaningful work in the territory (as elsewhere defined 
in these regulations).
    (15) Discrete movements and components means screws, parts, 
components and subassemblies not assembled together with another part, 
component or subassembly at the time of importation into the territory. 
(A mainplate containing set jewels or shock devices, together with other 
parts, would be considered a single discrete component, as would a 
barrel bridge subassembly.)
    (b) Forms--(1) ITA-334P ``Application for License to Enter Watches 
and Watch Movements into the Customs Territory of the United States.'' 
This form must be completed annually by all producers desiring to 
receive an annual allocation. It is also used, with appropriate special 
instructions for its completion, by new firms applying for duty-
exemptions.
    (2) ITA-333 ``License to Enter Watches and Watch Movements into the 
Customs Territory of the United States.'' This form is issued by the 
Director to producers who have received an allocation and constitutes 
authorization for issuing specific shipment permits by

[[Page 22]]

the territorial governments. It is also used to record the balance of a 
producer's remaining duty-exemptions after each shipment permit is 
issued.
    (3) ITA-340 ``Permit to Enter Watches and Watch Movements into the 
Customs Territory of the United States.'' This form may be obtained, by 
producers holding a valid license, from the territorial government or 
may be produced by the licensee in an approved computerized format or 
any other medium or format approved by the Departments of Commerce and 
the Interior. The completed form authorizes duty-free entry of a 
specified amount of watches or watch movements at a specified U.S. 
Customs port.
    (4) ITA-360P ``Certificate of Entitlement to Secure the Refund of 
Duties on Watches and Watch Movements.'' This document authorizes an 
insular producer to request the refund of duties on imports of watches, 
watch movements and parts therefor, with certain exceptions, up to a 
specified value. Certificates may be used to obtain duty refunds only 
when presented with a properly executed Form ITA-361P.
    (5) ITA-361P ``Request for Refund of Duties on Watches and Watch 
Movements.'' This form must be completed to obtain the refund of duties 
authorized by the Director through Form ITA-360P. After authentication 
by the Department of Commerce, it may be used for the refund of duties 
on items which were entered into the customs territory of the United 
States during a specified time period. Copies of the appropriate Customs 
entries must be provided with this form to establish a basis for issuing 
the claimed amounts. The forms may also be used to transfer all or part 
of the producer's entitlement to another party. (See Sec. 303.12.)

(The information collection requirements in paragraph (b)(1) were 
approved by the Office of Management and Budget under control number 
0625-0040. The information collection requirements in paragraphs (b)(4) 
through (6) were approved under control number 0625-0134)

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 
53 FR 52994, Dec. 30, 1988; 56 FR 9621, Mar. 7, 1991; 61 FR 55884, 
55885, Oct. 30, 1996]



Sec. 303.3  Determination of the total annual duty-exemption.

    (a) Procedure for determination. If, after considering the 
productive capacity of the territorial watch industry and the economic 
interests of the territories, the Secretaries determine that the amount 
of the total annual duty-exemption, or the territorial shares of the 
total amount, should be changed, they shall publish in the Federal 
Register a proposed limit on the quantity of watch units which may enter 
duty-free into the customs territory of the United States and proposed 
territorial shares thereof and, after considering comments, establish 
the limit and shares by Federal Register notice. If the Secretaries take 
no action under this section, they shall make the allocations in 
accordance with the limit and shares last established by this procedure.
    (b) Standards for determination. (1) Notwithstanding paragraph 
(b)(2) of this section, the limit established for any year may be 
7,000,000 units if the limit established for the preceding year was a 
smaller amount.
    (2) Subject to paragraph (c) of this section, the total annual duty-
exemption shall not be decreased by more than 10% of the quantity 
established for the preceding calendar year, or increased, if the 
resultant total is larger than 7,000,000, by more than 20% of the 
quantity established for the calendar year immediately preceding.
    (3) The Secretaries shall determine the limit after considering the 
interests of the territories; the domestic or international trade policy 
objectives of the United States; the need to maintain the competitive 
nature of the territorial industry; the total contribution of the 
industry to the economic well-being of the territories; and the 
territorial industry's utilization of the total duty-exemption 
established in the preceding year.
    (c) Determinations based on consumption. (1) The Secretaries shall 
notify the International Trade Commission whenever they have reason to 
believe duty-free watch imports from the territories will exceed 
9,000,000 units, or whenever they make a preliminary determination that 
the total annual

[[Page 23]]

duty-exemption should exceed 10,000,000 units.
    (2) In addition to the limitations in paragraph (b) of this section, 
the Secretaries shall not establish a limit exceeding one-ninth of 
apparent domestic consumption if such consumption, as determined by 
International Trade Commission, exceeds 90 million units.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 7170, Feb. 21, 1985; 50 
FR 43568, Oct. 28, 1985; 53 FR 52994, Dec. 30, 1988]



Sec. 303.4  Determination of territorial distribution.

    (a) Procedure for determination. The Secretaries shall determine the 
territorial shares concurrently with their determination of the total 
annual duty exemption, and in the same manner (see Sec. 303.3, above).
    (b) Standards for determination--(1) Limitations. A territorial 
share may not be reduced by more than 500,000 units in any calendar 
year. No territorial share shall be less than 500,000 units.
    (2) Criteria for setting precise quantities. The Secretaries shall 
determine the precise quantities after considering, inter alia, the 
territorial capacity to produce and ship watch units. The Secretaries 
shall further bear in mind the aggregate benefits to the territories, 
such as creditable wages paid, creditable wages per unit exported, and 
corporate income tax payments.
    (3) Limitations on reduction of share. The Secretaries shall not 
reduce a territory's share if its producers use 85% or more of the 
quantity distributed to that territory in the immediately preceding 
year, except in the case of a major increase or decrease in the number 
of producers in a territory or if they believe that a territorial 
industry will decrease production by more than 15% from the total of the 
preceding year.
    (4) Standby redistribution authority. The Secretaries may 
redistribute territorial shares if such action is warranted by 
circumstances unforeseen at the time of the initial distributions, such 
as that a territory will use less than 80% of its total by the end of a 
calendar year, or if a redistribution is necessary to maintain the 
competitive nature of the territorial industries.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 7170, Feb. 21, 1985]



Sec. 303.5  Application for annual allocations of duty-exemptions.

    (a) Application forms (ITA-334P) shall be furnished to producers by 
January 1, and must be completed and returned to the Director no later 
than January 31, of each calendar year.
    (b) All data supplied are subject to verification by the Secretaries 
and no allocation shall be made to producer until the Secretaries are 
satisfied that the data are accurate. To verify the data, 
representatives of the Secretaries shall have access to relevant company 
records including:
    (1) Work sheets used to answer all questions on the application 
form;
    (2) Original records from which such data are derived;
    (3) Records pertaining to ownership and control of the company and 
to the satisfaction of eligibility requirements of duty-free treatment 
of its product by the U.S. Customs Service;
    (4) Records pertaining to corporate income taxes, gross receipts 
taxes and excise taxes paid by each producer in the territories on the 
basis of which a portion of each producer's annual allocation is or may 
be predicated;
    (5) Customs, bank, payroll, and production records;
    (6) Records on purchases of components and sales of movements, 
including proof of payment; and
    (7) Any other records in the possession of the parent or affiliated 
companies outside the territory pertaining to any aspect of the 
producer's 91/5 watch assembly operation.
    (c) Data verification shall be performed in the territories, unless 
other arrangements satisfactory to the Departments are made in advance, 
by the Secretaries' representatives by the end of February of each 
calendar year. In the event a company cannot substantiate the data in 
its application before allocations must be calculated, the Secretaries 
shall determine which data will be used.
    (d) Records subject to the requirements of paragraph (b), above, 
shall be

[[Page 24]]

retained for a period of two years following their creation.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 
53 FR 52994, Dec. 30, 1988]



Sec. 303.6  Allocation and reallocation of exemptions among producers.

    (a) Interim allocations. As soon as practicable after January 1 of 
each year the Secretaries shall make an interim allocation to each 
producer equaling 70% of the number of watch units it has entered duty-
free into the customs territory of the United States during the first 
eight months of the preceding calendar year, or any lesser amount 
requested in writing by the producer. The Secretaries may also issue a 
lesser amount if, in their judgment, the producer might otherwise 
receive an interim allocation in an amount greater than the producer's 
probable annual allocation. In calculating the interim allocations, the 
Director shall count only duty-free watches and watch movements verified 
by the U.S. Customs Service, or verified by other means satisfctory to 
the Secretaries, as having been entered on or before August 31 of the 
preceding year. Interim allocations shall not be published.
    (b) Annual allocations. (1) By March 1 of each year the Secretaries 
shall make annual allocations to the producers in accordance with the 
allocation formula based on data supplied in their annual application 
(Form ITA-334P) and verified by the Secretaries.
    (2) The excess of a producer's duty-exemption earned under the 
allocation criteria over the amount formally requested by the producer 
shall be considered to have been relinquished voluntarily (see paragraph 
(f) below). A producer's request may be modified by written 
communication received by the Secretaries by February 28, or, at the 
discretion of the Secretaries, before the annual allocations are made. 
An allocation notice shall be published in the Federal Register.
    (c) Supplemental allocations. At the request of a producer, the 
Secretaries may supplement a producer's interim allocation if the 
Secretaries determine the producer's interim allocation will be used 
before the Secretaries can issue the annual allocation. Allocations to 
supplement a producer's annual allocation shall be made under the 
reallocation provisions prescribed below.
    (d) Allocations to new entrants. In making interim and annual 
allocations to producers selected the preceding year as new entrants, 
the Secretaries shall take into account that such producers will not 
have had a full year's operation as a basis for computation of its duty-
exemption. The Secretaries may make an interim or annual allocation to a 
new entrant even if the firm did not operate during the preceding 
calendar year.
    (e) Special allocations. A producer may request a special allocation 
if unusual circumstances kept it from making duty-free shipments at a 
level comparable with its past record. In considering such requests, the 
Secretaries shall take into account the firm's proposed assembly 
operations; its record in contributing to the territorial economy; and 
its intentions and capacity to make meaningful contributions to the 
territory. They shall also first determine that the amount of the 
special allocation requested will not significantly affect the amounts 
allocated to other producers pursuant to Sec. 303.6(b)(1).
    (f) Reallocations. Duty-exemptions may become available for 
reallocation as a result of cancellation or reduction for cause, 
voluntary relinquishment or nonplacement of duty-exemption set aside for 
new entrants. At the request of a producer, the Secretaries may 
reallocate such duty-exemptions among the remaining producers who can 
use additional quantities in a manner judged best for the economy of the 
territories. The Secretaries shall consider such factors as the wage and 
income tax contributions of the respective producers during the 
preceding year and the nature of the producer's present assembly 
operations. In addition, the Secretaries may consider other factors 
which, in their judgment, are relevant to determining that applications 
from new firms, in lieu of reallocations, should be considered for part 
or all of unused portions of the total duty exemptions. Such factors may 
include:
    (1) The ability of the established industry to use the duty-
exemption;

[[Page 25]]

    (2) Whether the duty-exemption is sufficient to support new entrant 
operations;
    (3) The impact upon the established industry if new entrants are 
selected, particularly with respect to the effect on local employment, 
tax contributions to the territorial government, and the ability of the 
established industry to maintain satisfactory production levels; and
    (4) Whether additional new entrants offer the best prospect for 
adding economic benefits to the territory.
    (g) Section 303.14 of this part contains the criteria and formulae 
used by the Secretaries in calculating each watch producer's annual 
watch duty-exemption allocation, and other special rules or provisions 
the Secretaries may periodically adopt to carry out their 
responsibilities in a timely manner while taking into account changing 
circumstances. References to duty-exemptions, unless otherwise 
indicated, are to the amount available for reallocation in the current 
calendar year. Specifications of or references to data or bases used in 
the calculation of current year allocations (e.g., economic 
contributions and shipments) are, unless indicated otherwise, those 
which were generated in the previous year.
    (h) The Secretaries may propose changes to Sec. 303.14 at any time 
they consider it necessary to fulfill their responsibilities. Normally, 
such changes will be proposed towards the end of each calendar year. 
Interested parties shall be given an opportunity to submit written 
comments on proposed changes.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 
61 FR 55885, Oct. 30, 1996; 63 FR 5888, Feb. 5, 1998]



Sec. 303.7  Issuance of licenses and shipment permits.

    (a) Issuance of Licenses (ITA-333). (1) Concurrently with annual 
allocations under Sec. 303.5 the Director shall issue a non-transferable 
license (Form ITA-333) to each producer. The Director shall also issue a 
replacement license if a producer's allocation is reduced pursuant to 
Sec. 303.6.
    (2) Annual duty-exemption licenses shall be for only that portion of 
a producer's annual duty-exemption not previously licensed.
    (3) If a producer's duty-exemption has been reduced, the Director 
shall not issue a replacement license for the reduced amount until the 
producer's previous license has been received for cancellation by the 
Director.
    (4) A producer's license shall be used in their entirety, except 
when they expire or are cancelled, in order of their date of issuance, 
i.e., an interim license must be completely used before shipment permits 
can be issued against an interim supplemental license.
    (5) Outstanding licenses issued by the Director automatically expire 
at midnight, December 31, of each calendar year. No unused allocation of 
duty-exemption may be carried over into the subsequent calendar year.
    (6) The Director shall ensure that all licenses issued are 
conspicuously marked to show the type of license issued, the identity of 
the producer, and the year for which the license is valid. All licenses 
shall bear the signature of the Director.
    (7) Each producer is responsible for the security of its licenses. 
The loss of a license shall be reported immediately to the Director. 
Defacing, tampering with, and unauthorized use of a license are 
forbidden.
    (b) Shipment Permit Requirements (ITA-340). (1) Producers may obtain 
shipment permits from the territorial government officials designated by 
the Governor. Permits may also be produced in any computerized or other 
format or medium approved by the Departments. The permit is for use 
against a producer's valid duty-exemption license and a permit must be 
completed for every duty-free shipment.
    (2) Each permit must specify the license and permit number, the 
number of watches and watch movements included in the shipment, the 
unused balance remaining on the producer's license, pertinent shipping 
information and must have the certification statement signed by an 
official of the licensee's company. A copy of the completed permit must 
be sent electronically or taken to the designated territorial government 
officials, no later than the day of shipment, for confirmation that the 
producer's duty-exemption license has

[[Page 26]]

not been exceeded and that the permit is properly completed.
    (3) The permit (form ITA-340) shall be filed with Customs along with 
the other required entry documents to receive duty-free treatment unless 
the importer or its representative clears the documentation through 
Customs' automated broker interface. Entries made electronically do not 
require the submission of a permit to Customs, but the shipment data 
must be maintained as part of a producer's recordkeeping 
responsibilities for the period prescribed by Customs' recordkeeping 
regulations. U.S. Customs Service Import Specialists may request the 
documentation they deem appropriate to substantiate claims for duty-free 
treatment, allowing a reasonable amount of time for the importer to 
produce the permit.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 
61 FR 55885, Oct. 30, 1996]



Sec. 303.8  Maintenance of duty-exemption entitlements.

    (a) The Secretaries may order a producer to show cause within 30 
days of receipt of the order why the duty-exemption to which the firm 
would otherwise be entitled should not be cancelled, in whole or in 
part, if:
    (1) At any time after June 30 of the calendar year:
    (i) A producer's assembly and shipment record provides a reasonable 
basis to conclude that the producer will use less than 80 percent of its 
total allocation by the end of the calendar year, and
    (ii) The producer refuses a request from the Departments to 
relinquish that portion of its allocation which they conclude will not 
be used; or
    (2) A producer fails to satisfy or fulfill any term, condition or 
representation, whether undertaken by itself or prescribed by the 
Departments, upon which receipt of allocation has been predicated or 
upon which the Departments have relied in connection with the sale or 
transfer of a business together with its allocation; or
    (3) A producer, in the judgment of the Secretaries, has failed to 
make a meaningful contribution to the territory for a period of two or 
more consecutive calendar years, when compared with the performance of 
the duty-free watch assembly industry in the territory as a whole. This 
comparison shall include the producer's quantitative use of its 
allocations, amount of direct labor employed in the assembly of watches 
and watch movements, and the net amount of corporate income taxes paid 
to the government of the territory. If the producer fails to satisfy the 
Secretaries as to why such action should not be taken, the firm's 
allocation shall be reduced or cancelled, whichever is appropriate under 
the show-cause order. The eligibility of a firm whose allocation has 
been cancelled to receive further allocations may also be terminated.
    (b) The Secretaries may also issue a show-cause order to reduce or 
cancel a producer's allocation or production incentive certificate (see 
Sec. 303.12, below), as appropriate, or to declare the producer 
ineligible to receive an allocation or certificate if it violates any 
regulation in this part, uses a form, license, permit, or certificate in 
an unauthorized manner, or fails to provide information or data required 
by these regulations or requested by the Secretaries or their delegates 
in the performance of their responsibilities.
    (c) If a firm's allocation is reduced or cancelled, or if a firm 
voluntarily relinquishes a part of its allocation, the Secretaries may:
    (1) Reallocate the allocation involved among the remaining producers 
in a manner best suited to contribute to the economy of the territory;
    (2) Reallocate the allocation or part thereof to a new entrant 
applicant; or
    (3) Do neither of the above if deemed in the best interest of the 
territories and the established industry.

[49 FR 17740, Apr. 25, 1984, as amended at 61 FR 55885, Oct. 31, 1996]



Sec. 303.9  Restrictions on the transfer of duty-exemptions.

    (a) The sale or transfer of a duty-exemption from one firm to 
another shall not be permitted.
    (b) The sale or transfer of a business together with its duty-
exemption shall

[[Page 27]]

be permitted with prior written notification to the Departments. Such 
notification shall be accompanied by certifications and representations, 
as appropriate, that:
    (1) If the transferee is a subsidiary of or in any way affiliated 
with any other company engaged in the production of watch movements 
components being offered for sale to any territorial producer, the 
related company or companies will continue to offer such watch and watch 
movement components on equal terms and conditions to all willing buyers 
and shall not engage in any practice, in regard to the sale of 
components, that competitively disadvantages the non-affiliated 
territorial producers vis-a-vis the territorial subsidiary;
    (2) The sale or transfer price for the business together with its 
duty-exemption does not include the capitalization of the duty-exemption 
per se;
    (3) The transferee is neither directly or indirectly affiliated with 
any other territorial duty-exemption holder in any territory;
    (4) The transferee will not modify the watch assembly operations of 
the duty-exemption firm in a manner that will significantly diminish its 
economic contributions to the territory.
    (c) At the request of the Departments, the transferee shall permit 
representatives of the Departments to inspect whatever records are 
necessary to establish to their satisfaction that the certifications and 
representations contained in paragraph (b) of this section have been or 
are being met.
    (d) Any transferee who is either unwilling or unable to make the 
certifications and representations specified in paragraph (b) of this 
section shall secure the Departments' approval in advance of the sale or 
transfer of the business together with its duty-exemption. The request 
for approval shall specify which of the certifications specified in 
paragraph (b) of this section the firm is unable or unwilling to make, 
and give reasons why such fact should not constitute a basis for the 
Departments' disapproval of the sale or transfer.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985]



Secs. 303.10-303.11  [Reserved]



Sec. 303.12  Issuance and use of production incentive certificates.

    (a) Issuance of certificates. (1) Certificates of Entitlement, Form 
ITA-360, shall be issued before March 1 of the current year.
    (2) Certificates shall not be issued to more than one company in the 
territories owned or controlled by the same corporate entity.
    (b) Securities and handling of certificates. (1) Certificate holders 
are responsible for the security of the certificates. The certificates 
shall be kept at the territorial address of the insular producer or at 
another location having the advance approval of the Departments.
    (2) All refund requests made pursuant to the certificates shall be 
entered on the reverse side of the certificate.
    (3) Certificates shall be returned by registered, certified or 
express carrier mail to the Departments when:
    (i) A refund is requested which exhausts the entitlement on the face 
of the certificate,
    (ii) The certificate expires, or
    (iii) The Departments request their return with good cause.
    (4) Certificate entitlements may be transferred according to the 
procedures described in (c) of this section.
    (c) The use and transfer of certificate entitlements. (1) Insular 
producers issued a certificate may request a refund by executing a Form 
ITA-361P (see Sec. 303.2(b)(5) and the instructions on the form). After 
authentication by the Department of Commerce, the Form ITA-361P may be 
used to obtain duty refunds on watch movements, watches, and parts 
therefor. Duties on watchcases not containing a movement and on articles 
containing any material which is the product of a country with respect 
to which Column 2 rates of duty apply may not be refunded. Articles for 
which duty refunds are claimed must have entered the customs territory 
of the United States during the two-year period prior to the issue date 
of the certificate or during the one-year period the certificate remains 
valid. Copies of the appropriate Customs entries must be provided with 
the refund request in order to establish a

[[Page 28]]

basis for issuing the claimed amounts. Certification regarding drawback 
claims and liquidated refunds relating to the presented entries is 
required from the claimant on the form.
    (2) Regulations issued by the U.S. Customs Service, U.S. Department 
of the Treasury, govern the refund of duties under Pub. L. 97-446, as 
amended by Public Law 103-465. If the Departments receive information 
from the Customs Service that a producer has made unauthorized use of 
any official form, they shall cancel the affected certificate.
    (3) The insular producer may transfer a portion of all of its 
certificate entitlement to another party by entering in block C of Form 
ITA-361P the name and address of the party.
    (4) After a Form ITA-361P transferring a certificate entitlement to 
a party other than the certificate holder has been authenticated by the 
Department of Commerce, the form may be exchanged for any consideration 
satisfactory to the two parties. In all cases, authenticated forms shall 
be transmitted to the certificate holder or its authorized custodian for 
disposition (see paragraph (b) above).
    (5) All disputes concerning the use of an authenticated Form ITA-
361P shall be referred to the Departments for resolution. Any party 
named on an authenticated Form ITA-361P shall be considered an 
``interested party'' within the meaning of Sec. 303.13 of this part.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 
56 FR 9621, Mar. 7, 1991; 61 FR 55885, Oct. 30, 1996]



Sec. 303.13  Appeals.

    (a) Any official decision or action relating to the allocation of 
duty-exemptions or to the issuance or use of production incentive 
certificates may be appealed to the Secretaries by any interested party. 
Such appeals must be received within 30 days of the date on which the 
decision was made or the action taken in accordance with the procedures 
set forth in paragraph (b) of this section. Interested parties may 
petition for the issuance of a rule, or amendment or repeal of a rule 
issued by the Secretaries. Interested parties may also petition for 
relief from the application of any rule on the basis of hardship or 
extraordinary circumstances resulting in the inability of the petitioner 
to comply with the rule.
    (b) Petitions shall bear the name and post office address of the 
petitioner and the name and address of the principal attorney or 
authorized representative (if any) for the party concerned. They shall 
be addressed to the Secretaries and filed in one original and two copies 
with the U.S. Department of Commerce, Import Administration, 
International Trade Administration, Washington, D.C. 20230, Attention: 
Statutory Import Programs Staff. Petitions shall contain the following:
    (1) A reference to the decision, action or rule which is the subject 
of the petition;
    (2) A short statement of the interest of the petitioner;
    (3) A statement of the facts as seen by the petitioner;
    (4) The petitioner's argument as to the points of law, policy of 
fact. In cases where policy error is contended, the alleged error 
together with the policy the submitting party advocates as the correct 
one should be described in full;
    (5) A conclusion specifying the action that the petitioner believes 
the Secretaries should take.
    (c) The Secretaries may at their discretion schedule a hearing and 
invite the participation of other interested parties.
    (d) The Secretaries shall communicate their decision which shall be 
final, to the petitioner by registered mail.
    (e) If the outcome of any petition materially affects the amount of 
the petitioner's allocation and if the Secretaries' consideration of the 
petition continues during the calculation of the annual allocations, the 
Secretaries shall set aside a portion of the affected territorial share 
in an amount which, in their judgment, protects the petitioner's 
interest and shall allocate the remainder among the other producers.

[49 FR 17740, Apr. 25, 1984, as amended at 56 FR 9622, Mar. 7, 1991]

[[Page 29]]



Sec. 303.14  Allocation factors and miscellaneous provisions.

    (a) The allocation formula. (1) Except as provided in (a)(2) of this 
section, the territorial shares (excluding any amount set aside for 
possible new entrants) shall be allocated among the several producers in 
each territory in accordance with the following formula:
    (i) Fifty percent of the territorial share shall be allocated on the 
basis of the net dollar amount of economic contributions to the 
territory consisting of the dollar amount of creditable wages, up to a 
maximum of $38,650 per person, paid by each producer to territorial 
residents, plus the dollar amount of income taxes (excluding penalty and 
interest payments and deducting any income tax refunds and subsidies 
paid by the territorial government), and
    (ii) Fifty percent of the territorial share shall be allocated on 
the basis of the number of units of watches and watch movements 
assembled in the territory and entered by each producer duty-free into 
the customs territory of the United States.
    (2) If there is only one producer in a territory, the entire 
territorial share, excluding any amount set aside for possible new 
entrants, may be allocated without recourse to any distributive formula.
    (b) Minimum assembly requirements and prohibition of preferential 
supply relationship. (1) No insular watch movement or watch may be 
entered free of duty into the customs territory of the United States 
unless the producer used 30 or more discrete parts and components to 
assemble a mechanical watch movement and 33 or more discrete parts and 
components to assemble a mechanical watch.
    (2) Quartz analog watch movements must be assembled from parts 
knocked down to the maximum degree possible for the technical 
capabilities of the insular industry as a whole. The greatest degree of 
disassembly specified, for each manufacturer's brand and model, by any 
producer in any territory purchasing such brands and models shall 
constitute the disassembly required as a minimum for the industry as a 
whole.
    (3) Watch movements and watches assembled from components with a 
value of more than $35 for watch movements and $500 for watches shall 
not be eligible for duty-exemption upon entry into the U.S. Customs 
territory. Value means the value of the merchandise plus all charges and 
costs incurred up to the last point of shipment (i.e., prior to entry of 
the parts and components into the territory).
    (4) No producer shall accept from any watch parts and components 
supplier advantages and preferences which might result in a more 
favorable competitive position for itself vis-a-vis other territorial 
producers relying on the same supplier. Disputes under this paragraph 
may be resolved under the appeals procedures contained in 
Sec. 303.13(b).
    (c) Calculation of the value of production incentive certificates. 
(1) The value of each producer's certificate shall equal the producer's 
average creditable wages per unit shipped (including non-91/5 units as 
provided for in Sec. 303.2(a)(13)) multiplied by the sum of:
    (i) The number of units shipped up to 300,000 units times a factor 
of 90%; plus
    (ii) Incremental units shipped up to 450,000 units times a factor of 
85%; plus
    (iii) Incremental units shipped up to 600,000 times a factor of 80%; 
plus
    (iv) Incremental shipments up to 750,000 units times a factor of 
75%.
    (2) The Departments may make adjustments for these data in the 
manner set forth in Sec. 303.5(c).
    (d) New entrant invitations. Applications from new firms are invited 
for any unused portion of any territorial share.
    (e) Territorial shares. The shares of the total duty exemption are 
2,240,000 for the Virgin Islands, 500,000 for Guam, 500,000 for American 
Samoa, and 500,000 for the Northern Mariana Islands.

[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985; 
53 FR 17825, May 19, 1988; 53 FR 52679, Dec. 29, 1988; 53 FR 52994, Dec. 
30, 1988; 56 FR 9622, Mar. 7, 1991; 58 FR 21348, Apr. 21, 1993; 59 FR 
8847, 8848, Feb. 24, 1994; 61 FR 55885, Oct. 30, 1996; 63 FR 49667, 
Sept. 17, 1998]

[[Page 30]]



PART 310--OFFICIAL U.S. GOVERNMENT RECOGNITION OF AND PARTICIPATION IN INTERNATIONAL EXPOSITIONS HELD IN THE UNITED STATES--Table of Contents




Sec.
310.1  Background and purpose.
310.2  Definitions.
310.3  Applications for Federal recognition.
310.4  Action on application.
310.5  Report of the Secretary on Federal recognition.
310.6  Recognition by the President.
310.7  Statement for Federal participation.
310.8  Proposed plan for Federal participation.
310.9  Report of the Secretary on Federal participation.

    Authority: Pub. L. 91-269, 84 Stat. 271 (22 U.S.C. 2801 et seq.).

    Source: 40 FR 34107, Aug. 14, 1975, unless otherwise noted. 
Redesignated at 46 FR 57457, Nov. 24, 1981.

    Editorial Note: Nomenclature changes to part 310 appear at 46 FR 
57457, Nov. 24, 1981.



Sec. 310.1  Background and purpose.

    The regulations in this part are issued under the authority of Pub. 
L. 91-269 (84 Stat. 271, 22 U.S.C. 2801 et seq.) which establishes an 
orderly procedure for Federal Government recognition of, and 
participation in, international expositions to be held in the United 
States. The Act provides, inter alia, that Federal recognition of an 
exposition is to be granted upon a finding by the President that such 
recognition will be in the national interest. In making this finding, 
the President is directed to consider, among other factors, a report 
from the Secretary of Commerce as to the purposes and reasons for an 
exposition and the extent of financial and other support to be provided 
by the State and local officials and business and community leaders 
where the exposition is to be held, and a report by the Secretary of 
State to determine whether the exposition is qualified for registration 
under Bureau of International Expositions (BIE) rules. The BIE is an 
international organization established by the Paris Convention of 1928 
(T.I.A.S. 6548 as amended by T.I.A.S. 6549) to regulate the conduct and 
scheduling of international expositions in which foreign nations are 
officially invited to participate. The BIE divides international 
expositions into different categories and types and requires each member 
nation to observe specified minimum time intervals in scheduling each of 
these categories and types of expositions.1 Under BIE rules, 
member nations may not ordinarily participate in an international 
exposition unless such exposition has been approved by the BIE. The 
United States became a member of the BIE on April 30, 1968, upon 
ratification of the Paris Convention by the U.S. Senate (114 Cong. Rec. 
11012).
---------------------------------------------------------------------------

    1 The BIE defines a General Exposition of the First 
Category as an exposition dealing with progress achieved in a particular 
field applying to several branches of human activity at which the 
invited countries are obligated to construct national pavilions. A 
General Exposition of the Secondary Category is a similar exposition at 
which invited countries are not authorized to construct national 
pavilions, but occupy space provided by the exposition sponsors. Special 
Category Expositions are those dealing only with one particular 
technique, raw material, or basic need.
    The BIE frequency rules require that an interval of 15 years must 
elapse between General Expositions of the First Category held in one 
country. General Expositions of the Second Category require an interval 
of 10 years. An interval of 5 years must ordinarily elapse between 
Special Category Expositions of the same kind in one country or three 
months between Special Category Expositions of different kinds. These 
frequency intervals are computed from the date of the opening of the 
exposition.
    More detailed BIE classification criteria and regulations are 
contained in the Paris Convention of 1928, as amended in 1948 and 1966. 
Applicants not having a copy of the text of this convention may obtain 
one by writing the Director. (The Convention may soon be amended by a 
Protocol which has been approved by the BIE and ratified by the United 
States. This amendment would increase authorized frequencies or 
intervals for BIE approved expositions.)


Federal participation in a recognized international exposition requires 
a specific authorization by the Congress, upon a finding by the 
President that such participation would be in the national interest. The 
Act provides for the transmission to Congress of a participation 
proposal by the President.

[[Page 31]]

This proposal transmits to the Congress information regarding the 
exposition, including a statement that it has been registered by the BIE 
and a plan for Federal participation prepared by the Secretary of 
Commerce in cooperation with other interested Federal departments and 
agencies.



Sec. 310.2  Definitions.

    For the purpose of this part, except where the context requires 
otherwise:
    (a) Act means Pub. L. 91-269.
    (b) Secretary means the Secretary of Commerce.
    (c) Commissioner General means the person appointed to act as the 
senior Federal official for the exposition as required by BIE rules and 
regulations.
    (d) Director means the Director of the International Expositions 
Staff, Office of the Deputy Assistant Secretary for Export Development, 
International Trade Administration, Department of Commerce.
    (e) Applicant means a State, County, municipality, a political 
subdivision of the foregoing, private non-profit or not-for-profit 
organizations, or individuals filing an application with the Director 
seeking Federal recognition of an international exposition to be held in 
the United States.
    (f) State means one of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, the Virgin 
Islands, Guam, American Samoa, and the Trust Territory of the Pacific 
Islands.
    (g) Exposition means an international exposition proposed to be held 
in the United States for which an application has been filed with the 
Director seeking Federal recognition under the Act; which proposes to 
invite more than one foreign country to participate; and, which would 
exceed three weeks in duration. Any event under three weeks in duration 
is not considered an international exposition under BIE rules.

[40 FR 34107, Aug. 14, 1975. Redesignated and amended at 46 FR 57457, 
Nov. 24, 1981]



Sec. 310.3  Applications for Federal recognition.

    (a) Applications for Federal recognition of an exposition shall be 
filed with, and all official communications in connection therewith 
addressed to, the International Expositions Staff, International Trade 
Administration, Department of Commerce, Washington, DC 20230.
    (b) Every application, exhibit, or enclosure, except where 
specifically waived by the Director, shall be in quadruplicate, duly 
authenticated and referenced.
    (c) Every application shall be in letter form and shall contain the 
date, address, and official designation of the applicant and shall be 
signed by an authorized officer or individual.
    (d) Every application, except where specifically waived by the 
Director, shall be accompanied by the following exhibits:

    1. Exhibit No. 1. A study setting forth in detail the purpose for 
the exposition, including any historical, geographic, or other 
significant event of the host city, State, or region related to the 
exposition.
    2. Exhibit No. 2. An exposition plan setting forth in detail (i) the 
theme of the exposition and the ``storyline'' around which the entire 
exposition is to be developed; (ii) whatever preliminary architectural 
and design plans are available on the physical layout of the site plus 
existing and projected structures; (iii) the type of participation 
proposed in the exposition (e.g., foreign and domestic exhibits); (iv) 
cultural, sports, and special events planned; (v) the proposed BIE 
category of the event and evidence of its conformity to the regulations 
of the BIE (a copy of these regulations can be obtained from the 
Director upon request); (vi) the proposed steps that will be taken to 
protect foreign exhibitors under the BIE model rules and regulations and 
(vii) in writing commit its organization to the completion of the 
exposition.
    3. Exhibit No. 3. Documentary evidence of State, regional and local 
support (e.g., letters to the applicant from business and civic 
leadership of the region, pledging assistance and/or financing; State 
and/or municipal resolutions, acts, or appropriations; referendums on 
bond issues, and others).
    4. Exhibit No. 4. An organization chart of the exposition management 
structure (actual or proposed) of the applicant, including description 
of the functions, duties and responsibilities of each official position 
along with bibliographic material, including any professional experience 
in the fields of architecture, industrial design, engineering, labor 
relations, concession management, interpretative theme planning, exhibit 
development, etc., on principal officers, if available. (The principal 
officials should also be prepared to submit subsequent individual 
statements under oath of their respective financial holdings and other 
interests.)

[[Page 32]]

    5. Exhibit No. 5. A statement setting forth in detail (i) the 
availability of visitor services in existence or projected to 
accommodate tourists at the exposition (e.g., number of hotel and motel 
units, number and type of restaurants, health facilities, etc.); (ii) 
evidence of adequate transportation facilities and accessibility of the 
host city to large groups of national and international visitors (e.g., 
number and schedule of airlines, bus lines, railroads, and truck lines 
serving the host city); and (iii) plans to promote the exposition as a 
major national and international tourist destination.
    6. Exhibit No. 6. A statement setting forth in detail the 
applicant's plans for acquiring title to, or the right to occupy and use 
real property, other than that owned by the applicant or by the United 
States, essential for implementing the project or projects covered by 
the application. If the applicant, at the time of filing the 
application, has acquired title to the real property, he should submit a 
certified copy of the deed(s). If the applicant, at the time of filing 
the application, has by easement, lease, franchise, or otherwise 
acquired the right to occupy and use real property owned by others, he 
should submit a certified copy of the appropriate legal instrument(s) 
evidencing this right.
    7. Exhibit No. 7. A statement of the latest prevailing hourly wage 
rates for construction workers in the host city (e.g., carpenters, 
cement masons, sheet metal workers, etc.).
    8. Exhibit No. 8. Information on attitudes of labor leaders as to 
``no strike'' agreements during the development and operation of the 
exposition. Actual ``no strike'' pledges are desirable.
    9. Exhibit No. 9. A detailed study conducted and certified by a 
nationally recognized firm(s) in the field of economics, accounting, 
management, etc., setting forth (i) proposed capital investment cost; 
cash flow projections; and sources of financing available to meet these 
costs, including but not limited to funds from State and municipal 
financing, general obligation and/or general revenue bond issues, and 
other public or private sources of front-end capital; (ii) assurances 
that the ``guaranteed financing'' is or will be available in accordance 
with Section 2(a)(1)(b) of Pub. L. 91-269; (iii) the projected expenses 
for managing the exposition; (iv) projected operational revenues broken 
down to include admissions, space rental, concessions, service fees and 
miscellaneous income; and (v) cost-benefit projections. These should be 
accompanied by a statement of the firm that the needed cash flow, 
sources of funding, and revenue projections are realistic and 
attainable.
    10. Exhibit No. 10. A description of the exposition implementation 
time schedule and the management control system to be utilized to 
implement the time schedule (e.g., PERT, CPM, etc.).
    11. Exhibit No. 11. A statement setting forth in detail the public 
relations, publicity and other promotional plans of the applicant. For 
example, the statement could include: (i) an outline of the public 
relations/publicity program broken down by percentage allocations among 
the various media; (ii) a public relations/publicity program budget with 
the various calendar target dates for completion of phases prior to the 
opening, the opening and post-opening of the exposition; and (iii) 
protocol plans for U.S. and foreign dignitaries, as well as for special 
ceremonies and events and how these plans are to be financed.
    12. Exhibit No. 12. A study setting forth in detail the benefits to 
be derived from the exposition and residual use plans. For example, the 
study might include: (i) extent of immediate economic benefits for the 
city/region/nation in proportion to total investment in the exposition; 
(ii) extent of long range economic benefits for the city/region/nation 
in proportion to total investment in the exposition; and (iii) extent of 
intangible (social, psychological, ``good will'') benefits accruing to 
the city/region/nation including the solution or amelioration of any 
national/local problems.
    13. Exhibit No. 13. A statement committing the applicant to develop 
and complete an environmental impact statement which complies with 
section 102(2)(c) of the National Environmental Policy Act of 1969 (83 
Stat. 852; 42 U.S.C. 4331). Sample copies of environmental impact 
statements may be obtained from the Director. Prior to the Director's 
submitting a report to the Secretary containing his findings on the 
application for Federal recognition pursuant to Sec. 310.4, the 
applicant must have completed the required Environmental Impact 
Statement (EIS), in a form acceptable to the Department of Commerce.
    14. Exhibit No. 14. A detailed set of general and special rules and 
regulations governing the exposition and participation in it, which, if 
Federal recognition is obtained, can be used by the Federal Government 
in seeking BIE registration.
    15. Exhibit No. 15. A statement from the applicant agreeing to 
accept a U.S. Commissioner General, appointed by the President. He will 
be recognized as the senior Federal official and titular head of the 
exposition, final arbiter in disputes with exhibitors, and the official 
contact with foreign governments. The applicant should also agree to 
furnish the Commissioner General and his staff with suitable facilities 
in the host community during the development and operation of the 
exposition.

[40 FR 34107, Aug. 14, 1975. Redesignated and amended at 46 FR 57457, 
Nov. 24, 1981]

[[Page 33]]



Sec. 310.4  Action on application.

    (a) Upon receipt of an application, the Director will analyze the 
application and all accompanying exhibits to insure compliance with the 
provisions of Sec. 310.3 and report his findings with respect thereto to 
the Secretary.
    (b) If more than one applicant applies for Federal recognition for 
expositions to be held within three years or less of each other, the 
applications will be reviewed concurrently by the Director. The 
following standards will be considered in determining which if any of 
the competing applicants will be recommended for Federal recognition:
    (1) The order of receipt of the applications by the Director, 
complete with all exhibits required by Sec. 310.3.
    (2) The financial plans of the applications. Primary consideration 
will be given to those applications which do not require Federal 
financing for exposition development. This does not extend to funding 
for a Federal pavilion, if one is desired.
    (3) The relative merit of the applications in terms of their 
qualifications as tourism destination sites, both with respect to 
existing facilities and those facilities planned for the proposed 
exposition. If necessary, to assist in making this determination, the 
Director will appoint a panel of travel industry experts representing 
tour developers, the transportation, entertainment and hotel/motel 
industries for the purpose of studying the competing applications and 
reporting to the Director its views as to which proposed site best meets 
the above criteria. If such a panel is deemed necessary, the provisions 
of the Federal Advisory Committee Act (86 Stat. 770, 5 U.S.C. App. I) 
will be applicable.
    (c) In analyzing the applications, the Director may hold public 
hearings with the objective of clarifying issues that might be raised by 
the application. If desired, the Director may utilize the services of an 
examiner.
    (d) If the Director, in his discretion, decides to hold a public 
hearing, notice of such hearing shall be published in the Federal 
Register, and a copy of the notice shall be furnished to local 
newspapers. The notice shall state the subject to be considered and when 
and where the hearing will be held, specifically designating the date, 
hour, and place.
    (e) The following general procedure shall govern the conduct of 
public hearings: (1) Stenographic minutes of the proceedings shall be 
made; (2) the names and addresses of all parties present or represented 
at the hearing shall be recorded; and (3) the Director or Examiner shall 
read aloud for the record and for the benefit of the public such parts 
of the Act and of these regulations as bear on the application. He shall 
also read aloud for the record and for the benefit of the public such 
other important papers, or extracts therefrom, as may be necessary for a 
full understanding of the issues which require clarification. The 
Director or Examiner shall impress upon the parties in attendance at the 
public hearing, and shall specifically state at the commencement of the 
hearing, that the hearing is not adversary in nature and that the sole 
objective thereof is to clarify issues that might have been raised by 
the application.
    (f) Statements of interested parties may be presented orally at the 
hearing, or submitted in writing for the record.
    (g) Within six months after receipt of a fully completed application 
and/or the adjournment of the public hearing, the Director shall submit 
his report containing his findings on the application to the Secretary.



Sec. 310.5  Report of the Secretary on Federal recognition.

    If the Director's report recommends Federal recognition, the 
Secretary, within a reasonable time, shall submit a report to the 
President.
    (a) The Secretary's report shall include: (1) An evaluation of the 
purposes and reasons for the exposition; and (2) a determination as to 
whether guaranteed financial and other support has been secured by the 
exposition from affected State and local governments and from business 
and civic leaders of the region and others in amounts sufficient to 
assure the successful development and progress of the exposition.
    (b) Based on information from, and coordination with the Department 
of Commerce the Secretary of State shall also file a report with the 
President

[[Page 34]]

that the exposition qualifies for recognition by the BIE.



Sec. 310.6  Recognition by the President.

    If the President concurs in the favorable reports from the 
Secretaries of State and Commerce, he may grant Federal recognition to 
the exposition by indicating his concurrence to the two Secretaries and 
authorizing them to seek BIE registration.



Sec. 310.7  Statement for Federal participation.

    If Federal participation in the exposition, as well as Federal 
recognition thereof is desired, the applicant shall in a statement to 
the Director outline the nature of the Federal participation envisioned, 
including whether construction of a Federal pavilion is contemplated. 
(It should be noted, however, that before Federal participation can be 
authorized by the Congress under the Act, the exposition must have (i) 
met the criteria for Federal recognition and be so recognized, and (ii) 
been registered by the BIE. Although applicants need not submit such a 
statement until these prerequisites are satisfied, they are encouraged 
to do so.) Where the desired Federal participation includes a request 
for construction of a Federal pavilion, the statement shall be 
accompanied by the following exhibits:

    1. Exhibit No. 1. A survey drawing of the proposed Federal pavilion 
site, showing its areas and boundaries, its grade elevations, and 
surface and subsoil conditions.
    2. Exhibit No. 2. Evidence of resolutions, statutes, opinions, etc., 
as to the applicant's ability to convey by deed the real property 
comprising the proposed Federal pavilion site in fee-simple and free of 
liens and encumbrances to the Federal Government. The only consideration 
on the part of the Government for the conveyance of the property shall 
be the Government's commitment to participate in the exposition.
    3. Exhibit No. 3. A certified copy of the building code which would 
be applicable should a pavilion be constructed.
    4. Exhibit No. 4. An engineering drawing showing the accessibility 
of the proposed pavilion site to utilities (e.g., sewerage, water, gas, 
electricity, etc.).
    5. Exhibit No. 5. A statement setting forth the security and 
maintenance and arrangements which the applicant would undertake (and an 
estimate of their cost) while a pavilion is under construction.
    6. Exhibit No. 6. A study pursuant to Executive Order 11296 of 
August 10, 1966, entitled ``Evaluation of flood hazard in locating 
Federally owned or financed buildings, roads and other facilities and in 
disposing of Federal land and properties.''



Sec. 310.8  Proposed plan for Federal participation.

    (a) Upon receipt of the statement, and the exhibits referred to in 
Sec. 310.7, the Director shall prepare a proposed plan in cooperation 
with other interested departments and agencies of the Federal Government 
for Federal participation in the exposition.
    (b) In preparing the proposed plan for Federal participation in the 
exposition, the Director shall conduct a feasibility study of Federal 
participation including cost estimates by utilizing the services within 
the Federal Government, professional consultants and private sources as 
required and in accordance with applicable laws and regulations.
    (c) The Director, in the proposed plan for Federal participation in 
the exposition, shall determine whether or not a Federal pavilion should 
be constructed and, if so, whether or not the Government would have need 
for a permanent structure in the area of the exposition or whether a 
temporary structure would be more appropriate.
    (d) The Director shall seek the advice of the Administrator of the 
General Services Administration to the extent necessary in carrying out 
the proposed plan for Federal participation in the exposition.
    (e) Upon completion of the proposed plan for Federal participation 
in the exposition, the Director shall submit the plan to the Secretary.



Sec. 310.9  Report of the Secretary on Federal participation.

    Upon receipt of the Director's proposed plan for Federal 
participation, the Secretary, within a reasonable time, shall submit a 
report to the President including: (a) Evidence that the exposition has 
met the criteria for Federal recognition and has been so recognized; (b) 
a statement that the exposition has been registered by the BIE; and (c) 
a proposed plan for the

[[Page 35]]

Federal participation referred to in Sec. 310.8.



PART 315--DETERMINATION OF BONA FIDE MOTOR-VEHICLE MANUFACTURER--Table of Contents




Sec.
315.1  Scope and purpose.
315.2  Definitions.
315.3  Application.
315.4  Determination by the Under Secretary.
315.5  Maintenance and publication of a list of bona fide motor-vehicle 
          manufacturers.

    Authority: Headnote 2, subpart B, part 6, schedule 6, Tariff 
Schedules of the United States (19 U.S.C. 1202); sec. 501(2) of Title V, 
Automotive Products Trade Act of 1965 (19 U.S.C. 2031).

    Source: 45 FR 42214, June 23, 1980. Redesignated at 53 FR 52115, 
Dec. 27, 1988, unless otherwise noted.



Sec. 315.1  Scope and purpose.

    The purpose of this part is to set forth regulations implementing 
headnote 2 to subpart B, part 6, schedule 6 of the Tariff Schedules of 
the United States as proclaimed by Proclamation No. 3682 of October 21, 
1965 (3 CFR 140-65 Comp.). issued pursuant to the Automotive Products 
Trade Act of 1965 (19 U.S.C. 2031), by establishing a procedure under 
which a person may apply to be determined a bona fide motor-vehicle 
manufacturer. Under headnote 2 to subpart B, part 6, schedule 6 of the 
Tariff Schedules of the United States, whenever the Secretary of 
Commerce has determined a person to be a bona fide motor-vehicle 
manufacturer, such person is eligible to obtain duty-free importation of 
certain Canadian articles and to issue certain orders, contracts, or 
letters of intent under or pursuant to which other persons, not 
themselves bona fide motor-vehicle manufacturers, may obtain duty-free 
treatment for such Canadian articles. The responsibilities of Secretary 
of Commerce relating to the development, maintenance and publication of 
a list of bona fide motor-vehicle manufacturers and the authority to 
promulgate rules and regulations pertaining thereto have been delegated 
to Under Secretary for International Trade, Department of Commerce 
pursuant to Department of Commerce Organization Order 40-1, Amendment 9 
of January 22, 1984 (49 FR 4538).

[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, 
Dec. 27, 1988]



Sec. 315.2  Definitions.

    For the purpose of the regulations in this part and the forms issued 
to implement it:
    (a) Act means the Automotive Products Trade Act of 1965 (79 Stat. 
1016, 19 U.S.C. 2001 through 2033).
    (b) Under Secretary means Under Secretary for International Trade of 
the Department of Commerce, or such official as may be designated by the 
Under Secretary to act in his or her behalf.
    (c) Motor vehicle means a motor vehicle of a kind described in item 
692.05 or 692.10 of subpart B, part 6, schedule 6, of the Tariff 
Schedules of the United States (excluding an electric trolley bus and a 
three-wheeled vehicle) or an automotive truck tractor.
    (d) Bona fide motor-vehicle manufacturer means a person who upon 
application to the Under Secretary is determined by the Under Secretary 
to have produced no fewer than 15 complete motor vehicles in the United 
States during the 12-month period preceding the date certified in the 
application, and to have had as of such date installed capacity in the 
United States to produce 10 or more complete motor vehicles per 40-hour 
week. A person shall only be regarded as having had the capacity to 
produce a complete motor vehicle if his operation included the assembly 
of two or more major components (e.g., the attachment of a body to a 
chassis) to create a new motor vehicle ready for use.
    (e) Person includes any individual, corporation, partnership, 
association, company, or any kind of organization.
    (f) United States includes only the States, the District of Columbia 
and Puerto Rico.

[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, 
Dec. 27, 1988]



Sec. 315.3  Application.

    Any person in the United States desiring to be determined a bona 
fide motor vehicle manufacturer shall apply to the Under Secretary by 
filing

[[Page 36]]

two copies of Form BIE-3 in accordance with the instructions set forth 
on the form and this part. Application forms may be obtained from the 
Under Secretary, District offices of the U.S. Department of Commerce, or 
from U.S. Collectors of Customs, and should be mailed or delivered to 
the:

U.S. Department of Commerce, International Trade Administration, Office 
of Automotive Industry Affairs--APTA, 14th and Constitution Avenue, NW., 
Room 4036, Washington, DC 20230.

[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, 
Dec. 27, 1988]



Sec. 315.4  Determination by the Under Secretary.

    (a) As soon as practicable after receipt of the application, the 
Under Secretary shall determine whether an applicant has produced no 
fewer than 15 complete motor vehicles in the United States during the 
12-month period preceding the date certified in the application and as 
of such date, had installed capacity in the United States to produce 10 
or more complete motor vehicles per 40 hour week. The Under Secretary 
may request such additional data from an applicant as he may deem 
appropriate to establish whether the applicant has satisfied the 
requirements of this part.
    (b) A determination by the Under Secretary under this part shall be 
effective for a 12-month period to begin on the date as of which the 
Under Secretary determines that the applicant qualified under this part. 
Within 60 days prior to the termination of such period, a bona fide 
motor vehicle manufacturer may apply for another determination under 
this part.
    (c) The Under Secretary will promptly notify each applicant in 
writing of the final action taken on his application.

[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, 
Dec. 27, 1988]



Sec. 315.5  Maintenance and publication of a list of bona fide motor-vehicle manufacturers.

    The Under Secretary shall maintain and publish from time to time in 
the Federal Register, a list of the names and addresses of bona fide 
motor vehicle manufacturers, and the effective dates from each 
determination.

[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115, 
Dec. 27, 1988]



PART 325--EXPORT TRADE CERTIFICATES OF REVIEW--Table of Contents




Sec.
325.1  Scope.
325.2  Definitions.
325.3  Applying for a certificate of review.
325.4  Calculating time periods.
325.5  Issuing the certificate.
325.6  Publishing notices in the Federal Register.
325.7  Amending the certificate.
325.8  Expediting the certification process.
325.9  Reconsidering an application that has been denied.
325.10  Modifying or revoking a certificate.
325.11  Judicial review.
325.12  Returning the applicant's documents.
325.13  Nonadmissibility in evidence.
325.14  Submitting reports.
325.15  Relinquishing a certificate.
325.16  Protecting confidentiality of information.
325.17  Waiver.

    Authority: Title III of the Export Trading Company Act, Pub. L. 97-
290 (96 Stat. 1240-1245, 15 U.S.C. 4011-4021).

    Source: 50 FR 1806, Jan. 11, 1985, unless otherwise noted.



Sec. 325.1  Scope.

    This part contains regulations for issuing export trade certificates 
of review under title III of the Export Trading Company Act, Pub. L. 97-
290. A holder of a certificate of review and the members named in the 
certificate will have specific protections from private treble damage 
actions and government criminal and civil suits under U.S. Federal and 
State antitrust laws for the export conduct specified in the certificate 
and carried out during its effective period in compliance with its terms 
and conditions.



Sec. 325.2  Definitions.

    As used in this part:
    (a) Act means title III of Pub. L. 97-290, Export Trade Certificates 
of Review.
    (b) Antitrust laws means the antitrust laws, as the term is defined 
in the first section of the Clayton Act (15 U.S.C.

[[Page 37]]

12), section 5 of the Federal Trade Commission Act (15 U.S.C. 45) (to 
the extent that section 5 prohibits unfair methods of competition), and 
any State antitrust or unfair competition law.
    (c) Applicant means the person or persons who submit an application 
for a certificate.
    (d) Application means an application for a certificate to be issued 
under the Act.
    (e) Attorney General means the Attorney General of the United States 
or his designee.
    (f) Certificate means a certificate of review issued pursuant to the 
Act.
    (g) Control means either (1) holding 50 percent or more of the 
outstanding voting securities of an issuer; or (2) having the 
contractual power presently to designate a majority of the directors of 
a corporation, or in the case of an unincorporated entity, a majority of 
the individuals who exercise similar functions.
    (h) Controlling entity means an entity which directly or indirectly 
controls a member or applicant, and is not controlled by any other 
entity.
    (i) Export conduct means specified export trade activities and 
methods of operation carried out in specified export trade and export 
markets.
    (j) Export trade means trade or commerce in goods, wares, 
merchandise, or services that are exported, or are in the course of 
being exported, from the United States or any territory of the United 
States to any foreign nation.
    (k) Export trade activities means activities or agreements in the 
course of export trade.
    (l) Member means an entity (U.S. or foreign) or a person which is 
seeking protection under the certificate with the applicant. A member 
may be a partner in a partnership or a joint venture; a shareholder of a 
corporation; or a participant in an association, cooperative, or other 
form of profit or nonprofit organization or relationship, by contract or 
other arrangement.
    (m) Method of operation means any method by which an applicant or 
member conducts or proposes to conduct export trade.
    (n) Person means an individual who is a resident of the United 
States; a partnership that is created under and exists pursuant to the 
laws of any State or of the United States; a State or local government 
entity; a corporation, whether it is organized as a profit or nonprofit 
corporation, that is created under and exists pursuant to the laws of 
any State or of the United States; or any association or combination, by 
contract or other arrangement, between or among such persons.
    (o) Secretary means the Secretary of Commerce or his designee.
    (p) Services means intangible economic output, including, but not 
limited to--
    (1) business, repair, and amusement services,
    (2) management, legal, engineering, architectural, and other 
professional services, and
    (3) financial, insurance, transportation, informational and any 
other data-based services, and communication services.
    (q) United States means the fifty States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, the Virgin 
Islands, American Samoa, Guam, the Commonwealth of the Northern Mariana 
Islands, and the Trust Territory of the Pacific Islands.



Sec. 325.3  Applying for a certificate of review.

    (a) Place of filing. The applicant shall submit an original and two 
copies of a completed application form (ITA 4093-P, OMB control number 
0625-0125) by personal delivery during normal business hours or by first 
class mail to the Office of Export Trading Company Affairs, Room 5618, 
International Trade Administration, Department of Commerce, Washington, 
DC 20230. Although not required, the applicant should consider using 
registered mail or some other delivery method that provides evidence of 
receipt.
    (b) Contents of application. Any person may submit an application 
for certification. The application shall contain, where applicable, the 
information listed below. Some information, in particular the 
identification of goods or services that the applicant exports or 
proposes to export, is requested in a

[[Page 38]]

certain form (Standard Industrial Classification [SIC] numbers) if 
reasonably available. Where information does not exist in this form, the 
applicant may satisfy the request for information by providing it in 
some other convenient form. If the applicant is unable to provide any of 
the information requested or if the applicant believes that any of the 
information requested would be both burdensome to obtain and unnecessary 
for a determination on the application, the applicant should state that 
the information is not being provided or is being provided in lesser 
detail, and explain why.
    (1) Name and principal address of the applicant and of its 
controlling entity, if any. Include the name, title, address, telephone 
number, and relationship to the applicant of each individual to whom the 
Secretary should address correspondence.
    (2) The name and principal address of each member, and of each 
member's controlling entity, if any.
    (3) A copy of any legal instrument under which the applicant is 
organized or will operate. Include copies, as applicable, of its 
corporate charter, bylaws, partnership, joint venture, membership or 
other agreements or contracts under which the applicant is organized.
    (4) A copy of the applicant's most recent annual report, if any, and 
that of its controlling entity, if any. To the extent the information is 
not included in the annual report, or other documents submitted in 
connection with the application, a description of the applicant's 
domestic (including import) and export operations, including the nature 
of its business, the types of products or services in which it deals, 
and the places where it does business. This description may be 
supplemented by a chart or table.
    (5) A copy of each member's most recent annual report, if any, and 
that of its controlling entity, if any. To the extent the information is 
not included in the annual report, or other documents submitted in 
connection with the application, a description of each member's domestic 
(including import) and export operations, including the nature of its 
business, the types of products or services in which it deals, and the 
places where it does business. This description may be supplemented by a 
chart or table.
    (6) The names, titles, and responsibilities of the applicant's 
directors, officers, partners and managing officials, and their business 
affiliations with other members or other businesses that produce or sell 
any of the types of goods or services described in paragraph (b)(7) of 
this section.
    (7)(i) A description of the goods or services which the applicant 
exports or proposes to export under the certificate of review. This 
description should reflect the industry's customary definitions of the 
products and services.
    (ii) If it is reasonably available, an identification of the goods 
or services according to the Standard Industrial Classification (SIC) 
number. Goods should normally be identified according to the 7-digit 
level. Services should normally be identified at the most detailed SIC 
level available.
    (iii) The foreign geographic areas to which the applicant and each 
member export or intend to export their goods and services.
    (8) For each class of the goods, wares, merchandise or services 
described in paragraph (b)(7) of this section:
    (i) The principal geographic area or areas in the United States in 
which the applicant and each member sell their goods and services.
    (ii) For their previous two fiscal years, the dollar value of the 
applicant's and each member's (A) total domestic sales, if any; and (B) 
total export sales, if any. Include the value of the sales of any 
controlling entities and all entities under their control.
    (9) For each class of the goods, wares, merchandise or services 
described in paragraph (b)(7) of this section, the best information or 
estimate accessible to the applicant of the total value of sales in the 
United States by all companies for the last two years. Identify the 
source of the information or the basis of the estimate.
    (10) A description of the specific export conduct which the 
applicant seeks to have certified. Only the specific export conduct 
described in the application will be eligible for certification. For 
each item, the applicant should state the antitrust concern, if any,

[[Page 39]]

raised by that export conduct. (Examples of export conduct which 
applicants may seek to have certified include the manner in which goods 
and services will be obtained or provided; the manner in which prices or 
quantities will be set; exclusive agreements with U.S. suppliers or 
export intermediaries; territorial, quantity, or price agreements with 
U.S. suppliers or export intermediaries; and restrictions on membership 
or membership withdrawal. These examples are given only to illustrate 
the type of export conduct which might be of concern. The specific 
activities which the applicant may wish to have certified will depend on 
its particular circumstances or business plans.).
    (11) If the export trade, export trade activities, or methods of 
operation for which certification is sought will involve any agreement 
or any exchange of information among suppliers of the same or similar 
products or services with respect to domestic prices, production, sales, 
or other competitively sensitive business information, specify the 
nature of the agreement or exchange of information. Such information 
exchanges are not necessarily impermissible and may be eligible for 
certification. Whether or not certification is sought for such 
exchanges, this information is necessary to evaluate whether the conduct 
for which certification is sought meets the standards of the Act.
    (12) A statement of whether the applicant intends or reasonably 
expects that any exported goods or services covered by the proposed 
certificate will re-enter the United States, either in their original or 
modified form. If so, identify the goods or services and the manner in 
which they may re-enter the U.S.
    (13) The names and addresses of the suppliers of the goods and 
services to be exported (and the goods and services to be supplied by 
each) unless the goods and services to be exported are to be supplied by 
the applicant and/or its members.
    (14) A proposed non-confidential summary of the export conduct for 
which certification is sought. This summary may be used as the basis for 
publication in the Federal Register.
    (15) Any other information that the applicant believes will be 
necessary or helpful to a determination of whether to issue a 
certificate under the standards of the Act.
    (16) (Optional) A draft proposed certificate.
    (c) The applicant must sign the application and certify that (1) 
each member has authorized the applicant to submit the application, and 
(2) to the best of its belief the information in the application is 
true, correct, and fully responsive.
    (d) Conformity with regulations. No application shall be deemed 
submitted unless it complies with these regulations. Applicants are 
encouraged to seek guidance and assistance from the Department of 
Commerce in preparing and documenting their applications.
    (e) Review and acceptance. The Secretary will stamp the application 
on the day that it is received in the Office of Export Trading Company 
Affairs. From that date, the Secretary will have five working days to 
decide whether the application is complete and can be deemed submitted 
under the Act. On the date on which the application is deemed submitted, 
the Secretary will stamp it with that date and notify the applicant that 
the application has been accepted for review. If the application is not 
accepted for review, the Secretary shall advise the applicant that it 
may file the application again after correcting the deficiencies that 
the Secretary has specified. If the Secretary does not take action on 
the application within the five-day period, the application shall be 
deemed submitted as of the sixth day.
    (f) Withdrawal of application. The applicant may withdraw an 
application by written request at any time before the Secretary has 
determined whether to issue a certificate. An applicant who withdraws an 
application may submit a new application at any time.
    (g) Supplemental information. After an application has been deemed 
submitted, if the Secretary or the Attorney General finds that 
additional information is necessary to make a determination on the 
application, the Secretary will ask the applicant in writing to supply 
the supplemental information. The running of the time period for a

[[Page 40]]

determination on the application will be suspended from the date on 
which the request is sent until the supplemental information is received 
and is considered complete. The Secretary shall promptly decide whether 
the supplemental information is complete, and shall notify the applicant 
of his decision. If the information is being sought by the Attorney 
General, the supplemental information may be deemed complete only if the 
Attorney General concurs. If the applicant does not agree to provide the 
additional information, or supplies information which the Secretary or 
the Attorney General considers incomplete, the Secretary and the 
Attorney General will decide whether the information in their possession 
is sufficient to make a determination on the application. If either the 
Secretary or the Attorney General considers the information in their 
possession insufficient, the Secretary may make an additional request or 
shall deny the application. If they consider the information in their 
possession sufficient to make a determination on the application, the 
Secretary shall notify the applicant that the time period for a 
determination has resumed running.

(Information collection requirements in paragraph (a) approved by the 
Office of Management and Budget under control number 0625-0125)



Sec. 325.4  Calculating time periods.

    (a) When these regulations require action to be taken within a fixed 
time period, and the last day of the time period falls on a non-working 
day, the time period shall be extended to the next working day.
    (b) The day after an application is deemed submitted shall be deemed 
the first of the days within which the Secretary must make a 
determination on the application.



Sec. 325.5  Issuing the certificate.

    (a) Time period. The Secretary shall determine whether to issue a 
certificate within ninety days after the application is deemed submitted 
(excluding any suspension pursuant to Sec. 325.3(f) of the time period 
for making a determination). If the Secretary or the Attorney General 
considers it necessary, and the applicant agrees, the Secretary may take 
up to an additional thirty days to determine whether to issue a 
certificate.
    (b) Determination. The Secretary shall issue a certificate to the 
applicant if he determines, and the Attorney General concurs, that the 
proposed export trade, export trade activities and methods of operation 
will--
    (1) Result in neither a substantial lessening of competition or 
restraint of trade within the United States nor a substantial restraint 
of the export trade of any competitor of the applicant;
    (2) Not unreasonably enhance, stabilize, or depress prices within 
the United States of the class of the goods, wares, merchandise or 
services exported by the applicant;
    (3) Not constitute unfair methods of competition against competitors 
who are engaged in the export of goods, wares, merchandise or services 
of the class exported by the applicant; and
    (4) Not include any act that may reasonably be expected to result in 
the sale for consumption or resale within the United States of the 
goods, wares, merchandise, or services exported by the applicant.
    (c) Concurrence of the Attorney General. (1) Not later than seven 
days after an application is deemed submitted, the Secretary shall 
deliver to the Attorney General a copy of the application, any 
information submitted in connection with the application, and any other 
relevant information in his possession. The Secretary and the Attorney 
General shall make available to each other copies of other relevant 
information that was obtained in connection with the application, unless 
otherwise prohibited by law.
    (2) Not later than thirty days before the day a determination on the 
application is due, the Secretary shall deliver a proposed certificate 
to the Attorney General for discussion and comment. If the Attorney 
General does not agree that the proposed certificate may be issued, he 
shall, not later than ten days before the day a determination on the 
application is due, so advise the Secretary and state the reasons for 
the disagreement. The Secretary with the concurrence of the Attorney 
General,

[[Page 41]]

may modify or revise the proposed certificate to resolve the objections 
and problems raised by the Attorney General, or deny the application.
    (3) If the Attorney General receives the proposed certification by 
the date specified in the preceding paragraph and does not respond 
within the time period specified in that paragraph, he shall be deemed 
to concur in the proposed certificate.
    (d) Content of certificate. The certificate shall specify the export 
conduct and all persons or entities which are protected from liability 
under the antitrust laws. The Secretary may certify the proposed export 
conduct contained in the application, in whole or in part, with such 
changes, modifications, terms, or conditions as are appropriate. If the 
Secretary intends to issue a certificate different from a draft 
certificate submitted by the applicant, the Secretary shall first 
consult with the applicant.
    (e) Certificate obtained by fraud. A certificate shall be void ab 
initio with respect to any export conduct for which a certificate was 
obtained by fraud.
    (f) Minimum thirty-day period. The Secretary may not issue a 
certificate until thirty days after the summary of the application is 
published in the Federal Register.



Sec. 325.6  Publishing notices in the Federal Register.

    (a) Within ten days after an application is deemed submitted, the 
Secretary shall deliver to the Federal Register a notice summarizing the 
application. The notice shall identify the applicant and each member and 
shall include a summary of the export conduct for which certification is 
sought. If the Secretary does not intend to publish the summary proposed 
by the applicant, he shall notify the applicant. Within twenty days 
after the date the notice is published in the Federal Register, 
interested parties may submit written comments to the Secretary on the 
application. The Secretary shall provide a copy of such comments to the 
Attorney General.
    (b) If a certificate is issued, the Secretary shall publish a 
summary of the certification in the Federal Register. If an application 
is denied, the Secretary shall publish a notice of denial. Certificates 
will be available for inspection and copying in the International Trade 
Administration Freedom of Information Records Inspection Facility.
    (c) If the Secretary initiates proceedings to revoke or modify a 
certificate, he shall publish a notice of his final determination in the 
Federal Register.
    (d) If the applicant requests reconsideration of a determination to 
deny an application, in whole or in part, the Secretary shall publish 
notice of his final determination in the Federal Register.



Sec. 325.7  Amending the certificate.

    An application for an amendment to a certificate shall be treated in 
the same manner as an original application. The application for an 
amendment shall set forth the proposed amendment(s) and the reasons for 
them. It shall contain any information specified in Sec. 325.3(b) that 
is relevant to the determination on the application for an amendment. 
The effective date of an amendment will be the date on which the 
application for the amendment was deemed submitted.



Sec. 325.8  Expediting the certification process.

    (a) Request for expedited action. (1) An applicant may be granted 
expedited action on its application in the discretion of the Secretary 
and the Attorney General. The Secretary and the Attorney General will 
consider such requests in light of an applicant's showing that it has a 
special need for a prompt decision. A request for expedited action 
should include an explanation of why expedited action is needed, 
including a statement of all relevant facts and circumstances, such as 
bidding deadlines or other circumstances beyond the control of the 
applicant, that require the applicant to act in less than ninety days 
and that have a significant impact on the applicant's export trade.
    (2) The Secretary shall advise the applicant within ten days after 
the application is deemed submitted whether it will receive expedited 
action. The Secretary may grant the request in whole or in part and 
process the remainder of the application through the normal

[[Page 42]]

procedures. Expedited action may be granted only if the Attorney General 
concurs.
    (b) Time period. The Secretary shall determine whether to issue a 
certificate to the applicant within forty-five days after the Secretary 
granted the request for expedited action, or within a longer period if 
agreed to by the applicant (excluding any suspension pursuant to 
Sec. 325.3(f) of the time period for making a determination). The 
Secretary may not issue a certificate until thirty days after the 
summary of the application is published in the Federal Register.
    (c) Concurrence of the Attorney General. (1) Not later than ten 
working days before the date on which a determination on the application 
is due, the Secretary shall deliver a proposed certificate to the 
Attorney General for discussion and comment. If the Attorney General 
does not agree that the proposed certificate may be issued, he shall, 
not later than five working days before the date on which a 
determination on the application is due, so advise the Secretary and 
state the reasons for the disagreement. The Secretary, with the 
concurrence of the Attorney General, may revise the proposed certificate 
to resolve the objections and problems raised by the Attorney General, 
or deny the application.
    (2) If the Attorney General receives the proposed certificate by the 
date specified in the preceding paragraph and does not respond within 
the time period specified in that paragraph, he shall be deemed to 
concur in the proposed certificate.

(Information collection requirements in paragraph (a)(1) approved by the 
Office of Management and Budget under control number 0625-0125)



Sec. 325.9  Reconsidering an application that has been denied.

    (a) If the Secretary determines to deny an application in whole or 
in part, he shall notify the applicant in writing of his decision and 
the reasons for his determination.
    (b) Within thirty days after receiving a notice of denial, the 
applicant may request the Secretary to reconsider his determination.
    (1) The request for reconsideration shall include a written 
statement setting forth the reasons why the applicant believes the 
decision should be reconsidered, and any additional information that the 
applicant considers relevant.
    (2) Upon the request of the applicant, the Secretary and the 
Attorney General will meet informally with the applicant and/or his 
representative to discuss the applicant's reasons why the determination 
on the application should be changed.
    (c) The Secretary shall consult with the Attorney General with 
regard to reconsidering an application. The Secretary may modify his 
original determination only if the Attorney General concurs.
    (d) The Secretary shall notify the applicant in writing of his final 
determination after reconsideration and of his reasons for the 
determination within thirty days after the request for reconsideration 
has been received.



Sec. 325.10  Modifying or revoking a certificate.

    (a) Action subject to modification or revocation. The Secretary 
shall revoke a certificate, in whole or in part, or modify it, as the 
Secretary or the Attorney General considers necessary, if:
    (1) The export conduct of a person or entity protected by the 
certificate no longer complies with the requirements set forth in 
Sec. 325.4(b);
    (2) A person or entity protected by the certificate fails to comply 
with a request for information under paragraph (b) of this section; or
    (3) The certificate holder fails to file a complete annual report.
    (b) Request for information. If the Secretary or the Attorney 
General has reason to believe that the export trade, export trade 
activities, or methods of operation of a person or entity protected by a 
certificate no longer comply with the requirements set forth in 
Sec. 325.4(b), the Secretary shall request any information that he or 
the Attorney General considers to be necessary to resolve the matter.
    (c) Proceedings for the revocation or modification of a 
certificate--(1) Notification letter. If, after reviewing the relevant 
information in their possession,

[[Page 43]]

it appears to the Secretary or the Attorney General that a certificate 
should be revoked or modified for any of the reasons set forth in 
paragraph (a) above, the Secretary shall so notify the certificate 
holder in writing. The notification shall be sent by registered or 
certified mail to the address specified in the certificate. The 
notification shall include a detailed statement of the facts, conduct, 
or circumstances which may warrant the revocation or modification of the 
certificate.
    (2) Answer. The certificate holder shall respond to the notification 
letter within thirty days after receiving it, unless the Secretary, in 
his discretion, grants a thirty day extension for good cause shown. The 
certificate holder shall respond specifically to the statement included 
with the notification letter and state in detail why the facts, conduct 
or circumstances described in the notification letter are not true, or 
if they are true, why they do not warrant the revoking or modifying of 
the certificate. If the certificate holder does not respond within the 
specified period, it will be considered an admission of the statements 
contained in the notification letter.
    (3) Resolution of factual disputes. Where material facts are in 
dispute, the Secretary and the Attorney General shall, upon request, 
meet informally with the certificate holder. The Secretary or the 
Attorney General may require the certificate holder to provide any 
documents or information that are necessary to support its contentions. 
After reviewing the statements of the certificate holder and the 
documents or information that the certificate holder has submitted, and 
upon considering other relevant documents or information in his 
possession, the Secretary shall make proposed findings of the factual 
matters in dispute. The Attorney General is not bound by the proposed 
findings.
    (4) Final determination. The Secretary and the Attorney General 
shall review the notification letter and the certificate holder's answer 
to it, the proposed factual findings made under paragraph (c)(3) of this 
section, and any other relevant documents or information in their 
possession. If, after review, the Secretary or the Attorney General 
determines that the export conduct of a person or entity protected by 
the certificate no longer complies with the standards set forth in 
Sec. 325.4(b), the Secretary shall revoke or modify the certificate as 
appropriate. If the Secretary or the Attorney General determines that 
the certificate holder has failed to comply with the request for 
information under paragraph (b) of this section, or has failed to file a 
complete annual report, and that the failure to comply or file should 
result in revocation of modification, the Secretary shall revoke or 
modify the certificate as appropriate. The determination will be final 
and will be issued to the certificate holder in writing. The notice to 
the certificate holder shall include a statement of the circumstances 
underlying and the reasons in support of the determination. If the 
Secretary determines to revoke or modify the certificate, the decision 
shall specify the effective date of the revocation or modification; this 
date must be at least thirty days but not more than ninety days after 
the Secretary notifies the certificate holder of his determination. The 
Secretary shall publish notice in the Federal Register of a revocation 
or modification or a decision not to revoke or modify.
    (d) Investigative information. In proceedings under this section, 
the Attorney General shall make available to the Secretary any 
information that has been obtained in response to Civil Investigative 
Demands issued under section 304(b)(3) of the Act. Unless prohibited by 
law, the Attorney General and the Secretary shall also make available to 
each other any other information which each is relying upon under these 
proceedings.



Sec. 325.11  Judicial review.

    (a) Review of certain determinations. (1) Any person aggrieved by a 
final determination of the Secretary under Sec. 325.5, Sec. 325.7, 
Sec. 325.9, or Sec. 325.10 of these regulations may, within thirty days 
of the determination, bring an action in an appropriate district court 
of the United States to set aside the determination on the ground that 
it is erroneous. If a certificate is denied, the applicant may bring 
suit within thirty days after the notice of denial is published in the

[[Page 44]]

Federal Register, or, if the applicant seeks reconsideration, within 
thirty days after the Secretary publishes in the Federal Register notice 
of his determination after reconsideration.
    (b) For purposes of judicial review, determinations of the Secretary 
are final when notice is published in the Federal Register.
    (c) Record for judicial review. For purposes of judicial review, the 
record shall include all information presented to or obtained by the 
Secretary which had a bearing on the determination, the determination 
itself, the supporting statement setting forth the reasons for the 
determination, and the Attorney General's response to the Secretary 
indicating concurrence or nonconcurrence.
    (d) Limitation of judicial review. Except as provided in paragraph 
(a) of this section, no agency action taken under the Act shall be 
subject to judicial review.



Sec. 325.12  Returning the applicant's documents.

    (a) Upon the denial or withdrawal of an application for a 
certificate in its entirety, the applicant may request the return of all 
copies of the documents submitted by the applicant in connection with 
the application to the Department of Commerce or the Department of 
Justice. The applicant shall submit this request in writing to both the 
Secretary and the Attorney General.
    (b) The Secretary and the Attorney General shall return the 
documents to the applicant within thirty days after they receive the 
applicant's request.



Sec. 325.13  Nonadmissibility in evidence.

    If the Secretary denies, in whole or in part, an application for a 
certificate or for an amendment to a certificate, or revokes or amends a 
certificate, neither the negative determination nor the statement of 
reasons therefor shall be admissible in evidence in any administrative 
or judicial proceeding in support of any claim under the antitrust laws.



Sec. 325.14  Submitting reports.

    (a) Not later than each anniversary of a certificate's effective 
date, the Secretary shall notify the certificate holder of the 
information to be included in the annual report. This report shall 
contain any changes relevant to the matters specified in the 
certificate, an update of the information contained in the application 
brought current to the anniversary date, and any other information the 
Secretary considers appropriate, after consultation with the Attorney 
General.
    (b) Not later than forty-five days after each anniversary of a 
certificate's effective date, a certificate holder shall submit its 
annual report to the Secretary. The Secretary shall deliver a copy of 
the annual report to the Attorney General.
    (c) Failure to submit a complete annual report may be the basis for 
modification or revocation of a certificate.



Sec. 325.15  Relinquishing a certificate.

    A certificate holder may relinquish a certificate at any time 
through written notice to the Secretary. The certificate will cease to 
be effective on the day the Secretary receives the notice.



Sec. 325.16  Protecting confidentiality of information.

    (a) Any information that is submitted by any person under the Act is 
exempt from disclosure under the Freedom of Information Act (5 U.S.C. 
552).
    (b)(1) Except as authorized under paragraph (b)(3) of this section, 
no officer or employee of the United States shall disclose commercial or 
financial information submitted under this Act if the information is 
privileged or confidential, and if disclosing the information would 
cause harm to the person who submitted it.
    (2) A person submitting information shall designate the documents or 
information which it considers privileged or confidential and the 
disclosure of which would cause harm to the person submitting it. The 
Secretary shall endeavor to notify these persons of any requests or 
demands before disclosing any of this information.
    (3) An officer or employee of the United States may disclose 
information covered under paragraph (b)(1) of this section only under 
the following circumstances--

[[Page 45]]

    (i) Upon a request made by either House of Congress or a Committee 
of the Congress,
    (ii) In a judicial or administrative proceeding subject to issuance 
of an appropriate protective order,
    (iii) With the written consent of the person who submitted the 
information,
    (iv) When the Secretary considers disclosure of the information to 
be necessary for determining whether or not to issue, amend, or revoke a 
certificate, if--
    (A) The Secretary determines that a non-confidential summary of the 
information is inadequate; and
    (B) The person who submitted the information is informed of the 
intent to disclose the information, and has an opportunity to advise the 
Secretary of the potential harm which disclosure may cause,
    (v) In accordance with any requirement imposed by a statute of the 
United States.
    (c) In any judicial or administrative proceeding in which disclosure 
is sought from the Secretary or the Attorney General of any confidential 
or privileged documents or information submitted under this Act, the 
Secretary or Attorney General shall attempt to notify the party who 
submitted the information of the request or demand for disclosure. In 
appropriate circumstances the Secretary or Attorney General may seek or 
support an appropriate protective order on behalf of the party who 
submitted the documents or information.



Sec. 325.17  Waiver.

    The Secretary may waive any of the provisions of this part in 
writing for good cause shown, if the Attorney General concurs and if 
permitted by law.

[[Page 47]]



      CHAPTER IV--FOREIGN-TRADE ZONES BOARD, DEPARTMENT OF COMMERCE




  --------------------------------------------------------------------
Part                                                                Page
400             Regulations of the Foreign-Trade Zones Board          49

[[Page 49]]



PART 400--REGULATIONS OF THE FOREIGN-TRADE ZONES BOARD--Table of Contents




                    Subpart A--Scope and Definitions

Sec.
400.1  Scope.
400.2  Definitions.

                  Subpart B--Foreign-Trade Zones Board

400.11  Authority of the Board.
400.12  Responsibilities and authority of the Executive Secretary.
400.13  Board headquarters.

       Subpart C--Establishment and Modification of Zone Projects

400.21  Number and location of zones and subzones.
400.22  Eligible applicants.
400.23  Criteria for grants of authority for zones and subzones.
400.24  Application for zone.
400.25  Application for subzone.
400.26  Application for expansion or other modification to zone project.
400.27  Procedure for processing application.
400.28  Conditions, prohibitions and restrictions applicable to grants 
          of authority.
400.29  Application fees.

        Subpart D--Manufacturing and Processing Activity--Reviews

400.31  Manufacturing and processing activity; criteria.
400.32  Procedure for review of request for approval of manufacturing or 
          processing.
400.33  Restrictions on manufacturing and processing activity.

       Subpart E--Zone Operations and Administrative Requirements

400.41  Zone operations; general.
400.42  Requirements for commencement of operations in a zone project.
400.43  Restriction and prohibition of certain zone operations.
400.44  Zone-restricted merchandise.
400.45  Retail trade.
400.46  Accounts, records and reports.
400.47  Appeals to the Board from decisions of the Assistant Secretary 
          for Import Administration and the Executive Secretary.

           Subpart F--Notice, Hearings, Record and Information

400.51  Notice and hearings.
400.52  Official record; public access.
400.53  Information.

    Authority: Foreign-Trade Zones Act of June 18, 1934, as amended 
(Pub. L. 397, 73rd Congress, 48 Stat. 998-1003 (19 U.S.C. 81a-81u)).

    Source: 56 FR 50798, Oct. 8, 1991, unless otherwise noted.



                    Subpart A--Scope and Definitions



Sec. 400.1  Scope.

    (a) This part sets forth the regulations, including the rules of 
practice and procedure, of the Foreign-Trade Zones Board with regard to 
foreign-trade zones in the United States pursuant to the Foreign-Trade 
Zones Act of 1934, as amended (19 U.S.C. 81a-81u). It includes the 
substantive and procedural rules for the authorization of zones and the 
regulation of zone activity. The purpose of zones as stated in the Act 
is to ``expedite and encourage foreign commerce, and other purposes.'' 
The regulations provide the legal framework for accomplishing this 
purpose in the context of evolving U.S. economic and trade policy, and 
economic factors relating to international competition.
    (b) Part 146 of the regulations of the United States Customs Service 
(19 CFR part 146) governs zone operations, including the admission of 
merchandise into zones, zone activity involving such merchandise, and 
the transfer of merchandise from zones.
    (c) To the extent ``activated'' under Customs procedures in 19 CFR 
part 146, and only for the purposes specified in the Act (19 U.S.C. 
81c), zones are treated for purposes of the tariff laws and Customs 
entry procedures as being outside the Customs territory of the United 
States. Under zone procedures, foreign and domestic merchandise may be 
admitted into zones for operations such as storage, exhibition, 
assembly, manufacture and processing, without being subject to formal 
Customs entry procedures and payment of duties, unless and until the 
foreign merchandise enters Customs territory for domestic consumption. 
At that time, the importer ordinarily has a choice of paying duties 
either at the rate applicable to the foreign material in its condition 
as admitted into a zone, or if used in manufacturing or processing, to 
the emerging product. Quota restrictions do not normally apply to 
foreign goods in zones. The Board can deny or limit the

[[Page 50]]

use of zone procedures in specific cases on public interest grounds. 
Merchandise moved into zones for export (zone-restricted status) may be 
considered exported for purposes such as federal excise tax rebates and 
Customs drawback. Foreign merchandise (tangible personal property) 
admitted to a zone and domestic merchandise held in a zone for 
exportation are exempt from certain state and local ad valorem taxes (19 
U.S.C. 81o(e)). Articles admitted into zones for purposes not specified 
in the Act shall be subject to the tariff laws and regular entry 
procedures, including the payment of applicable duties, taxes, and fees.

[56 FR 50798, Oct. 8, 1991; 56 FR 56544, Nov. 5, 1991]



Sec. 400.2  Definitions.

    (a) Act means the Foreign-Trade Zones Act of 1934, as amended.
    (b) Board means the Foreign-Trade Zones Board, which consists of the 
Secretary of the Department of Commerce (chairman) and the Secretary of 
the Treasury, or their designated alternates.
    (c) Customs Service means the United States Customs Service of the 
Department of the Treasury.
    (d) Executive Secretary is the Executive Secretary of the Foreign-
Trade Zones Board.
    (e) Foreign-trade zone is a restricted-access site, in or adjacent 
to a Customs port of entry, operated pursuant to public utility 
principles under the sponsorship of a corporation granted authority by 
the Board and under supervision of the Customs Service.
    (f) Grant of authority is a document issued by the Board which 
authorizes a zone grantee to establish, operate and maintain a zone 
project or a subzone, subject to limitations and conditions specified in 
this part and in 19 CFR part 146. The authority to establish a zone 
includes the authority to operate and the responsibility to maintain it.
    (g) Manufacturing, as used in this part, means activity involving 
the substantial transformation of a foreign article resulting in a new 
and different article having a different name, character, and use.
    (h) Port Director is normally the director of Customs for the 
Customs jurisdictional area in which the zone is located.
    (i) Port of entry means a port of entry in the United States, as 
defined by part 101 of the regulations of the Customs Service (19 CFR 
part 101), or a user fee airport authorized under 19 U.S.C. 58b and 
listed in part 122 of the regulations of the Customs Service (19 CFR 
part 122).
    (j) Private corporation means any corporation, other than a public 
corporation, which is organized for the purpose of establishing a zone 
project and which is chartered for this purpose under a law of the state 
in which the zone is located.
    (k) Processing, when referring to zone activity, means any activity 
involving a change in condition of merchandise, other than 
manufacturing, which results in a change in the Customs classification 
of an article or in its eligibility for entry for consumption.
    (l) Public corporation means a state, a political subdivision 
(including a municipality) or public agency thereof, or a corporate 
municipal instrumentality of one or more states.
    (m) State includes any state of the United States, the District of 
Columbia, and Puerto Rico.
    (n) Subzone means a special-purpose zone established as an adjunct 
to a zone project for a limited purpose.
    (o) Zone means a foreign-trade zone established under the provisions 
of the Act and these regulations. Where used in this part, the term also 
includes subzones, unless the context indicates otherwise.
    (p) Zone grantee is the corporate recipient of a grant of authority 
for a zone project. Where used in this part, the term ``grantee'' means 
``zone grantee'' unless otherwise indicated.
    (q) Zone operator is a corporation, partnership, or person that 
operates a zone or subzone under the terms of an agreement with the zone 
grantee or an intermediary entity, with the concurrence of the Port 
Director.
    (r) Zone project means the zone plan, including all of the zone and 
subzone sites that the Board authorizes a single grantee to establish.
    (s) Zone site means the physical location of a zone or subzone.

[[Page 51]]

    (t) Zone user is a party using a zone under agreement with the zone 
grantee or operator.

[62 FR 53534, Oct. 15, 1997]



                  Subpart B--Foreign-Trade Zones Board



Sec. 400.11  Authority of the Board.

    (a) In general. In accordance with the Act and procedures of this 
part, the Board has authority to:
    (1) Prescribe rules and regulations concerning zones;
    (2) Issue grants of authority for zones and subzones, and approve 
modifications to the original zone project;
    (3) Approve manufacturing and processing activity in zones and 
subzones as described in subpart D of this part;
    (4) Make determinations on matters requiring Board decisions under 
this part;
    (5) Decide appeals in regard to certain decisions of the Commerce 
Department's Assistant Secretary for Import Administration or the 
Executive Secretary;
    (6) Inspect the premises, operations and accounts of zone grantees 
and operators;
    (7) Require zone grantees to report on zone operations;
    (8) Report annually to the Congress on zone operations;
    (9) Restrict or prohibit zone operations;
    (10) Impose fines for violations of the Act and this part;
    (11) Revoke grants of authority for cause; and
    (12) Determine, as appropriate, whether zone activity is or would be 
in the public interest or detrimental to the public interest.
    (b) Authority of the Chairman of the Board. The Chairman of the 
Board (Secretary of the Department of Commerce) has the authority to:
    (1) Appoint the Executive Secretary of the Board;
    (2) Call meetings of the Board, with reasonable notice given to each 
member; and
    (3) Submit to the Congress the Board's annual report as prepared by 
the Executive Secretary.
    (c) Alternates. Each member of the Board will designate an alternate 
with authority to act in an official capacity for that member.
    (d) Determinations of the Board. (1) The determination of the Board 
will be based on the unanimous vote of the members (or alternate 
members) of the Board.
    (2) All votes will be recorded.
    (3) The Board will issue its determination in proceedings under the 
regulations in the form of a Board order.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997



Sec. 400.12  Responsibilities and authority of the Executive Secretary.

    The Executive Secretary has the following responsibilities and 
authority:
    (a) Represent the Board in administrative, regulatory, operational, 
and public affairs matters;
    (b) Serve as director of the Commerce Department's Foreign-Trade 
Zones staff;
    (c) Execute and implement orders of the Board;
    (d) Arrange meetings and direct circulation of action documents for 
the Board;
    (e) Arrange with other sections of the Department of Commerce, Board 
agencies and other governmental agencies for studies and comments on 
zone issues and proposals;
    (f) Maintain custody of the seal, records, files and correspondence 
of the Board, with disposition subject to the regulations of the 
Department of Commerce;
    (g) Issue notices on zone matters for publication in the Federal 
Register;
    (h) Determine subzone sponsorship questions as provided in 
Sec. 400.22(d);
    (i) Determine whether additional information is needed for 
evaluation of applications and other requests for decisions under this 
part, as provided for in various sections of this part, including 
Secs. 400.24, 400.25, and 400.26;
    (j) Issue guidelines on information required for subzone 
applications under Sec. 400.25(a)(6);
    (k) Determine whether proposed modifications involve major changes 
under Sec. 400.26(a)(2);

[[Page 52]]

    (l) Determine whether applications meet prefiling requirements under 
Sec. 400.27(b);
    (m) Direct processing of applications, including designation of 
examiners and scheduling of hearings under Secs. 400.27 and 400.32;
    (n) Authorize minor modifications to zone projects under 
Sec. 400.27(f);
    (o) Review changes in sourcing under Sec. 400.28(a)(3);
    (p) Direct monitoring of zone activity under Sec. 400.31(d);
    (q) Direct reviews and make recommendations on requests for 
manufacturing/processing approvals under Sec. 400.32(b);
    (r) Determine questions of scope under Sec. 400.32(c);
    (s) Accept rate schedules and determine their sufficiency under 
Sec. 400.42(b)(3);
    (t) Review and decide zone rate complaints cases under 
Sec. 400.42(b)(5);
    (u) Make recommendations in cases involving questions as to whether 
zone activity should be prohibited or restricted for public interest 
reasons, including reviews under Sec. 400.43;
    (v) Authorize under certain circumstances the return of ``zone-
restricted merchandise'' for entry into Customs territory under 
Sec. 400.44;
    (w) Authorize certain duty-paid retail trade under Sec. 400.45;
    (x) Determine the format for the annual reports of zone grantees to 
the Board and direct preparation of an annual report to Congress from 
the Board under Sec. 400.46(d); and
    (y) Designate an acting Executive Secretary.



Sec. 400.13  Board headquarters.

    The headquarters of the Board is located within the U.S. Department 
of Commerce (Herbert C. Hoover Building), Pennsylvania Avenue and 14th 
Street, NW., Washington, DC 20230, as part of the office of the Foreign-
Trade Zones staff.



       Subpart C--Establishment and Modification of Zone Projects



Sec. 400.21  Number and location of zones and subzones.

    (a) Number of zone projects--port of entry entitlement. (1) Provided 
that the other requirements of this subpart are met:
    (i) Each port of entry is entitled to at least one zone project;
    (ii) If a port of entry is located in more than one state, each of 
the states in which the port of entry is located is entitled to a zone 
project; and
    (iii) If a port of entry is defined to include more than one city 
separated by a navigable waterway, each of the cities is entitled to a 
zone project.
    (2) Zone projects in addition to those approved under the 
entitlement provision of paragraph (a)(1) of this section may be 
authorized by the Board if it determines that existing project(s) will 
not adequately serve the public interest (convenience of commerce).
    (b) Location of zones and subzones--port of entry adjacency 
requirements. (1) The Act provides that the Board may approve ``zones in 
or adjacent to ports of entry'' (19 U.S.C. 81b).
    (2) The ``adjacency'' requirement is satisfied if:
    (i) A general-purpose zone is located within 60 statute miles or 90 
minutes' driving time from the outer limits of a port of entry;
    (ii) A subzone meets the following requirements relating to Customs 
supervision:
    (A) Proper Customs oversight can be accomplished with physical and 
electronic means; and
    (B) All electronically produced records are maintained in a format 
compatible with the requirements of the U.S. Customs Service for the 
duration of the record period; and
    (C) The grantee/operator agrees to present merchandise for 
examination at a Customs site selected by Customs when requested, and 
further agrees to present all necessary documents directly to the 
Customs oversight office.



Sec. 400.22  Eligible applicants.

    (a) In general. Subject to the other provisions of this section, 
public or private corporations may apply for a grant of authority to 
establish a zone project. The board will give preference to public 
corporations.
    (b) Public and non-profit corporations. The eligibility of public 
and non-profit

[[Page 53]]

corporations to apply for a grant of authority shall be supported by a 
enabling legislation of the legislature of the state in which the zone 
is to be located, indicating that the corporation, individually or as 
part of a class, is authorized to so apply.
    (c) Private for-profit corporations. The eligibility of private for-
profit corporations to apply for a grant of authority shall be supported 
by a special act of the state legislature naming the applicant 
corporation and by evidence indicating that the corporation is chartered 
for the purpose of establishing a zone.
    (d) Applicants for subzones--(1) Eligibility. The following entities 
are eligible to apply for a grant of authority to establish a subzone:
    (i) The zone grantee of the closest zone project in the same state;
    (ii) The zone grantee of another zone in the same state, which is a 
public corporation, if the Board, or the Executive Secretary, finds that 
such sponsorship better serves the public interest; or
    (iii) A state agency specifically authorized to submit such an 
application by an act of the state legislature.
    (2) Complaints. If an application is submitted under paragraph 
(d)(1) (ii) or (iii) of this section, the Executive Secretary will:
    (i) Notify, in writing, the grantee specified in paragraph (d)(1)(i) 
of this section, who may, within 30 days, object to such sponsorship, in 
writing, with supporting information as to why the public interest would 
be better served by its acting as sponsor;
    (ii) Review such objections prior to filing the application to 
determine whether the proposed sponsorship is in the public interest, 
taking into account:
    (A) The complaining zone's structure and operation;
    (B) The views of State and local public agencies; and
    (C) The views of the proposed subzone operator;
    (iii) Notify the applicant and complainants in writing of the 
Executive Secretary's determination;
    (iv) If the Executive Secretary determines that the proposed 
sponsorship is in the public interest, file the application (see 
Sec. 400.47 regarding appeals to decisions of the Executive Secretary).



Sec. 400.23  Criteria for grants of authority for zones and subzones.

    (a) Zones. The Board will consider the following factors in 
determining whether to issue a grant of authority for a zone project:
    (1) The need for zone services in the port of entry area, taking 
into account existing as well as projected international trade related 
activities and employment impact;
    (2) The adequacy of the operational and financial plans and the 
suitability of the proposed sites and facilities, with justification for 
duplicative sites;
    (3) The extent of state and local government support, as indicated 
by the compatibility of the zone project with the community's master 
plan or stated goals for economic development and the views of State and 
local public officials involved in economic development. Such officials 
shall avoid commitments that anticipate outcome of Board decisions;
    (4) The views of persons and firms likely to be affected by proposed 
zone activity; and
    (5) If the proposal involves manufacturing or processing activity, 
the criteria in Sec. 400.31.
    (b) Subzones. In reviewing proposals for subzones the Board will 
also consider:
    (1) Whether the operation could be located in or otherwise 
accommodated by the multi-purpose facilities of the zone project serving 
the area;
    (2) The specific zone benefits sought and the significant public 
benefit(s) involved supported by evidence to meet the requirement in 
Sec. 400.31(c); and
    (3) Whether the proposed activity is in the public interest, taking 
into account the criteria in Sec. 400.31.



Sec. 400.24  Application for zone.

    (a) In general. An application for a grant of authority to establish 
a zone project shall consist of a transmittal letter, an executive 
summary and five exhibits.
    (b) Letter of transmittal. The transmittal letter shall be currently 
dated and signed by an authorized officer of the

[[Page 54]]

corporation and bear the corporate seal.
    (c) Executive summary. The executive summary shall describe:
    (1) The corporation's legal authority to apply;
    (2) The type of authority requested from the Board;
    (3) The proposed zone site and facilities and the larger project of 
which the zone is a part;
    (4) The project background, including surveys and studies;
    (5) The relationship of the project to the community's and state's 
overall economic development plans and objectives;
    (6) The plans for operating and financing the project; and
    (7) Any additional pertinent information needed for a complete 
summary description of the proposal.
    (d) Exhibits. (1) Exhibit One (Legal Authority for the Application) 
shall consist of:
    (i) A certified copy of the state enabling legislation described in 
Sec. 400.22;
    (ii) A copy of pertinent sections of the applicant's charter or 
organization papers; and
    (iii) A certified copy of the resolution of the governing body of 
the corporation authorizing the official signing the application.
    (2) Exhibit Two (Site Description) shall consist of:
    (i) A detailed description of the zone site, including size, 
location, address, and a legal description of the area proposed for 
approval; a table with site designations shall be included when more 
than one site is involved;
    (ii) A summary description of the larger project of which the zone 
is a part, including type, size, location and address;
    (iii) A statement as to whether the zone is within or adjacent to a 
customs port of entry;
    (iv) A description of zone facilities and services, including 
dimensions and types of existing and proposed structures;
    (v) A description of existing or proposed site qualifications 
including: land-use zoning, relationship to flood-plain, infrastructure, 
utilities, security, and access to transportation services;
    (vi) A description of current activities carried on in or contiguous 
to the project;
    (vii) If part of a port facility, a summary of port and 
transportation services and facilities; if not, a summary description of 
transportation systems indicating connections from local and regional 
points of arrival to the zone; and
    (viii) A statement as to the possibilities and plans for zone 
expansion.
    (3) Exhibit Three (Operation and Financing) shall consist of:
    (i) A statement as to site ownership (if not owned by the applicant 
or proposed operator, evidence as to their legal right to use the site);
    (ii) A discussion of the operational plan (if the zone or a portion 
thereof is to be operated by other than the grantee, a summary of the 
selection process used or to be used, the type of operation agreement 
and, if available, the name and qualifications of the proposed 
operator);
    (iii) A brief explanation of the plans for providing facilities, 
physical security, and for satisfying the requirements for Customs 
automated systems;
    (iv) A summary of the plans for financing capital and operating 
costs, including a statement as to the source and use of funds; and
    (v) The estimated time schedule for construction and activation.
    (4) Exhibit Four (Economic Justification) shall include:
    (i) A statement of the community's overall economic goals and 
strategies in relation to those of the region and state;
    (ii) A reference to the plan or plans on which the goals are based 
and how they relate to the zone project;
    (iii) An economic profile of the community including identification 
and discussion of dominant sectors in terms of percentage of employment 
or income, area resources and problems, economic imbalances, 
unemployment rates, area foreign trade statistics, and area port 
facilities and transportation networks;
    (iv) A statement as to the role and objective of the zone project, 
and a justification for each of the proposed sites;

[[Page 55]]

    (v) A discussion of the anticipated economic impact, direct and 
indirect, of the zone project, including references to public costs and 
benefits, employment, U.S. international trade, and environmental 
impact;
    (vi) A statement as to the need for zone services in the community, 
with information on surveys of business, and specific expressions of 
interest from proposed zone users, with letters of intent from those 
firms that are considered prime prospects; and
    (vii) A description of proposed manufacturing and processing 
operations, if applicable, with information covering the factors 
described in Sec. 400.31(b), including the nature and scope of the 
operation and production process, materials and components used, items 
to be foreign sourced with relevant tariff information, zone benefits 
anticipated and how they will affect the firm's plans, and the economic 
impact of the operation on the community and on related domestic 
industries.
    (5) Exhibit Five (Maps) shall consist of:
    (i) The following maps and drawings:
    (A) State and county maps showing the general location of the zone 
in terms of the area's transportation network;
    (B) A local community map showing in red the location of the 
proposed zone; and
    (C) A detailed blueprint of the zone or subzone area showing zone 
boundaries in red, with dimensions and metes and bounds, or other legal 
description, and showing existing and proposed structures.
    (ii) Proposals involving existing zones shall include a drawing 
showing existing zone sites and the proposed changes.
    (e) Additional information. The Board or the Executive Secretary may 
require additional information needed to adequately evaluate a proposal.
    (f) Amendment of application. The Board or the Executive Secretary 
may allow amendment of the application.
    (g) Drafts. Applicants may submit a draft application to the 
Executive Secretary for review.
    (h) Format and number of copies. Unless the Executive Secretary 
alters the requirements of this paragraph, submit an original and 8 
copies of the application on 8\1/2\"  x  11" (216  x  279 mm) paper. 
Exhibit Five of the original application shall contain full-sized maps, 
and copies shall contain letter-sized reductions.
    (i) Where to file. Address and mail the application to the Secretary 
of Commerce, Attention: Executive Secretary, Foreign-Trade Zones Board, 
U.S. Department of Commerce, Pennsylvania Avenue and 14th Street, NW., 
Washington, DC 20230.

(Approved by the Office of Management and Budget under control number 
0625-0139)

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.25  Application for subzone.

    (a) In general. An application to establish a subzone as part of a 
proposed or existing zone shall be submitted in accordance with the 
format in Sec. 400.24, except that the focus of the information provided 
in Exhibit Four shall be on the specific activity involved and its net 
economic effect. The information submitted in Exhibit Four shall 
include:
    (1) A summary as to the reasons for the subzone and an explanation 
of its anticipated economic effects;
    (2) Identity of the subzone user and its corporate affiliation;
    (3) Description of the proposed activity, including:
    (i) Products;
    (ii) Materials and Components;
    (iii) Sourcing plans (domestic/foreign);
    (iv) Tariff rates and other import requirements or restrictions;
    (v) Information to assist the Board in making a determination under 
Secs. 400.31(b)(1)(iii) and 400.31(b)(2);
    (vi) Benefits to subzone user;
    (vii) Information required in Sec. 400.24(d)(4)(vii);
    (viii) Information as to whether alternative procedures have been 
considered as a means of obtaining the benefits sought;
    (ix) Information on the industry involved and extent of 
international competition; and
    (x) Economic impact of the operation on the area;
    (4) Reason operation cannot be conducted within a general-purpose 
zone;

[[Page 56]]

    (5) Statement as to environmental impact; and
    (6) Any additional information requested by the Board or the 
Executive Secretary in order to conduct the review. The Executive 
Secretary may issue guidelines as to the kind of detailed information 
needed for various types of subzone cases.
    (b) Burden of proof. An applicant for a subzone must demonstrate to 
the Board that the proposed operation meets the criteria in 
Sec. 400.23(b).

(Approved by the Office of Management and Budget under control number 
0625-0139)



Sec. 400.26  Application for expansion or other modification to zone project.

    (a) In general. (1) A grantee may apply to the Board for authority 
to expand or otherwise modify its zone project.
    (2) The Executive Secretary, in consultation with the Port Director, 
will determine whether the proposed modification involves a major change 
in the zone plan and is thus subject to paragraph (b) of this section, 
or is minor and subject to paragraph (c) of this section. In making this 
determination the Executive Secretary will consider the extent to which 
the proposed modification would:
    (i) Substantially modify the plan originally approved by the Board; 
or
    (ii) Expand the physical dimensions of the approved zone area as 
related to the scope of operations envisioned in the original plan.
    (b) Major modification to zone project. An application for a major 
modification to an approved zone project shall be submitted in 
accordance with the format in Sec. 400.24, except that:
    (1) Reference may be made to current information in an application 
from the same applicant on file with the Board; and
    (2) The content of Exhibit Four shall relate specifically to the 
proposed change.
    (c) Minor modification to zone project. Other applications or 
requests under this subpart, including those for minor revisions of zone 
boundaries, grant of authority transfers, or time extensions, shall be 
submitted in letter form with information and documentation necessary 
for analysis, as determined by the Executive Secretary, who shall 
determine whether the proposed change is a minor one subject to this 
paragraph (c) instead of paragraph (b) of this section (see, 
Sec. 400.27(f)).
    (d) Applications for other revisions to grants of authority. 
Applications or requests for revisions to grants of authority, such as 
restriction modifications, shall be submitted in letter form with 
information and documentation necessary for analysis, as determined by 
the Executive Secretary. If the change involves removal or significant 
modification of a restriction included by the Board in a grant of 
authority, the review procedures of Sec. 400.32 shall apply. If not, the 
procedure set forth in Sec. 400.27(f) shall apply.

(Approved by the Office of Management and Budget under control number 
0625-0139)

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.27  Procedure for processing application.

    (a) In general. This section outlines the procedure followed in 
processing applications submitted under Secs. 400.24-400.26. In 
addition, it sets forth the time schedules which will normally be 
applied in processing applications. The schedules will provide guidance 
to applicants with respect to the time frames for each of the procedural 
steps involved in the Board's review. Under these schedules, 
applications involving manufacturing or processing activity would be 
processed within 1 year, and those not involving such activity, within 
10 months. While the schedules set forth a standard time frame, the 
Board may determine that it requires additional time based on special 
circumstances, such as when the public comment period must be reopened 
pursuant to paragraphs (d)(2)(v)(B) and (d)(3)(vi)(B) of this section.
    (b) Prefiling review. Applications subject to Sec. 400.29 shall be 
accompanied with a check in accordance with that section, and will be 
dated upon receipt at the headquarters of the Board. The Executive 
Secretary will determine whether the application satisfies the 
requirements of Secs. 400.22-400.24, 400.25, 400.26, 400.32, and other 
applicable provisions of this part.

[[Page 57]]

    (1) If the application is deficient, the Executive Secretary will 
notify the applicant within 20 days of receipt of the application, 
specifying the deficiencies. The applicant shall correct the 
deficiencies and submit the correct application within 30 days of 
notification. Otherwise, the application (original) will be returned.
    (2) If the application is sufficient, the Executive Secretary will 
within 45 days of receipt of the application:
    (i) Formally file the application, thereby initiating the proceeding 
or review;
    (ii) Assign a case docket number in cases requiring a Board order; 
and
    (iii) Notify the applicant.
    (c) Procedure--Executive Secretary responsibilities. After 
initiating a proceeding based on an application under Secs. 400.24-
400.25, or 400.26(b), the Executive Secretary will:
    (1) Designate an examiner to conduct a review and prepare a report 
with recommendations for the Board;
    (2) Publish in the Federal Register a notice of the formal filing of 
the application and initiation of the review which includes the name of 
the applicant, a description of the zone project, information as to any 
hearing scheduled at the outset, and an invitation for public comment, 
including a time period during which the public may submit evidence, 
factual information, and written arguments. Normally, the comment period 
will close 60 days after the date the notice appears, except that, if a 
hearing is held (see, Sec. 400.51), the period will not close prior to 
15 days after the date of the hearing. The closing date for general 
comment will ordinarily be followed by an additional 15-day period for 
rebuttal comments;
    (3) Send copies of the filing and initiation notice and the 
application to the Commissioner of Customs and the Port Director, or a 
designee;
    (4) Arrange for hearings, as appropriate;
    (5) Transmit the reports and recommendations of the examiner and of 
the officials identified in paragraph (c)(3) of this section to the 
Board for appropriate action; and
    (6) Notify the applicant in writing and publish notice in the 
Federal Register of the Board's determination.
    (d) Case reviews--procedure and time schedule--(1) Customs review. 
The Port Director, or a designee, in accordance with agency regulations 
and directives, will submit a technical report to the Executive 
Secretary within 45 days of the conclusion of the public comment period 
described in paragraph (c)(2) of this section.
    (2) Examiners reviews--non-manufacturing/processing. Examiners 
assigned to cases not involving manufacturing or processing activity 
shall conduct a review taking into account the factors enumerated in 
Sec. 400.23 and other appropriate sections of this part, which shall 
include:
    (i) Conducting or participating in necessary hearings scheduled by 
the Executive Secretary;
    (ii) Reviewing case records, including public comments;
    (iii) Requesting information and evidence from parties of record;
    (iv) Developing information and evidence necessary for evaluation 
and analysis of the application in accordance with the criteria of the 
Act and this part;
    (v) Preparing a report with recommendations to the Board and 
submitting it to the Executive Secretary within 120 days of the close of 
the period for public comment (see, paragraph (c)(2) of this section).
    (A) If the report is unfavorable to the applicant, it shall be 
considered a preliminary report and the applicant shall be notified 
within 5 days (in writing or by phone) and given 30 days from the date 
of notification in which to respond to the report and submit additional 
evidence.
    (B) If the response contains new evidence on which there has not 
been an opportunity for public comment, the Executive Secretary will 
publish notice in the Federal Register after completion of the review of 
the response. The new material will be made available for public 
inspection and the Federal Register notice will invite further public 
comment for 30 days, with an additional 15-day period for rebuttal 
comments.
    (C) The Customs adviser shall be notified when necessary for further 
comments, which shall be submitted within 45 days after notification.

[[Page 58]]

    (D) The examiners report in a situation under paragraph (d)(2)(v)(A) 
of this section shall be completed and submitted to the Executive 
Secretary within 30 days after receipt of additional evidence or notice 
from the applicant that there will be none; except that, if paragraph 
(d)(2)(v)(B) of this section applies, the report will be submitted 
within 30 days of the close of the period for public comment.
    (3) Examiners reviews--cases involving manufacturing or processing 
activity. Examiners shall conduct a review taking into account the 
factors enumerated in Sec. 400.23, Sec. 400.31, and other appropriate 
sections of this part, which shall include:
    (i) Conducting or participating in hearings scheduled by the 
Executive Secretary;
    (ii) Reviewing case records, including public comments;
    (iii) Requesting information and evidence from parties of record;
    (iv) Developing information and evidence necessary for analysis of 
the threshold factors and the economic factors enumerated in 
Sec. 400.31;
    (v) Conducting an analysis to include:
    (A) An evaluation of policy considerations pursuant to 
Secs. 400.31(b)(1)(i) and 400.31(b)(1)(ii);
    (B) An evaluation of the economic factors enumerated in 
Secs. 400.31(b)(1)(iii) and 400.31(b)(2), which shall include an 
evaluation of the economic impact on domestic industry, considering both 
producers of like products and producers of components/materials used in 
the manufacture/processing or assembly of the products. The evaluation 
will take into account such factors as market conditions, price 
sensitivity, degree and nature of foreign competition, effect on exports 
and imports, and the net effect on U.S. employment;
    (vi) Conducting appropriate industry surveys when necessary; and
    (vii) Preparing a report with recommendations to the Board and 
submitting it to the Executive Secretary within 150 days of the close of 
the period for public comment:
    (A) If the report is unfavorable to the applicant, it shall be 
considered a preliminary report and the applicant shall be notified (in 
writing or by phone) and given 45 days from the date of notification in 
which to respond to the report and submit additional evidence pertinent 
to the factors considered in the report.
    (B) If the response contains new evidence on which there has not 
been an opportunity for public comment, the Executive Secretary will 
publish notice in the Federal Register after completion of the review of 
the response. The new material will be made available for public 
inspection and the Federal Register notice will invite further public 
comment for 30 days, with an additional 15-day period for rebuttal 
comments.
    (e) Procedure--Completion of review--(1) The Executive Secretary 
will circulate the examiners report with recommendations to Board 
members for their review and votes (by resolution).
    (2) The Treasury and Army Board members will return their votes to 
the Executive Secretary within 30 days, unless a formal meeting is 
requested (see, Sec. 400.11(d)).
    (3) The Commerce Department will complete the decision process 
within 15 days of receiving the votes of both other Board members, and 
the Executive Secretary will publish the Board decision.
    (f) Procedure--Application for minor modification of zone project. 
(1) The Executive Secretary, with the concurrence of the Port Director, 
will make a determination in cases under Sec. 400.26(c) involving minor 
changes to zone projects that do not require a Board order, such as 
boundary modifications, including certain relocations, and will notify 
the applicant in writing of the decision within 30 days of the 
determination that the application or request can be processed under 
Sec. 400.26(c).
    (2) The Port Director shall provide the decision as to concurrence 
within 20 days after being notified of the request or application.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.28  Conditions, prohibitions and restrictions applicable to grants of authority.

    (a) In general. Grants of authority issued by the Board for the 
establishment of zones or subzones, including

[[Page 59]]

those already issued, are subject to the Act and this part and the 
following general conditions or limitations:
    (1) Approvals from the grantee and the Port Director, pursuant to 19 
CFR part 146, are required prior to the activation of any portion of an 
approved zone project; and
    (2) Approval of the Board or the Commerce Department's Assistant 
Secretary for Import Administration pursuant to subpart D of this part 
is required prior to the commencement of manufacturing beyond the scope 
of that approved as part of the application or pursuant to reviews under 
this part (e.g., new end products, significant expansions of plant 
production capacity), and of similar changes in processing activity 
which involves foreign articles subject to quantitative import controls 
(quotas) or results in articles subject to a lower (actual or effective) 
duty rate (inverted tariff) than any of their foreign components.
    (3) Sourcing changes--(i) Notification requirement. The grantee or 
operator of a zone or subzone shall notify the Executive Secretary when 
there is a change in sourcing for authorized manufacturing or processing 
activity which involves the use of new foreign articles subject to 
quotas or inverted tariffs, unless--
    (A) Entries for consumption are not to be made at the lower duty 
rate; or
    (B) The product in which the foreign articles are to be incorporated 
is being produced for exportation.
    (ii) Notification procedure. Notification shall be given prior to 
the commencement of the activity, when possible, otherwise at the time 
the new foreign articles arrive in the zone or are withdrawn from 
inventory for use in production. Requests may be made to the Executive 
Secretary for authority to submit notification of sourcing changes on a 
quarterly federal fiscal year basis covering changes in the previous 
quarter.
    (iii) Reviews. (A) Upon notification of a sourcing change under 
paragraph (a)(3)(i) of this section, within 30 days, the Executive 
Secretary will conduct a preliminary review of the changes in relation 
to the approved activity to determine whether they could have 
significant adverse effects, taking into account the factors enumerated 
in Sec. 400.31(b), and will submit a report and recommendation to the 
Commerce Department's Assistant Secretary for Import Administration, who 
shall determine whether review is necessary. The procedures of 
Sec. 400.32(b) shall be used in these situations when appropriate.
    (B) The Board or the Commerce Department's Assistant Secretary for 
Import Administration may, based on public interest grounds, prohibit or 
restrict the use of zone procedures in regard to the change in sourcing, 
including requiring that items be placed in privileged foreign status 
(19 CFR 146.41) upon admission to a zone or subzone.
    (C) The Executive Secretary shall direct reviews necessary to ensure 
that activity involved in these situations continues to be in the public 
interest.
    (4) Prior to activation of a zone, the zone grantee or operator 
shall obtain all necessary permits from federal, state and local 
authorities, and except as otherwise specified in the Act or this part, 
shall comply with the requirements of those authorities.
    (5) A grant of authority for a zone or a subzone shall lapse unless 
the zone project (in case of subzones, the subzone facility) is 
activated, pursuant to 19 CFR part 146, and in operation not later than 
five years from:
    (i) A Board order (authorizing the zone or subzone) issued after 
November 7, 1991; or
    (ii) November 7, 1991.
    (6) A grant of authority approved under this subpart includes 
authority for the grantee to permit the erection of buildings necessary 
to carry out the approved zone project subject to concurrence of the 
Port Director.
    (7) Zone grantees, operators, and users shall permit federal 
government officials acting in an official capacity to have access to 
the zone project and records during normal business hours and under 
other reasonable circumstances.
    (8) A grant of authority may not be sold, conveyed, transferred, set 
over, or assigned (FTZ Act, section 17; 19 U.S.C. 81q). Private 
ownership of zone land and facilities is permitted provided the zone 
grantee retains the control necessary to implement the approved zone

[[Page 60]]

project. Should title to land or facilities be transferred after a grant 
of authority is issued, the zone grantee must retain, by agreement with 
the new owner, a level of control which allows the grantee to carry out 
its responsibilities as grantee. The sale of a zone site or facility for 
more than its fair market value without zone status could, depending on 
the circumstances, be subject to section 17 of the Act.
    (9) A grant of authority will not be construed to make the zone 
grantee automatically liable for violations by operators, users, or 
other parties.
    (b) Additional conditions, prohibitions and restrictions. Other 
requirements, conditions or restrictions under Federal, State or local 
law may apply to the zone or subzone authorized by the grant of 
authority.
    (c) Revocation of grants of authority. (1) In general. As provided 
in this section, the Board can revoke in whole or in part a grant of 
authority for a zone or subzone whenever it determines that the zone 
grantee or, in the case of subzones, the subzone operator, has violated, 
repeatedly and willfully, the provisions of the Act.
    (2) Procedure. When the Board has reason to believe that the 
conditions for revocation, as described in paragraph (a) of this 
section, are met, the Board will:
    (i) Notify the zone or subzone grantee in writing stating the nature 
of the alleged violations, and provide the grantee an opportunity to 
request a hearing on the proposed revocation;
    (ii) Conduct a hearing, if requested or otherwise if appropriate;
    (iii) Make a determination on the record of the proceeding not 
earlier than 4 months after providing notice to the zone grantee under 
paragraph (b)(1) of this section; and
    (iv) If the Board's determination is affirmative, publish notice of 
revocation of the grant of authority in the Federal Register.
    (3) As provided in section 18 of the Act (19 U.S.C. 81r(c)), the 
zone or subzone grantee may appeal an order of the Board revoking the 
grant of authority.

[56 FR 50798, Oct. 8, 1991; 56 FR 65833, Dec. 19, 1991, as amended at 62 
FR 53535, Oct. 15, 1997]



Sec. 400.29  Application fees.

    (a) In general. This section sets forth a uniform system of charges 
in the form of fees to recover some costs incurred by the Foreign-Trade 
Zones staff of the Department of Commerce in processing the applications 
listed in paragraph (b) of this section. The legal authority for the 
fees is 31 U.S.C. 9701, which provides for the collection of user fees 
by agencies of the Federal Government.
    (b) Uniform system of user fee charges. The following graduated fee 
schedule establishes fees for certain types of applications and requests 
for authority based on their average processing time. Applications 
combining requests for more than one type of approval are subject to the 
fee for each category.

(1) Additional general-purpose zones (Sec.  400.24; Sec.          $3,200
 400.21(a)(2)).................................................
(2) Special-purpose subzones (Sec.  400.25):
  (i) Non-manufacturing/processing or less than three products.    4,000
  (ii) Manufacturing/processing--three or more products........    6,500
(3) Expansions (Sec.  400.26(b))...............................    1,600
 

    (c) Applications submitted to the Board shall include a check drawn 
on a national or state bank or trust company of the United States or 
Puerto Rico in the amount called for in paragraph (b) of this section. 
Uncertified checks must be acceptable for deposit by a Federal Reserve 
bank or branch.
    (d) Applicants shall make their checks payable to the U.S. 
Department of Commerce ITA. The checks will be deposited by ITA into the 
Treasury receipts account. If applications are found deficient under 
Sec. 400.27(b)(1), or withdrawn by applicants prior to formal filing, 
refunds will be made.



        Subpart D--Manufacturing and Processing Activity--Reviews



Sec. 400.31  Manufacturing and processing activity; criteria.

    (a) In general. Pursuant to section 15(c) of the Act (19 U.S.C. 
81o(c)), the Board has authority to restrict or prohibit zone activity 
``that in its judgment is detrimental to the public interest.'' When 
evaluating zone and subzone manufacturing and processing activity, 
either as proposed in an application, in a request for manufacturing/

[[Page 61]]

processing approval, or as part of a review of an ongoing operation, the 
Board shall determine whether the activity is in the public interest by 
reviewing it in relation to the evaluation criteria contained in 
paragraph (b) of this section. With regard to processing activity, this 
section shall apply only when the activity involves foreign articles 
subject to quantitative import controls (quotas) or results in articles 
subject to a lower duty rate (inverted tariff) than any of their foreign 
components. Such a review involves consideration of whether the activity 
is consistent with trade policy and programs, and whether its net 
economic effect is positive.
    (b) Evaluation criteria--(1) Threshold factors. It is the policy of 
the Board to authorize zone activity only when it is consistent with 
public policy and, in regard to activity involving foreign merchandise 
subject to quotas or inverted tariffs, when zone procedures are not the 
sole determining cause of imports. Thus, without undertaking a review of 
the economic factors enumerated in Sec. 400.31(b)(2), the Board shall 
deny or restrict authority for proposed or ongoing activity if it 
determines that:
    (i) The activity is inconsistent with U.S. trade and tariff law, or 
policy which has been formally adopted by the Executive branch;
    (ii) Board approval of the activity under review would seriously 
prejudice U.S. tariff and trade negotiations or other initiatives; or
    (iii) The activity involves items subject to quantitative import 
controls or inverted tariffs, and the use of zone procedures would be 
the direct and sole cause of imports that, but for such procedures, 
would not likely otherwise have occurred, taking into account imports 
both as individual items and as components of imported products.
    (2) Economic factors. After its review of threshold factors, if 
there is a basis for further consideration, the Board shall consider the 
following factors in determiing the net economic effect of the activity 
or proposed activity:
    (i) Overall employment impact;
    (ii) Exports and reexports;
    (iii) Retention or creation of manufacturing or processing activity;
    (iv) Extent of value-added activity;
    (v) Overall effect on import levels of relevant products, including 
import displacement;
    (vi) Extent and nature of foreign competition in relevant products;
    (vii) Impact on related domestic industry, taking into account 
market conditions; and
    (viii) Other relevant information relating to public interest and 
net economic impact considerations, including technology transfers and 
investment effects.
    (c) Methodology and evidence--(1)(i) The first phase 
(Sec. 400.31(b)) involves consideration of threshold factors. If an 
examiner or reviewer makes a negative finding on any of the factors in 
paragraph (b)(1) of this section in the course of a review, the 
applicant shall be informed pursuant to Sec. 400.27(d)(3)(vii)(A). When 
threshold factors are the basis for a negative recommendation in a 
review of ongoing activity, the zone grantee and directly affected party 
shall be notified and given an opportunity to submit evidence pursuant 
to Sec. 400.27(d)(3)(vii)(A). If the Board determines in the negative 
any of the factors in paragraph (b)(1) of this section, it shall deny or 
restrict authority for the proposed or ongoing activity.
    (ii) The process for paragraph (b)(2) of this section involves 
consideration of the enumerated economic factors, taking into account 
their relative weight and significance under the circumstances. Previous 
evaluations in similar cases are considered. The net effect is arrived 
at by balancing the positive and negative factors and arriving at a net 
economic effect.
    (2) Contributory effect. In assessing the significance of the 
economic effect of the zone activity as part of the consideration of 
economic factors, and in consideration of whether there is a significant 
public benefit, the Board may consider the contributory effect zone 
savings have as an incremental part of cost effectiveness programs 
adopted by companies to improve their international competitiveness.
    (3) Burden of proof. Applicants for subzones shall have the burden 
of submitting evidence establishing that the

[[Page 62]]

activity does or would result in a significant public benefit, taking 
into account the factors in paragraph (b) of this section. Applicants 
for approval of manufacturing or processing in general-purpose zones 
shall submit evidence regarding the positive economic effects that would 
result from activity within the zone and may submit evidence and 
comments as to policy considerations. Both types of applicants are 
expected to submit information in response to evidence of adverse 
economic effects during the public comment period. Parties should submit 
evidence that is probative and substantial in addressing the matter in 
issue.
    (d) Monitoring and post-approval reviews--(1) Ongoing zone activity 
may be reviewed at anytime to determine whether it is in compliance with 
the Act and regulations, as well as the authority granted by the Board. 
Reviews may also be conducted to determine whether there are changed 
circumstances that raise questions as to whether the activity is 
detrimental to the public interest, taking into account the factors 
enumerated in Sec. 400.31. The Board may prescribe special monitoring 
requirements in its decisions when appropriate.
    (2) Reviews may be initiated by the Board, the Commerce Department's 
Assistant Secretary for Import Administration, or the Executive 
Secretary; or, they may be undertaken in response to requests from 
parties directly affected by the activity in question and showing good 
cause.
    (3) Upon review, if the Board finds that zone activity is no longer 
in the public interest, taking into account the provisions of 
Sec. 400.31, it may restrict the activity in question. The 
appropriateness of a delayed effective date will be considered in such 
cases.

[56 FR 50798, Oct. 8, 1991; 56 FR 56544, Nov. 5, 1991]



Sec. 400.32  Procedure for review of request for approval of manufacturing or processing.

    (a) Request as part of application for grant of authority. A request 
for approval of proposed manufacturing or processing activity may be 
submitted as part of an application under Secs. 400.24-400.26(a). The 
Board will review the request taking into account the criteria in 
Sec. 400.31(b).
    (b) Request for manufacturing/processing in approved zone or 
subzone. Prior to the commencement of manufacturing in a zone or subzone 
involving activity beyond the scope of that which has been previously 
authorized at the facility (i.e., new end products, significant 
expansions of plant production capacity), and of similar changes in 
processing activity that involves foreign articles subject to quotas or 
inverted tariffs, zone grantees or operators shall request the 
determination referred to in Sec. 400.31(a) by submitting a request in 
writing to the Executive Secretary (Sec. 400.28(a)(2)). Such requests 
shall include the information required by Secs. 400.24(d)(4)(vii) and 
400.25.
    (1) The Commerce Department's Assistant Secretary for Import 
Administration may make determinations in these cases based upon a 
review by the FTZ staff and the recommendation of the Executive 
Secretary, when:
    (i) The proposed activity is the same, in terms of products 
involved, to activity recently approved by the Board and similar in 
circumstances; or
    (ii) The activity is for export only; or
    (iii) The zone benefits sought do not involve the election of non-
privileged foreign status (19 CFR 146.42) on items involving inverted 
tariffs; or
    (iv) The Port Director determines that the activity could otherwise 
be conducted under Customs bonded procedures.
    (2) When the informal procedure in paragraph (b)(1) of this section 
is not appropriate--
    (i) The Executive Secretary will:
    (A) Assign a case docket number and give notice in the Federal 
Register inviting public comment;
    (B) Arrange a public hearing, if appropriate;
    (C) Appoint an examiner, if appropriate, to conduct a review and 
prepare a report with recommendations for the Board; and
    (D) Prepare and transmit a report with recommendations, or transmit 
the examiners report, to the Board for appropriate action; and

[[Page 63]]

    (ii) The Board will make a determination on the requests, and the 
Executive Secretary will notify the grantee in writing of the Board's 
determination, and will publish notice of the determination in the 
Federal Register.
    (c) Scope determinations. Determinations shall be made by the 
Executive Secretary as to whether changes in activity are within the 
scope of related activity already approved for the facility involved 
under this part. When warranted, the procedures of paragraph (b)(2) of 
this section will be followed.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.33  Restrictions on manufacturing and processing activity.

    (a) In general. In approving manufacturing or processing activity 
for a zone or subzone the Board may adopt restrictions to protect the 
public interest, health, or safety. The Commerce Department's Assistant 
Secretary for Import Administration may similarly adopt restrictions in 
exercising authority under Sec. 400.32(b)(1).
    (b) Restrictions on items subject to antidumping and countervailing 
duty actions--(1) Board policy. Zone procedures shall not be used to 
circumvent antidumping (AD) and countervailing duty (CVD) actions under 
19 CFR parts 353 and 355.
    (2) Admission of items subject to AD/CVD actions. Items subject to 
AD/CVD orders or items which would be otherwise subject to suspension of 
liquidation under AD/CVD procedures, if they entered U.S. Customs 
territory, shall be placed in privileged foreign status (19 CFR 146.41) 
upon admission to a zone or subzone. Upon entry for consumption, such 
items shall be subject to duties under AD/CVD orders or to suspension of 
liquidation, as appropriate, under 19 CFR parts 353 and 355.



       Subpart E--Zone Operations and Administrative Requirements



Sec. 400.41  Zone operations; general.

    Zones shall be operated by or under the contractual oversight of 
zone grantees, subject to the requirements of the Act and this part, as 
well as those of other federal, state and local agencies having 
jurisdiction over the site and operation. Zone grantees shall ensure 
that the reasonable zone needs of the business community are served by 
their zone projects. The Port Director represents the Board with regard 
to the zone projects in the district and is responsible for enforcement, 
including physical security and access requirements, as provided in 19 
CFR part 146.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.42  Requirements for commencement of operations in a zone project.

    (a) In general. The following actions are required before operations 
in a zone may commence:
    (1) Approval by the Port Director of an application for activation 
is required as provided in 19 CFR part 146; and
    (2) The Executive Secretary will review proposed manufacturing or 
processing, pursuant to Sec. 400.32, and a zone schedule as provided in 
this section.
    (b) Zone schedule. (1) The zone grantee shall submit to the 
Executive Secretary and to the Port Director a zone schedule which sets 
forth:
    (i) Internal rules and regulations for the zone; and
    (ii) A statement of the rates and charges (fees) applicable to zone 
users.
    (2) A zone schedule shall consist of typed, loose-leaf, numbered, 
letter-sized pages, enclosed in covers, and shall contain:
    (i) A title page, with information to include:
    (A) The name of the zone grantee and operator(s);
    (B) Schedule identification;
    (C) Site description;
    (D) Date of original schedule; and
    (E) Name of the preparer;
    (ii) A table of contents;
    (iii) Administrative information;
    (iv) A statement of zone operating policy, rules and regulations, 
including uniform procedures regarding the construction of buildings and 
facilities; and
    (v) A section listing rates and charges for zones and subzones with 
information sufficient for the Board or the Executive Secretary to 
determine

[[Page 64]]

whether the rates and charges are reasonable based on other like 
operations in the port of entry area, and whether there is uniform 
treatment under like circumstances among zone users.
    (3) The Executive Secretary will review the schedule to determine 
whether it contains sufficient information for users concerning the 
operation of the facility and a statement of rates and charges as 
provided in paragraph (b)(2) of this section. If the Executive Secretary 
determines that the schedule satisfies these requirements, the Executive 
Secretary will notify the zone grantee, unless there is a basis for 
review under paragraph (b)(5) of this section. A copy of the schedule 
shall be available for public inspection at the offices of the zone 
grantee and operator. The zone grantee shall send a copy to the Port 
Director, who may submit comments to the Executive Secretary.
    (4) Amendments to the schedule shall be prepared and submitted in 
the manner described in paragraphs (b)(1) through (b)(3) of this 
section, and listed in the concluding section of the schedule, with 
dates.
    (5) A zone user or prospective user showing good cause may object to 
the zone or subzone fee on the basis that it is not reasonable, fair and 
uniform, by submitting to the Executive Secretary a complaint in writing 
with supporting information. The Executive Secretary will review the 
complaint and issue a report and decision, which will be final unless 
appealed to the Board within 30 days. The Board or the Executive 
Secretary may otherwise initiate a review for cause. The factors 
considered in reviewing reasonableness and fairness, will include:
    (i) The going-rates and charges for like operations in the area and 
the extra costs of operating a zone, including return on investment; and
    (ii) In the case of subzones, the value of actual services rendered 
by the zone grantee or operator, and reasonable out-of-pocket expenses.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.43  Restriction and prohibition of certain zone operations.

    (a) In general. After review, the Board may restrict or prohibit any 
admission of merchandise into a zone project or operation in a zone 
project when it determines that such activity is detrimental to the 
public interest, health or safety.
    (b) Initiation of review. The Board may conduct a proceeding, or the 
Executive Secretary a review, to consider a restriction or prohibition 
under paragraph (a) of this section either self-initiated, or in 
response to a complaint made to the Board by a party directly affected 
by the activity in question and showing good cause.



Sec. 400.44  Zone-restricted merchandise.

    (a) In general. Merchandise which has been given export status by 
Customs officials (``zone-restricted merchandise''--19 CFR 146.44) may 
be returned to the Customs Territory of the United States only when the 
Board determines that the return would be in the public interest. Such 
returns are subject to the Customs laws and the payment of applicable 
duties and excise taxes (19 U.S.C. 81c, 4th proviso).
    (b) Criteria. In making the determination described in paragraph (a) 
of this section, the Board will consider:
    (1) The intent of the parties;
    (2) Why the goods cannot be exported;
    (3) The public benefit involved in allowing their return; and
    (4) The recommendation of the Port Director.
    (c) Procedure. (1) A request for authority to return ``zone-
restricted'' merchandise into Customs territory shall be made to the 
Executive Secretary in letter form by the zone grantee or operator of 
the zone in which the merchandise is located, with supporting 
information and documentation.
    (2) The Executive Secretary will investigate the request and prepare 
a report for the Board.
    (3) The Executive Secretary may act for the Board under this section 
in cases involving merchandise valued at 500,000 dollars or less, 
provided requests are accompanied with a letter of concurrence from the 
Port Director.

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]

[[Page 65]]



Sec. 400.45  Retail trade.

    (a) In general. Retail trade is prohibited in zones, except that 
sales or other commercial activity involving domestic, duty-paid, and 
duty-free goods may be conducted within an activated zone project under 
permits issued by the zone grantee and approved by the Board, with the 
further exception that no permits shall be necessary for sales involving 
domestic, duty-paid or duty-free food and non-alcoholic beverage 
products sold within the zone or subzone for consumption on premises by 
persons working therein. The Port Director will determine whether an 
activity is retail trade, subject to review by the Board when the zone 
grantee requests such a review with a good cause.
    (b) Procedure. Requests for Board approval under this section shall 
be submitted in letter form, with supporting documentation, to the Port 
Director, who is authorized to act for the Board in these cases, subject 
to the concurrence of the Executive Secretary.
    (c) Criteria. In evaluating requests under this section, the Port 
Director and the Executive Secretary will consider:
    (1) Whether any public benefits would result from approval; and
    (2) The economic effect such activity would have on the retail trade 
outside the zone in the port of entry area.

[56 FR 50798, Oct. 8, 1991; 57 FR 2319, Jan. 21, 1992, as amended at 62 
FR 53535, Oct. 15, 1997]



Sec. 400.46  Accounts, records and reports.

    (a) Zone accounts. Zone accounts shall be maintained in accordance 
with generally accepted accounting principles, and in compliance with 
the requirements of Federal, State or local agencies having jurisdiction 
over the site or operation.
    (b) Records and forms. Zone records and forms shall be prepared and 
maintained in accordance with the requirements of the Customs Service 
and the Board, and the zone grantee shall retain copies of applications 
it submits to the Board.
    (c) Maps and drawings. Zone grantees or operators, and Port 
Directors, shall keep current layout drawings of approved sites as 
described in Sec. 400.24(d)(5), showing activated portions, and a file 
showing required approvals. The zone grantee shall furnish necessary 
maps to the Port Director.
    (d) Annual reports. (1) Zone grantees shall submit annual reports to 
the Board at the time and in the format prescribed by the Executive 
Secretary, for use by the Executive Secretary in the preparation of the 
Board's annual report to the Congress.
    (2) The Board shall submit an annual report to the Congress.

(Approved by the Office of Management and Budget under control number 
0625-0109)

[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]



Sec. 400.47  Appeals to the Board from decisions of the Assistant Secretary for Import Administration and the Executive Secretary.

    (a) In general. Decisions of the Assistant Secretary for Import 
Administration and the Executive Secretary made pursuant to 
Secs. 400.22(d)(2)(ii), 400.32(b)(1), 400.44(c)(3), and 400.45(b)(2) may 
be appealed to the Board by adversely affected parties showing good 
cause.
    (b) Procedures. Parties appealing a decision under paragraph (a) of 
this section shall submit a request for review to the Board in writing, 
stating the basis for the request, and attaching a copy of the decision 
in question, as well as supporting information and documentation. After 
a review, the Board will notify the complaining party of its decision in 
writing.



           Subpart F--Notice, Hearings, Record and Information



Sec. 400.51  Notice and hearings.

    (a) In general. The Executive Secretary will publish notice in the 
Federal Register inviting public comment on applications docketed for 
Board action (see, Sec. 400.27(c)), and with regard to other reviews or 
matters considered under this part when public comment is necessary. 
Applicants shall give appropriate notice of their proposals in local 
newspapers. The Board, the Secretary, the Commerce Department's 
Assistant Secretary for Import Administration, or the Executive 
Secretary, as appropriate, may schedule

[[Page 66]]

and/or hold hearings during any proceedings or reviews conducted under 
this part whenever necessary or appropriate.
    (b) Requests for hearings--(1) A directly affected party showing 
good cause may request a hearing during a proceeding or review.
    (2) The request must be made within 30 days of the beginning of the 
period for public comment (see, Sec. 400.27) and must be accompanied by 
information establishing the need for the hearing and the basis for the 
requesting party's interest in the matter.
    (3) A determination as to the need for the hearing will be made by 
the Commerce Department's Assistant Secretary for Import Administration 
within 15 days after the receipt of such a request.
    (c) Procedure for public hearings. The Board will publish notice in 
the Federal Register of the date, time and location of a hearing. All 
participants shall have the opportunity to make a presentation. 
Applicants and their witnesses shall ordinarily appear first. The 
presiding officer may adopt time limits for individual presentations.



Sec. 400.52  Official record; public access.

    (a) Content. The Executive Secretary will maintain at the location 
stated in Sec. 400.53(d) an official record of each proceeding within 
the Board's jurisdiction. The Executive Secretary will include in the 
official record all factual information, written argument, and other 
material developed by, presented to, or obtained by the Board in 
connection with the proceeding. The official record will contain 
material that is public, business proprietary, privileged, and 
classified. While there is no requirement that a verbatim record shall 
be kept of public hearings, the proceedings of such hearings shall 
ordinarily be recorded and transcribed when significant opposition is 
involved.
    (b) Opening and closing of official record. The official record 
opens on the date the Executive Secretary files an application or 
receives a request that satisfies the applicable requirements of this 
part and closes on the date of the final determination in the proceeding 
or review, as applicable.
    (c) Protection of the official record. Unless otherwise ordered in a 
particular case by the Executive Secretary, the official record will not 
be removed from the Department of Commerce. A certified copy of the 
record will be made available to any court before which any aspect of a 
proceeding is under review, with appropriate safeguards to prevent 
disclosure of proprietary or privileged information.



Sec. 400.53  Information.

    (a) Request for information. The Board may request submission of any 
information, including business proprietary information, and written 
argument necessary or appropriate to the proceeding.
    (b) Public information. Except as provided in paragraph (c) of this 
section, the Board will consider all information submitted in a 
proceeding to be public information. If the person submitting the 
information does not agree to its public disclosure, the Board will 
return the information and not consider it in the proceeding.
    (c) Business proprietary information. Persons submitting business 
proprietary information and requesting protection from public disclosure 
shall mark the cover page ``business proprietary,'' as well as the top 
of each page on which such information appears.
    (d) Disclosure of information. Disclosure of public information will 
be governed by 15 CFR part 4. Public information in the official record 
will be available for inspection and copying at the Office of the 
Executive Secretary, Foreign-Trade Zones Board, U.S. Department of 
Commerce Building, Pennsylvania Avenue and 14th Street, NW., Washington, 
DC 20230.

[[Page 67]]



              CHAPTER VII--BUREAU OF EXPORT ADMINISTRATION,






                         DEPARTMENT OF COMMERCE




  --------------------------------------------------------------------

       SUBCHAPTER A--NATIONAL SECURITY INDUSTRIAL BASE REGULATIONS
Part                                                                Page
700             Defense priorities and allocations system...          69
701             Reporting of offsets agreements in sales of 
                    weapon systems or defense-related items 
                    to foreign countries or foreign firms...          94
702-704

[Reserved]

705             Effect of imported articles on the national 
                    security................................          96
706-709

[Reserved]

                         SUBCHAPTER B [RESERVED]
710-729

[Reserved]

             SUBCHAPTER C--EXPORT ADMINISTRATION REGULATIONS
730             General information.........................         101
732             Steps for using the EAR.....................         110
734             Scope of the Export Administration 
                    regulations.............................         124
736             General prohibitions........................         139
738             Commerce Control List overview and the 
                    country chart...........................         144
740             License exceptions..........................         155
742             Control policy--CCL based controls..........         190
743             Special Reporting...........................         227
744             Control policy: end-user and end-use based..         229
746             Embargoes and other special controls........         260
748             Applications (classification, advisory, and 
                    license) and documentation..............         270
750             Application processing, issuance or and 
                    denial..................................         300
752             Special comprehensive license...............         311
754             Short supply controls.......................         327
756             Appeals.....................................         339
758             Export clearance requirements...............         341

[[Page 68]]

760             Restrictive trade practices or boycotts.....         358
762             Recordkeeping...............................         425
764             Enforcement and protective measures.........         429
766             Administrative enforcement proceedings......         437
768             Foreign availability determination 
                    procedures and criteria.................         450
770             Interpretations.............................         460
772             Definitions of terms........................         467
774             The Commerce Control List...................         491
775-799

[Reserved]

[[Page 69]]



       SUBCHAPTER A--NATIONAL SECURITY INDUSTRIAL BASE REGULATIONS





PART 700--DEFENSE PRIORITIES AND ALLOCATIONS SYSTEM--Table of Contents




                           Subpart A--Purpose

Sec.
700.1  Purpose of this regulation.

                           Subpart B--Overview

700.2  Introduction.
700.3  Priority ratings and rated orders.
700.4  Priorities and allocations in a national emergency.
700.5  Special priorities assistance.
700.6  Official actions.
700.7  Compliance.

                         Subpart C--Definitions

700.8  Definitions.

                    Subpart D--Industrial Priorities

700.10  Delegation of authority.
700.11  Priority ratings.
700.12  Elements of a rated order.
700.13  Acceptance and rejection of rated orders.
700.14  Preferential scheduling.
700.15  Extension of priority ratings.
700.16  Changes or cancellations of priority ratings and rated orders.
700.17  Use of rated orders.
700.18  Limitations on placing rated orders.

          Subpart E--Industrial Priorities for Energy Programs

700.20  Use of priority ratings.
700.21  Application for priority rating authority.

      Subpart F--National emergency Preparedness and Critical Items

700.30  Priorities and allocations in a national emergency.
700.31  Metalworking machines.

                          Subpart G [Reserved]

                Subpart H--Special Priorities Assistance

700.50  General provisions.
700.51  Requests for priority rating authority.
700.52  Examples of assistance.
700.53  Criteria for assistance.
700.54  Instances where assistance may not be provided.
700.55  Assistance programs with Canada and other nations.

                       Subpart I--Official Actions

700.60  General provisions.
700.61  Rating Authorizations.
700.62  Directives.
700.63  Letters of Understanding.

                          Subpart J--Compliance

700.70  General provisions.
700.71  Audits and investigations.
700.72  Compulsory process.
700.73  Notification of failure to comply.
700.74  Violations, penalties, and remedies.
700.75  Compliance conflicts.

             Subpart K--Adjustments, Exceptions, and Appeals

700.80  Adjustments or exceptions.
700.81  Appeals.

                   Subpart L--Miscellaneous Provisions

700.90  Protection against claims.
700.91  Records and reports.
700.92  Applicability of this regulation and official actions.
700.93  Communications.

Schedule I to Part 700--Approved Programs and Delegate Agencies
Appendix I to Part 700--Form BXA-999-Request for Special Priorities 
          Assistance

    Authority: Titles I and VII of the Defense Production Act of 1950, 
as amended (50 U.S.C. app. 2061 et seq.), Title VI of the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5195 et 
seq.), and Executive Order 12919, 59 FR 29525, 3 CFR, 1994 Comp., p. 
901; Section 18 of the Selective Service Act of 1948 (50 U.S.C. App. 
468), 10 U.S.C. 2538, 50 U.S.C. 82, and Executive Order 12742, 56 FR 
1079, 3 CFR, 1991 Comp., p. 309; and Executive Order 12656, 53 FR 226, 3 
CFR, 1988 Comp., p. 585.

    Source: 49 FR 30414, July 30, 1984, unless otherwise noted. 
Redesignated at 54 FR 601, Jan. 9, 1989.



                           Subpart A--Purpose



Sec. 700.1  Purpose of this regulation.

    (a) Title I of the Defense Production Act of 1950, as amended (50 
U.S.C. App. 2061, et seq.) (Defense Production Act),

[[Page 70]]

authorizes the President: to require the priority performance of 
contracts and orders necessary or appropriate to promote the national 
defense over other contracts or orders; to allocate materials, services, 
and facilities as necessary or appropriate to promote the national 
defense; and to require the allocation of, or the priority performance 
under contracts or orders relating to, supplies of materials, equipment, 
and services in order to assure domestic energy supplies for national 
defense needs.
    (b) Section 18 of the Selective Service Act of 1948 (50 U.S.C. app. 
468) (Selective Service Act) authorizes the President to place an order 
with a supplier for any articles or materials required for the exclusive 
use of the U.S. armed forces whenever the President determines that in 
the interest of national security, prompt delivery of the articles and 
materials is required. The supplier must give precedence to the order so 
as to deliver the articles or materials in a required time period. 10 
U.S.C. 2538, and 50 U.S.C. 82, provide similar authority specifically 
for Department of Defense procurement, but only in time of war or when 
war is imminent.
    (c) Section 602(b) of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (42 U.S.C. 5195a(b)) provides that the terms 
``national defense'' and ``defense'' as used in the Defense Production 
Act includes ``emergency preparedness activities'' conducted pursuant to 
Title VI of the Stafford Act. The definition of ``national defense'' in 
Section 702(13) of the Defense Production Act provides that this term 
includes ``emergency preparedness activities'' conducted pursuant to 
Title VI of the Stafford Act.
    (d) The Defense Priorities and Allocations System (DPAS) regulation 
implements the priorities and allocations authority of the Defense 
Production Act and as this authority pertains to Title VI of the 
Stafford Act, and the priorities authority of the Selective Service Act 
and related statutes, all with respect to industrial resources. The DPAS 
ensures the timely availability of industrial resources for approved 
programs and provides an operating system to support rapid industrial 
response to a national emergency.
    (e) To aid in understanding and using the DPAS, an overview of its 
major provisions is incorporated into this regulation as subpart B--
Overview. The full text of the DPAS is found in subparts D through L.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31921, June 11, 1998]



                           Subpart B--Overview



Sec. 700.2  Introduction.

    (a) Certain national defense and energy programs (including 
emergency preparedness activities) are approved for priorities and 
allocations support. For example, military aircraft production, 
ammunition, and certain programs which maximize domestic energy supplies 
are ``approved programs.'' A complete list of currently approved 
programs is provided at Schedule 1 to this part.
    (b) The Department of Commerce administers the DPAS to ensure the 
timely delivery of industrial items to meet approved program 
requirements.
    (c) Commerce has delegated authority to place priority ratings on 
contracts or orders necessary or appropriate to promote the national 
defense to the government agencies that issue such contracts or orders. 
Schedule I includes a list of agencies delegated this authority. Copies 
of the Delegations of Authority are provided at Appendix II. They set 
forth the authorities delegated and those retained by Commerce.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31921, June 11, 1998]



Sec. 700.3  Priority ratings and rated orders.

    (a) Rated orders are identified by a priority rating consisting of 
the rating--either DX or DO--and a program identification symbol. Rated 
orders take preference over all unrated orders as necessary to meet 
required delivery dates. Among rated orders, DX rated orders take 
preference over DO rated orders. Program identification symbols

[[Page 71]]

indicate which approved program is involved with the rated order. For 
example, A1 identifies defense aircraft programs and A7 signifies 
defense electronic programs. The program identification symbols, in 
themselves, do not connote any priority.
    (b) Persons receiving rated orders must give them preferential 
treatment as required by this regulation. This means a person must 
accept and fill a rated order for items that the person normally 
supplies. The existence of previously accepted unrated or lower rated 
orders is not sufficient reason for rejecting a rated order. Persons are 
required to reschedule unrated orders if they conflict with performance 
against a rated order. Similarly, persons must reschedule DO rated 
orders if they conflict with performance against a DX rated order.
    (c) All rated orders must be scheduled to the extent possible to 
ensure delivery by the required delivery date.
    (d) Persons who receive rated orders must in turn place rated orders 
with their suppliers for the items they need to fill the orders. This 
provision ensures that suppliers will give priority treatment to rated 
orders from contractor to subcontractor to suppliers throughout the 
procurement chain.
    (e) Persons may place a priority rating on orders only when they are 
in receipt of a rated order, have been explicitly authorized to do so by 
the Department of Commerce or a Delegate Agency, or are otherwise 
permitted to do so by this regulation.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31921, June 11, 1998]



Sec. 700.4  Priorities and allocations in a national emergency.

    (a) In the event of a national emergency, special rules may be 
established as needed to supplement this part, thus ensuring rapid 
industrial response and the timely availability of critical industrial 
items and facilities to meet the urgent national defense requirements, 
including domestic emergency preparedness requirements, of approved 
programs.
    (b) The special rules established in response to the emergency may 
include provisions for the taking of certain emergency official actions 
and the allocation of critical and scarce materials and facilities.

[63 FR 31921, June 11, 1998]



Sec. 700.5  Special priorities assistance.

    (a) The DPAS is designed to be largely self-executing. However, from 
time-to-time production or delivery problems will arise. In this event, 
special priorities assistance is available from Commerce and from the 
Delegate Agencies.
    (b) Special priorities assistance is available for any reason 
consistent with this regulation. Generally, special priorities 
assistance is provided to expedite deliveries, resolve delivery 
conflicts, place rated orders, locate suppliers, or to verify 
information supplied by customers and vendors. Special priorities 
assistance may also be used to request rating authority for items not 
automatically ratable.



Sec. 700.6  Official actions.

    When necessary, Commerce takes specific official actions to 
implement or enforce the provisions of this regulation and to provide 
special priorities assistance. Such actions may include the issuance of: 
Rating Authorizations, Directives, Letters of Understanding, Set-asides, 
and compliance documents (Administrative Subpoenas, Demands for 
Information, and Inspection Authorizations).



Sec. 700.7  Compliance.

    (a) Compliance with the provisions of this regulation and official 
actions is required by the Defense Production Act and the Selective 
Service Act and related statutes. Violators are subject to criminal 
penalties.
    (b) Any person who places or receives a rated order should be 
thoroughly familiar with, and must comply with, the provisions of this 
regulation.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31921, June 11, 1998]

[[Page 72]]



                         Subpart C--Definitions



Sec. 700.8  Definitions.

    In addition to the definitions provided in Section 702 of the 
Defense Production Act (excepting the definition of ``industrial 
resources'') and Section 602(a) of the Stafford Act, the following 
definitions pertain to all sections of this part:
    Approved program--a program determined as necessary or appropriate 
for priorities and allocations support to promote the national defense 
by the Secretary of Defense, the Secretary of Energy, or the Director, 
Federal Emergency Management Agency, under the authority of the Defense 
Production Act, the Stafford Act, and Executive Order 12919, or the 
Selective Service Act and related statutes and Executive Order 12742.
    Construction. The erection, addition, extension, or alteration of 
any building, structure, or project, using materials or products which 
are to be an integral and permanent part of the building, structure, or 
project. Construction does not include maintenance and repair.
    Delegate Agency. A government agency authorized by delegation from 
the Department of Commerce to place priority ratings on contracts or 
orders needed to support approved programs.
    Defense Production Act. the Defense Production Act of 1950, as 
amended (50 U.S.C. App. 2061, et seq.).
    Industrial resources--all materials, services, and facilities, 
including construction materials, the authority for which has not been 
delegated to other agencies under Executive Order 12919. This term also 
includes the term ``item'' as defined and used in this part.
    Item. Any raw, in process, or manufactured material, article, 
commodity, supply, equipment, component, accessory, part, assembly, or 
product of any kind, technical information, process, or service.
    Maintenance and repair and operating supplies (MRO):
    (a) Maintenance is the upkeep necessary to continue any plant, 
facility, or equipment in working condition.
    (b) Repair is the restoration of any plant, facility, or equipment 
to working condition when it has been rendered unsafe or unfit for 
service by wear and tear, damage, or failure of parts.
    (c) Operating supplies are any items carried as operating supplies 
according to a person's established accounting practice. Operating 
supplies may include hand tools and expendable tools, jigs, dies, 
fixtures used on production equipment, lubricants, cleaners, chemicals 
and other expendable items.
    (d) MRO does not include items produced or obtained for sale to 
other persons or for installation upon or attachment to the property of 
another person, or items required for the production of such items; 
items needed for the replacement of any plant, facility, or equipment; 
or items for the improvement of any plant, facility, or equipment by 
replacing items which are still in working condition with items of a new 
or different kind, quality, or design.
    Official action. An action taken by Commerce under the authority of 
the Defense Production Act, the Selective Service Act and related 
statutes, and this regulation. Such actions include the issuance of Set-
asides, Rating Authorizations, Directives, Letters of Understanding, 
Demands for Information, Inspection Authorizations, and Administrative 
Subpoenas.
    Person--any individual, corporation, partnership, association, or 
any other organized group of persons, or legal successor or 
representative thereof; or any authorized State or local government or 
agency thereof; and for purposes of administration of this part, 
includes the United States Government and any authorized foreign 
government or agency thereof, delegated authority as provided in this 
part.
    Production equipment. Any item of capital equipment used in 
producing materials or furnishing services that has a unit acquisition 
cost of $2,500 or more, an anticipated service life in excess of one 
year, and the potential for maintaining its integrity as a capital item.
    Rated order. A prime contract, a subcontract, or a purchase order in 
support of an approved program issued in accordance with the provisions 
of this regulation.

[[Page 73]]

    Selective Service Act and related statutes--Section 18 of the 
Selective Service Act of 1948 (50 U.S.C. app. 468), 10 U.S.C. 2538, and 
50 U.S.C. 82.
    Set-aside. The amount of an item for which a supplier must reserve 
order book space in anticipation of the receipt of rated orders.
    Stafford Act--Title VI (Emergency Preparedness) of the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act, as amended (42 
U.S.C. 5195 et seq.).

[49 FR 30414, July 30, 1984; 49 FR 50172, Dec. 27, 1984. Redesignated at 
54 FR 601, Jan. 9, 1989, as amended at 63 FR 31921, June 11, 1998]



                    Subpart D--Industrial Priorities



Sec. 700.10  Delegation of authority.

    (a) The priorities and allocations authorities of the President 
under Title I of the Defense Production Act with respect to industrial 
resources have been delegated to the Secretary of Commerce under 
Executive Order 12919 of June 3, 1994 (59 FR 29525). The priorities 
authorities of the President under the Selective Service Act and related 
statutes with respect to industrial resources have also been delegated 
to the Secretary of Commerce under Executive Order 12742 of January 8, 
1991 (56 FR 1079).
    (b) Within the Department of Commerce, these responsibilities have 
been assigned to the Office of Strategic Industries and Economic 
Security. The Department of Commerce has authorized the Delegate 
Agencies to assign priority ratings to orders for items needed for 
approved programs. Copies of these Delegations of Authority are provided 
at Appendix II. They set forth the authorities delegated and those 
retained by Commerce.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31922, June 11, 1998]



Sec. 700.11  Priority ratings.

    (a) Levels of priority. (1) There are two levels of priority 
established by this regulation, identified by the rating symbols ``DO'' 
and ``DX''.
    (2) All DO rated orders have equal priority with each other and take 
preference over unrated orders. All DX rated orders have equal priority 
with each other and take preference over DO rated orders and unrated 
orders. (For resolution of conflicts among rated orders of equal 
priority, see Sec. 700.14(c).)
    (3) In addition, a Directive issued by Commerce takes preference 
over any DX rated order, DO rated order, or unrated order, as stipulated 
in the Directive. (For a full discussion of Directives, see 
Sec. 700.62.)
    (b) Program identification symbols. Program identification symbols 
indicate which approved program is being supported by a rated order. The 
list of approved programs and their identification symbols are listed in 
Schedule I. For example, A1 identifies defense aircraft programs and A7 
signifies defense electronic programs. Program identification symbols, 
in themselves, do not connote any priority.
    (c) Priority ratings. A priority rating consists of the rating 
symbol--DO and DX--and the program identification symbol, such as A1, 
B2, or H6. Thus, a contract for the production of an aircraft will 
contain a DO-A1 or DX-A1 priority rating. A contract for a radar set 
will contain a DO-A7 or DX-A7 priority rating.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31922, June 11, 1998]



Sec. 700.12  Elements of a rated order.

    Each rated order must include:
    (a) The appropriate priority rating (e.g. DO-A1, DX-A4, DO-H1);
    (b) A required delivery date or dates. The words ``immediately'' or 
``as soon as possible'' do not constitute a delivery date. A 
``requirements contract'', ``basic ordering agreement'', ``prime vendor 
contract'', or similar procurement document bearing a priority rating 
may contain no specific delivery date or dates and may provide for the 
furnishing of items from time-to-time or within a stated period against 
specific purchase orders, such as ``calls'', ``requisitions'', and 
``delivery orders''. These purchase orders must specify a required 
delivery date or dates and are to be considered as rated as of the date 
of their receipt by the supplier and not as of the date of the original 
procurement document;

[[Page 74]]

    (c) The written signature on a manually placed order, or the digital 
signature or name on an electronically placed order, of an individual 
authorized to sign rated orders for the person placing the order. The 
signature or use of the name certifies that the rated order is 
authorized under this part and that the requirements of this part are 
being followed; and
    (d) A statement that reads in substance:

    This is a rated order certified for national defense use, and you 
are required to follow all the provisions of the Defense Priorities and 
Allocations System regulation (15 CFR part 700).

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31922, June 11, 1998]



Sec. 700.13  Acceptance and rejection of rated orders.

    (a) Mandatory acceptance. (1) Except as otherwise specified in this 
section, a person shall accept every rated order received and must fill 
such orders regardless of any other rated or unrated orders that have 
been accepted.
    (2) A person shall not discriminate against rated orders in any 
manner such as by charging higher prices or by imposing different terms 
and conditions than for comparable unrated orders.
    (b) Mandatory rejection. Unless otherwise directed by Commerce:
    (1) A person shall not accept a rated order for delivery on a 
specific date if unable to fill the order by that date. However, the 
person must inform the customer of the earliest date on which delivery 
can be made and offer to accept the order on the basis of that date. 
Scheduling conflicts with previously accepted lower rated or unrated 
orders are not sufficient reason for rejection under this section.
    (2) A person shall not accept a DO rated order for delivery on a 
date which would interfere with delivery of any previously accepted DO 
or DX rated orders. However, the person must offer to accept the order 
based on the earliest delivery date otherwise possible.
    (3) A person shall not accept a DX rated order for delivery on a 
date which would interfere with delivery of any previously accepted DX 
rated orders, but must offer to accept the order based on the earliest 
delivery date otherwise possible.
    (4) If a person is unable to fill all the rated orders of equal 
priority status received on the same day, the person must accept, based 
upon the earliest delivery dates, only those orders which can be filled, 
and reject the other orders. For example, a person must accept order A 
requiring delivery on December 15 before accepting order B requiring 
delivery on December 31. However, the person must offer to accept the 
rejected orders based on the earliest delivery dates otherwise possible.
    (c) Optional rejection. Unless otherwise directed by Commerce, rated 
orders may be rejected in any of the following cases as long as a 
supplier does not discriminate among customers:
    (1) If the person placing the order is unwilling or unable to meet 
regularly established terms of sale or payment;
    (2) If the order is for an item not supplied or for a service not 
performed;
    (3) If the order is for an item produced, acquired, or provided only 
for the supplier's own use for which no orders have been filled for two 
years prior to the date of receipt of the rated order. If, however, a 
supplier has sold some of these items, the supplier is obligated to 
accept rated orders up to that quantity or portion of production, 
whichever is greater, sold within the past two years;
    (4) If the person placing the rated order, other than the U.S. 
Government, makes the item or performs the service being ordered;
    (5) If acceptance of a rated order or performance against a rated 
order would violate any other regulation, official action, or order of 
the Department of Commerce issued under the authority of the Defense 
Production Act or the Selective Service Act and related statutes [See 
Sec. 700.75].
    (d) Customer notification requirements. (1) A person must accept or 
reject a rated order in writing or electronically within fifteen (15) 
working days after receipt of a DO rated order and within ten (10) 
working days after receipt of a DX rated order. If the order is 
rejected, the person must give reasons in writing (not electronically) 
for the rejection.

[[Page 75]]

    (2) If a person has accepted a rated order and subsequently finds 
that shipment or performance will be delayed, the person must notify the 
customer immediately, give the reasons for the delay, and advise of a 
new shipment or performance date. If notification is given verbally, 
written or electronic confirmation must be provided within five (5) 
working days.
(The information collection requirements in paragraphs (d)(1) and (d)(2) 
are approved by the Office of Management and Budget under OMB control 
number 0694-0053.)

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31922, June 11, 1998]



Sec. 700.14  Preferential scheduling.

    (a) A person must schedule operations, including the acquisition of 
all needed production items, in a timely manner to satisfy the delivery 
requirements of each rated order. Modifying production or delivery 
schedules is necessary only when required delivery dates for rated 
orders cannot otherwise be met.
    (b) DO rated orders must be given production preference over unrated 
orders, if necessary to meet required delivery dates, even if this 
requires the diversion of items being processed or ready for delivery 
against unrated orders. Similarly, DX rated orders must be given 
preference over DO rated orders and unrated orders.

    Examples: If a person receives a DO rated order with a delivery date 
of June 3 and if meeting that date would mean delaying production or 
delivery of an item for an unrated order, the unrated order must be 
delayed. If a DX rated order is received calling for delivery on July 15 
and a person has a DO rated order requiring delivery on June 2 and 
operations can be scheduled to meet both deliveries, there is no need to 
alter production schedules to give any additional preference to the DX 
rated order.

    (c) Conflicting rated orders. (1) If a person finds that delivery or 
performance against any accepted rated orders conflicts with the 
delivery or performance against other accepted rated orders of equal 
priority status, the person shall give preference to the conflicting 
orders in the sequence in which they are to be delivered or performed 
(not to the receipt dates). If the conflicting rated orders are 
scheduled to be delivered or performed on the same day, the person shall 
give preference to those orders which have the earliest receipt dates.
    (2) If a person is unable to resolve rated order delivery or 
performance conflicts under this section, the person should promptly 
seek special priorities assistance as provided in Secs. 700.50 through 
700.54. If the person's customer objects to the rescheduling of delivery 
or performance of a rated order, the customer should promptly seek 
special priorities assistance as provided in Secs. 700.50 through 
700.54. For any rated order against which delivery or performance will 
be delayed, the person must notify the customer as provided in 
Sec. 700.13(d)(2).
    (d) If a person is unable to purchase needed production items in 
time to fill a rated order by its required delivery date, the person 
must fill the rated order by using inventoried production items. A 
person who uses inventoried items to fill a rated order may replace 
those items with the use of a rated order as provided in Sec. 700.17(b).

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31922, June 11, 1998]



Sec. 700.15  Extension of priority ratings.

    (a) A person must use rated orders with suppliers to obtain items 
needed to fill a rated order. The person must use the priority rating 
indicated on the customer's rated order, except as otherwise provided in 
this regulation or as directed by the Department of Commerce.

    For example, if a person is in receipt of a DO-A3 rated order for a 
navigation system and needs to purchase semiconductors for its 
manufacture, that person must use a DO-A3 rated order to obtain the 
needed semiconductors.

    (b) The priority rating must be included on each successive order 
placed to obtain items needed to fill a customer's rated order. This 
continues from contractor to subcontractor to supplier throughout the 
entire procurement chain.



Sec. 700.16  Changes or cancellations of priority ratings and rated orders.

    (a) The priority rating on a rated order may be changed or cancelled 
by:

[[Page 76]]

    (1) An official action of the Department of Commerce; or
    (2) Written notification from the person who placed the rated order 
(including a Delegate Agency).
    (b) If an unrated order is amended so as to make it a rated order, 
or a DO, rating is changed to a DX rating, the supplier must give the 
appropriate preferential treatment to the order as of the date the 
change is received by the supplier.
    (c) An amendment to a rated order that significantly alters a 
supplier's original production or delivery schedule shall constitute a 
new rated order as of the date of its receipt. The supplier must accept 
or reject the amended order according to the provisions of Sec. 700.13.
    (d) The following amendments do not constitute a new rated order: a 
change in shipping destination; a reduction in the total amount of the 
order; an increase in the total amount of the order which has negligible 
impact upon deliveries; a minor variation in size or design; or a change 
which is agreed upon between the supplier and the customer.
    (e) If a person no longer needs items to fill a rated order, any 
rated orders placed with suppliers for the items, or the priority rating 
on those orders, must be cancelled.
    (f) When a priority rating is added to an unrated order, or is 
changed or cancelled, all suppliers must be promptly notified in 
writing.



Sec. 700.17  Use of rated orders.

    (a) A person must use rated orders to obtain:
    (1) Items which will be physically incorporated into other items to 
fill rated orders, including that portion of such items normally 
consumed, or converted into scrap or by-products, in the course of 
processing;
    (2) Containers or other packaging materials required to make 
delivery of the finished items against rated orders;
    (3) Services, other than contracts of employment, needed to fill 
rated orders; and
    (4) MRO needed to produce the finished items to fill rated orders. 
However, for MRO, the priority rating used must contain the program 
identification symbol H7 along with the rating symbol contained on the 
customer's rated order. For example, a person in receipt of a DO-A3 
rated order, who needs MRO, would place a DO-H7 rated order with the 
person's supplier.
    (b) A person may use a rated order to replace inventoried items 
(including finished items) if such items were used to fill rated orders, 
as follows:
    (1) The order must be placed within 90 days of the date of use of 
the inventory.
    (2) A DO rating symbol and the program identification symbol 
indicated on the customer's rated order must be used on the order. A DX 
rating symbol may not be used even if the inventory was used to fill a 
DX rated order.
    (3) If the priority ratings on rated orders from one customer or 
several customers contain different program identification symbols, the 
rated orders may be combined. In this case, the program identification 
symbol H1 must be used (i.e., DO-H1).
    (c) A person may combine DX and DO rated orders from one customer or 
several customers if the items covered by each level of priority are 
identified separately and clearly. If different program identification 
symbols are indicated on those rated orders of equal priority, the 
person must use the program identification symbol H1 (i.e., DO-H1 or DX-
H1).
    (d) Combining rated and unrated orders. (1) A person may combine 
rated and unrated order quantities on one purchase order provided that:
    (i) The rated quantities are separately and clearly identified; and
    (ii) The four elements of a rated order, as required by Sec. 700.12, 
are included on the order with the statement required in Sec. 700.12(d) 
modified to read in substance:

    This purchase order contains rated order quantities certified for 
national defense use, and you are required to follow all the provisions 
of the Defense Priorities and Allocations System regulation (15 CFR part 
700) only as it pertains to the rated quantities.

    (2) A supplier must accept or reject the rated portion of the 
purchase order as provided in Sec. 700.13 and give preferential 
treatment only to the rated quantities as required by this part.

[[Page 77]]

This part may not be used to give preferential treatment to the unrated 
portion of the order.
    (3) Any supplier who believes that rated and unrated orders are 
being combined in a manner contrary to the intent of this regulation or 
in a fashion that causes undue or exceptional hardship may submit a 
request for adjustment or exception under Sec. 700.80.
    (e) A person may place a rated order for the minimum commercially 
procurable quantity even if the quantity needed to fill a rated order is 
less than that minimum. However, a person must combine rated orders as 
provided in paragraph (c) of this section, if possible, to obtain 
minimum procurable quantities.
    (f) A person is not required to place a priority rating on an order 
for less than $50,000, or one half of the Federal Acquisition Regulation 
(FAR) Simplified Acquisition Threshold (see FAR 2.101), whichever amount 
is larger, provided that delivery can be obtained in a timely fashion 
without the use of the priority rating.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31923, June 11, 1998]



Sec. 700.18  Limitations on placing rated orders.

    (a) General limitations. (1) A person may not place a DO or DX rated 
order unless entitled to do so under this regulation.
    (2) Rated orders may not be used to obtain:
    (i) Delivery on a date earlier than needed;
    (ii) A greater quantity of the item than needed, except to obtain a 
minimum procurable quantity. Separate rated orders may not be placed 
solely for the purpose of obtaining minimum procurable quantities on 
each order;
    (iii) Items in advance of the receipt of a rated order, except as 
specifically authorized by Commerce (see Sec. 700.51(c) for information 
on obtaining authorization for a priority rating in advance of a rated 
order); or
    (iv) Any of the following items unless specific priority rating 
authority has been obtained from a Delegate Agency or Commerce:
    (A) Items for plant improvement, expansion or construction, unless 
they will be physically incorporated into a construction project covered 
by a rated order; and
    (B) Production or construction equipment or items to be used for the 
manufacture of production equipment. [For information on requesting 
priority rating authority, see Sec. 700.53.]
    (v) Any items related to the development of chemical or biological 
warfare capabilities or the production of chemical or biological 
weapons, unless such development or production has been authorized by 
the President or the Secretary of Defense.
    (b) Jurisdictional limitations. (1) The priorities and allocations 
authority for certain items has been delegated under Executive Orders 
12919 and 12742, other executive order, or Interagency Memoranda of 
Understanding to other agencies. Unless otherwise agreed to by the 
concerned agencies, the provisions of this part are not applicable to 
these items which include:
    (i) Food resources, food resource facilities, and the domestic 
distribution of farm equipment and commercial fertilizer (Department of 
Agriculture--see Attachment A to DPAS Delegation 1 in Appendix II to 
part 700 concerning combat rations);
    (ii) All forms of energy, including radioisotopes, stable isotopes, 
source material, and special nuclear material produced in Government-
owned plants or facilities operated by or for the Department of Energy 
(Department of Energy);
    (iii) Health resources (Department of Health and Human Services);
    (iv) All forms of civil transportation (Department of 
Transportation);
    (v) Water resources (Department of Defense/U.S. Army Corps of 
Engineers);
    (vi) Communications services (National Communications System under 
Executive Order 12472 of April 3, 1984); and
    (vii) Mineral resources and mineral processing facilities 
(Department of the Interior/U.S. Geological Survey--see Memorandum of 
Understanding Between Interior and Commerce in DPAS Appendix III to part 
700).

[[Page 78]]

    (2) The jurisdiction of the Department of Commerce and the 
Departments of Energy, Agriculture, and the Interior over certain 
specific items included in the categories listed above has been 
clarified by Interagency Memoranda of Understanding. Copies of these 
Memoranda are provided for information at appendix III.
    (3) The following items under the jurisdiction of Commerce are 
currently excluded from the rating provisions of this regulation; 
however, these items are subject to Commerce Directives. These excluded 
items are:

Copper raw materials
Crushed stone
Gravel
Sand
Scrap
Slag
Steam heat, central
Waste paper

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31923, June 11, 1998]



          Subpart E--Industrial Priorities for Energy Programs



Sec. 700.20  Use of priority ratings.

    (a) Section 101(c) of the Defense Production Act authorizes the use 
of priority ratings for projects which maximize domestic energy 
supplies.
    (b) Projects which maximize domestic energy supplies include those 
which maintain or further domestic energy exploration, production, 
refining, and transportation; maintain or further the conservation of 
energy; or are involved in the construction or maintenance of energy 
facilities.



Sec. 700.21  Application for priority rating authority.

    (a) For projects believed to maximize domestic energy supplies, a 
person may request priority rating authority for scarce, critical, and 
essential supplies of materials, equipment, and services (related to the 
production of materials or equipment, or the installation, repair, or 
maintenance of equipment) by submitting DOE Form PR 437 to the 
Department of Energy. Blank applications and further information may be 
obtained from the U.S. Department of Energy, Office of Clearance and 
Support, Field/Headquarters Support Division, Forrestal Building, 1000 
Independence Avenue, S.W., Washington, D.C. 20585; Attn.: PR-132.
    (b) On receipt of the application, the Department of Energy will:
    (1) Determine if the project maximizes domestic energy supplies; and
    (2) Find whether the materials, equipment, or services involved in 
the application are critical and essential to the project.
    (c) If the Department of Energy notifies Commerce that the project 
maximizes domestic energy supplies and that the materials, equipment, or 
services are critical and essential, Commerce must find whether the 
items in question are scarce and whether there is a need to use the 
priorities and allocations authorities.
    (1) Scarcity implies an unusual difficulty in obtaining the 
materials, equipment, or services in a timeframe consistent with the 
timely completion of the energy project. Among the factors to be used in 
making the scarcity finding will be the following:
    (i) Value and volume of material or equipment shipments;
    (ii) Consumption of material and equipment;
    (iii) Volume and market trends of imports and exports;
    (iv) Domestic and foreign sources of supply;
    (v) Normal levels of inventories;
    (vi) Rates of capacity utilization;
    (vii) Volume of new orders; and
    (viii) Lead times for new orders.
    (2) In finding whether there is a need to use the priorities and 
allocations authorities, Commerce will consider alternative supply 
solutions and other measures.
    (d) If Commerce does not find that the items of materials, 
equipment, or services are scarce, it will not proceed to analyze the 
need to use the priorities and allocations authorities.
    (e) Commerce will inform the Department of Energy of the results of 
its analysis. If Commerce has made the two required findings, it will 
authorize the Department of Energy to grant the use of a priority rating 
to the applicant.

[[Page 79]]

    (f) Schedule I includes a list of approved programs to support the 
maximization of domestic energy supplies. A Department of Energy 
regulation setting forth the procedures and criteria used by the 
Department of Energy in making its determination and findings is 
published in 10 CFR part 216.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31923, June 11, 1998]



      Subpart F--National Emergency Preparedness and Critical Items

    Source:  63 FR 31923, June 11, 1998, unless otherwise noted.



Sec. 700.30  Priorities and allocations in a national emergency.

    (a) In the event of a national emergency, special rules may be 
established as needed to supplement this part, thus ensuring rapid 
industrial response and the timely availability of critical industrial 
items and facilities to meet the urgent national defense requirements, 
including domestic emergency preparedness requirements, of approved 
programs.
    (1) Emergency official actions. (i) As needed, this part may be 
supplemented to include additional definitions to cover civilian 
emergency preparedness industrial items, support for essential civilian 
programs, and provisions for the taking of certain emergency official 
actions under sections Secs. 700.60 through 700.63.
    (ii) Emergency official actions may include:
    (A) Controlling inventories of critical and scarce defense and/or 
emergency preparedness items;
    (B) Restricting the purchase, use, or distribution of critical and 
scarce defense and/or emergency preparedness items, or the use of 
production or distribution facilities, for non-essential purposes; and
    (C) Converting the production or distribution of non-essential items 
to the production or distribution of critical and scarce defense and/or 
emergency preparedness items.
    (2) Allocation of critical and scarce items and facilities. (i) As 
needed, this part may be supplemented to establish special rules for the 
allocation of scarce and critical items and facilities to ensure the 
timely availability of these items and facilities for approved programs, 
and to provide for an equitable and orderly distribution of requirements 
for such items among all suppliers of the items. These rules may provide 
for the allocation of individual items or they may be broad enough to 
direct general industrial activity as required in support of emergency 
requirements.
    (ii) Allocation rules (i.e., controlled materials programs) were 
established in response to previous periods of national security 
emergency such as World War II and the Korean Conflict. The basic 
elements of the controlled materials programs were the set-aside (the 
amount of an item for which a producer or supplier must reserve order 
book space in anticipation of the receipt of rated orders), the 
production directive (requires a producer to supply a specific quantity, 
size, shape, and type of an item within a specific time period), and the 
allotment (the maximum quantity of an item authorized for use in a 
specific program or application). These elements can be used to assure 
the availability of any scarce and critical item for approved programs. 
Currently, a set-aside applies only to metalworking machines (see 
Sec. 700.31).
    (3) In the event that certain critical items become scarce, and 
approved program requirements for these items cannot be met without 
creating a significant dislocation in the civilian market place so as to 
create appreciable hardship, Commerce may establish special rules under 
section 101(b) of the Defense Production Act to control the general 
distribution of such items in the civilian market.
    (b) Regional Emergency Coordinators. (1) If due to a catastrophic 
national security emergency event, communications with Commerce 
headquarters in Washington, D.C. are severed, DPAS Emergency Delegation 
1 will provide authority to the Regional Emergency Coordinators (REC) 
located in the Standard Federal Region Council cities (Boston, New York, 
Philadelphia, Atlanta, Dallas, Kansas City, Chicago, Denver, San 
Francisco, and Seattle) to represent the Secretary of Commerce,

[[Page 80]]

and as necessary, act for the Secretary to carry out the emergency 
industrial production and distribution control functions of Commerce as 
set forth in this part, in any supplement thereto, or other applicable 
authority. See DPAS Emergency Delegation 1 for further information about 
the authority and duties of the RECs, and the effective date of the 
Delegation.
    (2) If DPAS Emergency Delegation 1 is implemented due to a 
catastrophic national security emergency event, requests for special 
priorities assistance under Secs. 700.50 through 700.55 should be filed 
with the nearest Regional Emergency Coordinator located in one of the 
Standard Federal Region Council cities as provided in DPAS Delegation 1.



Sec. 700.31  Metalworking machines.

    (a) ``Metalworking machines'' include power driven, manual or 
automatic, metal cutting and metal forming machines and complete 
machines not supported in the hands of an operator when in use. Basic 
machines with a list price of $2,500 or less are not covered by this 
section.
    (b) Metalworking machines covered by this section include:

Bending and forming machines
Boring machines
Broaching machines
Drilling and tapping machines
Electrical discharge, ultrasonic and chemical erosion machines
Forging machinery and hammers
Gear cutting and finishing machines
Grinding machines
Hydraulic and pneumatic presses, power driven
Machining centers and way-type machines
Manual presses
Mechanical presses, power driven
Milling machines
Miscellaneous machine tools
Miscellaneous secondary metal forming and cutting machines
Planers and shapers
Polishing, lapping, boring, and finishing machines
Punching and shearing machines
Riveting machines
Saws and filing machines
Turning machines, lathes, including automatic
Wire and metal ribbon forming machines

    (c) A metalworking machine producer is not required to accept DO 
rated orders calling for delivery in any month of a total quantity of 
any size of machine in excess of 60 percent of scheduled production of 
that size of machine for that month, or any DO rated orders received 
less than three months prior to the beginning of the month for which 
delivery is requested. However, DX rated orders must be accepted without 
regard to a set-aside or the lead time, if delivery can be made by the 
required date.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989. 
Further redesignated at 63 FR 31924, June 11, 1998]



                          Subpart G [Reserved]



                Subpart H--Special Priorities Assistance



Sec. 700.50  General provisions.

    (a) The DPAS is designed to be largely self-executing. However, it 
is anticipated that from time-to-time problems will occur. In this 
event, a person should immediately contact the appropriate contract 
administration officer for guidance or assistance. If additional formal 
aid is needed, special priorities assistance should be sought from the 
Delegate Agency through the contract administration officer. If the 
Delegate Agency is unable to resolve the problem or to authorize the use 
of a priority rating and believes additional assistance is warranted, 
the Delegate Agency may forward the request to the Department of 
Commerce for action. Special priorities assistance is a service provided 
to alleviate problems that do arise.
    (b) Special priorities assistance can be provided for any reason in 
support of this regulation, such as assisting in obtaining timely 
deliveries of items needed to satisfy rated orders or authorizing the 
use of priority ratings on orders to obtain items not automatically 
ratable under this regulation.
    (c) A request for special priorities assistance or priority rating 
authority must be submitted on Form BXA-999 (OMB control number 0694-
0057) to the local contract administration representative. Form BXA-999 
may be obtained from the Delegate Agency representative or from the 
Department of

[[Page 81]]

Commerce. A sample Form BXA-999 is attached at Appendix I.

[49 FR 30414, July 30, 1984; 49 FR 50171, Dec. 27, 1984. Redesignated at 
54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11, 1998]



Sec. 700.51  Requests for priority rating authority.

    (a) If a rated order is likely to be delayed because a person is 
unable to obtain items not normally rated under this regulation, the 
person may request the authority to use a priority rating in ordering 
the needed items. Examples of items for which priority ratings can be 
authorized include:
    (1) Production or construction equipment;
    (2) Computers when not used as production items; and
    (3) Expansion, rebuilding or replacing plant facilities.
    (b) Rating authority for production or construction equipment. (1) A 
request for priority rating authority for production or construction 
equipment must be submitted to the appropriate Delegate Agency. The 
Delegate Agency may establish particular forms to be used for these 
requests (e.g., Department of Defense Form DD 691.)
    (2) When the use of a priority rating is authorized for the 
procurement of production or construction equipment, a rated order may 
be used either to purchase or to lease such equipment. However, in the 
latter case, the equipment may be leased only from a person engaged in 
the business of leasing such equipment or from a person willing to lease 
rather than sell.
    (c) Rating authority in advance of a rated prime contract. (1) In 
certain cases and upon specific request, Commerce, in order to promote 
the national defense, may authorize a person to place a priority rating 
on an order to a supplier in advance of the issuance of a rated prime 
contract. In these instances, the person requesting advance rating 
authority must obtain sponsorship of the request from the appropriate 
Delegate Agency. The person shall also assume any business risk 
associated with the placing of rated orders if these orders have to be 
cancelled in the event the rated prime contract is not issued.
    (2) The person must state the following in the request:

    It is understood that the authorization of a priority rating in 
advance of our receiving a rated prime contract from a Delegate Agency 
and our use of that priority rating with our suppliers in no way commits 
the Delegate Agency, the Department of Commerce or any other government 
agency to enter into a contract or order or to expend funds. Further, we 
understand that the Federal Government shall not be liable for any 
cancellation charges, termination costs, or other damages that may 
accrue if a rated prime contract is not eventually placed and, as a 
result, we must subsequently cancel orders placed with the use of the 
priority rating authorized as a result of this request.

    (3) In reviewing requests for rating authority in advance of a rated 
prime contract, Commerce will consider, among other things, the 
following criteria:
    (i) The probability that the prime contract will be awarded;
    (ii) The impact of the resulting rated orders on suppliers and on 
other authorized programs;
    (iii) Whether the contractor is the sole source;
    (iv) Whether the item being produced has a long lead time;
    (v) The political sensitivity of the project; and
    (vi) The time period for which the rating is being requested.
    (4) Commerce may require periodic reports on the use of the rating 
authority granted under paragraph (c) of this section.
    (5) If a rated prime contract is not issued, the person shall 
promptly notify all suppliers who have received rated orders pursuant to 
the advanced rating authority that the priority rating on those orders 
is cancelled.



Sec. 700.52  Examples of assistance.

    (a) While special priorities assistance may be provided for any 
reason in support of this regulation, it is usually provided in 
situations where:
    (1) A person is experiencing difficulty in obtaining delivery 
against a rated order by the required delivery date; or
    (2) A person cannot locate a supplier for an item needed to fill a 
rated order.
    (b) Other examples of special priorities assistance include:

[[Page 82]]

    (1) Ensuring that rated orders receive preferential treatment by 
suppliers;
    (2) Resolving production or delivery conflicts between various rated 
orders;
    (3) Assisting in placing rated orders with suppliers;
    (4) Verifying the urgency of rated orders; and
    (5) Determining the validity of rated orders.



Sec. 700.53  Criteria for assistance.

    Requests for special priorities assistance should be timely, i.e., 
the request has been submitted promptly and enough time exists for the 
Delegate Agency or Commerce to effect a meaningful resolution to the 
problem, and must establish that:
    (a) There is an urgent need for the item; and
    (b) The applicant has made a reasonable effort to resolve the 
problem.



Sec. 700.54  Instances where assistance will not be provided.

    Special priorities assistance is provided at the discretion of the 
Delegate Agencies and Commerce when it is determined that such 
assistance is warranted to meet the objectives of this regulation. 
Examples where assistance may not be provided include situations when a 
person is attempting to:
    (a) Secure a price advantage;
    (b) Obtain delivery prior to the time required to fill a rated 
order;
    (c) Gain competitive advantage;
    (d) Disrupt an industry apportionment program in a manner designed 
to provide a person with an unwarranted share of scarce items; or
    (e) Overcome a supplier's regularly established terms of sale or 
conditions of doing business.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



Sec. 700.55  Assistance programs with Canada and other nations.

    (a) To promote military assistance to foreign nations, this section 
provides for authorizing priority ratings to persons in Canada and in 
other foreign nations to obtain items in the United States in support of 
approved programs. Although priority ratings have no legal authority 
outside of the United States, this section also provides information on 
how persons in the United States may obtain informal assistance in 
Canada.
    (b) Canada. (1) The joint U.S.-Canadian military arrangements for 
the defense of North America and the integrated nature of their defense 
industries as set forth in the U.S.-Canadian Statement of Principles for 
Economic Cooperation (October 26, 1950) require close coordination and 
the establishment of a means to provide mutual assistance to the defense 
industries located in both countries.
    (2) The Department of Commerce coordinates with the Canadian Public 
Works and Government Services Canada on all matters of mutual concern 
relating to the administration of this regulation. A copy of the 
Memorandum of Understanding between the two departments is provided at 
appendix IV.
    (3) Any person in the United States ordering defense items in Canada 
should inform the Canadian supplier that the items being ordered are to 
be used to fill a rated order. The Canadian supplier should be informed 
that if production materials are needed from the United States by the 
supplier or the supplier's vendor to fill the order, they should contact 
the Canadian Public Works and Government Services Canada for authority 
to place rated orders in the United States.
    (4) Any person in Canada producing defense items for the Canadian 
government may also obtain priority rating authority for items to be 
purchased in the United States by applying to the Canadian Public Works 
and Government Services Canada in accordance with procedures specified 
by that Department.
    (5) Persons in Canada needing special priorities assistance in 
obtaining defense items in the United States may apply for such 
assistance to the Canadian Public Works and Government Services Canada. 
Public Works and Government Services Canada will forward appropriate 
requests to Commerce.
    (6) Any person in the United States requiring assistance in 
obtaining items in Canada must submit a request through the Delegate 
Agency to Commerce on Form BXA-999. Commerce

[[Page 83]]

will forward appropriate requests to the Canadian Public Works and 
Government Services Canada.
    (c) Foreign nations. (1) Any person in a foreign nation other than 
Canada requiring assistance in obtaining defense items in the United 
States or priority rating authority for defense items to be purchased in 
the United States, should apply for such assistance or rating authority 
to the U.S. Department of Defense. The request must be sponsored by the 
government of the foreign nation prior to its submission.
    (2) If the Department of Defense endorses the request, it will be 
forwarded to Commerce for appropriate action.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



                       Subpart I--Official Actions



Sec. 700.60  General provisions.

    (a) Commerce may, from time-to-time, take specific official actions 
to implement or enforce the provisions of this regulation.
    (b) Several of these official actions (Rating Authorizations, 
Directives, and Letters of Understanding) are discussed in this subpart. 
Other official actions which pertain to compliance (Administrative 
Subpoenas, Demands for Information, and Inspection Authorizations) are 
discussed in Sec. 700.71(b).



Sec. 700.61  Rating Authorizations.

    (a) A Rating Authorization is an official action granting specific 
priority rating authority that:
    (1) Permits a person to place a priority rating on an order for an 
item not normally ratable under this regulation; or
    (2) Authorizes a person to modify a priority rating on a specific 
order or series of contracts or orders.
    (b) To request priority rating authority, see Sec. 700.51.



Sec. 700.62  Directives.

    (a) A Directive is an official action which requires a person to 
take or refrain from taking certain actions in accordance with its 
provisions.
    (b) A person must comply with each Directive issued. However, a 
person may not use or extend a Directive to obtain any items from a 
supplier, unless expressly authorized to do so in the Directive.
    (c) Directives take precedence over all DX rated orders, DO rated 
orders, and unrated orders previously or subsequently received, unless a 
contrary instruction appears in the Directive.



Sec. 700.63  Letters of Understanding.

    (a) A Letter of Understanding is an official action which may be 
issued in resolving special priorities assistance cases to reflect an 
agreement reached by all parties (Commerce, the Delegate Agency, the 
supplier, and the customer).
    (b) A Letter of Understanding is not used to alter scheduling 
between rated orders, to authorize the use of priority ratings, to 
impose restrictions under this regulation, or to take other official 
actions. Rather, Letters of Understanding are used to confirm production 
or shipping schedules which do not require modifications to other rated 
orders.



                          Subpart J--Compliance



Sec. 700.70  General provisions.

    (a) Compliance actions may be taken for any reason necessary or 
appropriate to the enforcement or the administration of the Defense 
Production Act, the Selective Service Act and related statutes, this 
regulation, or an official action. Such actions include audits, 
investigations, or other inquiries.
    (b) Any person who places or receives a rated order should be 
thoroughly familiar with, and must comply with, the provisions of this 
regulation.
    (c) Willful violation of any of the provisions of Title I or section 
705 of the Defense Production Act, this regulation, or an official 
action of the Department of Commerce, is a criminal act, punishable as 
provided in the Defense Production Act and as set forth in Sec. 700.74 
of this regulation.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]

[[Page 84]]



Sec. 700.71  Audits and investigations.

    (a) Audits and investigations are official examinations of books, 
records, documents, other writings and information to ensure that the 
provisions of the Defense Production Act, the Selective Service Act and 
related statutes, this regulation, and official actions have been 
properly followed. An audit or investigation may also include interviews 
and a systems evaluation to detect problems or failures in the 
implementation of this regulation.
    (b) When undertaking an audit, investigation, or other inquiry, the 
Department of Commerce shall:
    (1) Define the scope and purpose in the official action given to the 
person under investigation, and
    (2) Have ascertained that the information sought or other adequate 
and authoritative data are not available from any Federal or other 
responsible agency.
    (c) In administering this regulation, Commerce may issue the 
following documents which constitute official actions:
    (1) Administrative Subpoenas. An Administrative Subpoena requires a 
person to appear as a witness before an official designated by the 
Department of Commerce to testify under oath on matters of which that 
person has knowledge relating to the enforcement or the administration 
of the Defense Production Act, the Selective Service Act and related 
statutes, this regulation, or official actions. An Administrative 
Subpoena may also require the production of books, papers, records, 
documents and physical objects or property.
    (2) Demand for Information. A Demand for Information requires a 
person to furnish to a duly authorized representative of the Department 
of Commerce any information necessary or appropriate to the enforcement 
or the administration of the Defense Production Act, the Selective 
Service Act and related statutes, this regulation, or official actions.
    (3) Inspection Authorizations. An Inspection Authorization requires 
a person to permit a duly authorized representative of Commerce to 
interview the person's employees or agents, to inspect books, records, 
documents, other writings and information in the person's possession or 
control at the place where that person usually keeps them, and to 
inspect a person's property when such interviews and inspections are 
necessary or appropriate to the enforcement or the administration of the 
Defense Production Act, the Selective Service Act and related statutes, 
this regulation, or official actions.
    (d) The production of books, records, documents, other writings and 
information will not be required at any place other than where they are 
usually kept if, prior to the return date specified in the 
Administrative Subpoena or Demand for Information, a duly authorized 
official of Commerce is furnished with copies of such material that are 
certified under oath to be true copies. As an alternative, a person may 
enter into a stipulation with a duly authorized official of Commerce as 
to the content of the material.
    (e) An Administrative Subpoena, Demand for Information, or 
Inspection Authorization, shall include the name, title or official 
position of the person to be served, the evidence sought to be adduced, 
and its general relevance to the scope and purpose of the audit, 
investigation, or other inquiry. If employees or agents are to be 
interviewed; if books, records, documents, other writings, or 
information are to be produced; or if property is to be inspected; the 
Administrative Subpoena, Demand for Information, or Inspection 
Authorization will describe them with particularity.
    (f) Service of documents shall be made in the following manner:
    (1) Service of a Demand for Information or Inspection Authorization 
shall be made personally, or by Certified Mail--Return Receipt Requested 
at the person's last known address. Service of an Administrative 
Subpoena shall be made personally. Personal service may also be made by 
leaving a copy of the document with someone of suitable age and 
discretion at the person's last known dwelling or place of business.
    (2) Service upon other than an individual may be made by serving a 
partner, corporate officer, or a managing or general agent authorized by 
appointment or by law to accept service of process. If an agent is 
served, a copy of

[[Page 85]]

the document shall be mailed to the person named in the document.
    (3) Any individual 18 years of age or over may serve an 
Administrative Subpoena, Demand for Information, or Inspection 
Authorization. When personal service is made, the individual making the 
service shall prepare an affidavit as to the manner in which service was 
made and the identity of the person served, and return the affidavit, 
and in the case of subpoenas, the original document, to the issuing 
officer. In case of failure to make service, the reasons for the failure 
shall be stated on the original document.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



Sec. 700.72  Compulsory process.

    (a) If a person refuses to permit a duly authorized representative 
of Commerce to have access to any premises or source of information 
necessary to the administration or the enforcement of the Defense 
Production Act, the Selective Service Act and related statutes, this 
regulation, or official actions, the Commerce representative may seek 
compulsory process. Compulsory process means the institution of 
appropriate legal action, including ex parte application for an 
inspection warrant or its equivalent, in any forum of appropriate 
jurisdiction.
    (b) Compulsory process may be sought in advance of an audit, 
investigation, or other inquiry, if, in the judgment of the Director of 
the Office of Industrial Resource Administration, U.S. Department of 
Commerce, in consultation with the Chief Counsel for Export 
Administration, U.S. Department of Commerce, there is reason to believe 
that a person will refuse to permit an audit, investigation, or other 
inquiry, or that other circumstances exist which make such process 
desirable or necessary.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



Sec. 700.73  Notification of failure to comply.

    (a) At the conclusion of an audit, investigation, or other inquiry, 
or at any other time, Commerce may inform the person in writing where 
compliance with the requirements of the Defense Production Act, the 
Selective Service Act and related statutes, this regulation, or an 
official action were not met.
    (b) In cases where Commerce determines that failure to comply with 
the provisions of the Defense Production Act, the Selective Service Act 
and related statutes, this regulation, or an official action was 
inadvertent, the person may be informed in writing of the particulars 
involved and the corrective action to be taken. Failure to take 
corrective action may then be construed as a willfull violation of the 
Defense Production Act, this regulation, or an official action.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



Sec. 700.74  Violations, penalties, and remedies.

    (a) Willful violation of the provisions of Title I or Sections 705 
or 707 of the Defense Production Act, the priorities provisions of the 
Selective Service Act and related statutes, this part, or an official 
action, is a crime and upon conviction, a person may be punished by fine 
or imprisonment, or both. The maximum penalty provided by the Defense 
Production Act is a $10,000 fine, or one year in prison, or both. The 
maximum penalty provided by the Selective Service Act and related 
statutes is a $50,000 fine, or three years in prison, or both.
    (b) The government may also seek an injunction from a court of 
appropriate jurisdiction to prohibit the continuance of any violation 
of, or to enforce compliance with, the Defense Production Act, this 
regulation, or an official action.
    (c) In order to secure the effective enforcement of the Defense 
Production Act, this regulation, and official actions, the following are 
prohibited (see section 704 of the Defense Production Act; see also, for 
example, sections 2 and 371 of Title 18, United States Code):
    (1) No person may solicit, influence or permit another person to 
perform any act prohibited by, or to omit any act required by, the 
Defense Production Act, this regulation, or an official action.

[[Page 86]]

    (2) No person may conspire or act in concert with any other person 
to perform any act prohibited by, or to omit any act required by, the 
Defense Production Act, this regulation, or an official action.
    (3) No person shall deliver any item if the person knows or has 
reason to believe that the item will be accepted, redelivered, held, or 
used in violation of the Defense Production Act, this regulation, or an 
official action. In such instances, the person must immediately notify 
the Department of Commerce that, in accordance with this provision, 
delivery has not been made.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



Sec. 700.75  Compliance conflicts.

    If compliance with any provision of the Defense Production Act, the 
Selective Service Act and related statutes, this regulation, or an 
official action would prevent a person from filling a rated order or 
from complying with another provision of the Defense Production Act, 
this regulation, or an official action, the person must immediately 
notify the Department of Commerce for resolution of the conflict.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, June 11, 1998]



             Subpart K--Adjustments, Exceptions, and Appeals



Sec. 700.80  Adjustments or exceptions.

    (a) A person may submit a request to the Office of Strategic 
Industries and Economic Security, U.S. Department of Commerce, for an 
adjustment or exception on the ground that:
    (1) A provision of this regulation or an official action results in 
an undue or exceptional hardship on that person not suffered generally 
by others in similar situations and circumstances; or
    (2) The consequence of following a provision of this regulation or 
an official action is contrary to the intent of the Defense Production 
Act, the Selective Service Act and related statutes, or this regulation.
    (b) Each request for adjustment or exception must be in writing and 
contain a complete statement of all the facts and circumstances related 
to the provision of this regulation or official action from which 
adjustment is sought and a full and precise statement of the reasons why 
relief should be provided.
    (c) The submission of a request for adjustment or exception shall 
not relieve any person from the obligation of complying with the 
provision of this regulation or official action in question while the 
request is being considered unless such interim relief is granted in 
writing by the Office of Strategic Industries and Economic Security.
    (d) A decision of the Office of Strategic Industries and Economic 
Security under this section may be appealed to the Assistant Secretary 
for Export Administration, U.S. Department of Commerce. (For information 
on the appeal procedure, see Sec. 700.81.)

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, 31925, June 11, 1998]



Sec. 700.81  Appeals.

    (a) Any person who has had a request for adjustment or exception 
denied by the Office of Strategic Industries and Economic Security under 
Sec. 700.80, may appeal to the Assistant Secretary for Export 
Administration, U.S. Department of Commerce, who shall review and 
reconsider the denial.
    (b) An appeal must be received by the Office of the Assistant 
Secretary for Export Administration, Bureau of Export Administration, 
U.S. Department of Commerce, Washington, D. C. 20230, Ref: DPAS, no 
later than 45 days after receipt of a written notice of denial from the 
Office of Strategic Industries and Economic Security. After this 45-day 
period, an appeal may be accepted at the discretion of the Assistant 
Secretary for Trade Administration for good cause shown.
    (c) Each appeal must be in writing and contain a complete statement 
of all the facts and circumstances related to the action appealed from 
and a full and precise statement of the reasons the decision should be 
modified or reversed.

[[Page 87]]

    (d) In addition to the written materials submitted in support of an 
appeal, an appellant may request, in writing, an opportunity for an 
informal hearing. This request may be granted or denied at the 
discretion of the Assistant Secretary for Export Administration.
    (e) When a hearing is granted, the Assistant Secretary for Export 
Administration may designate an employee of the Department of Commerce 
to conduct the hearing and to prepare a report. The hearing officer 
shall determine all procedural questions and impose such time or other 
limitations deemed reasonable. In the event that the hearing officer 
decides that a printed transcript is necessary, all expenses shall be 
borne by the appellant.
    (f) When determining an appeal, the Assistant Secretary for Export 
Administration may consider all information submitted during the appeal 
as well as any recommendations, reports, or other relevant information 
and documents available to the Department of Commerce, or consult with 
any other persons or groups.
    (g) The submission of an appeal under this section shall not relieve 
any person from the obligation of complying with the provision of this 
regulation or official action in question while the appeal is being 
considered unless such relief is granted in writing by the Assistant 
Secretary for Export Administration.
    (h) The decision of the Assistant Secretary for Export 
Administration shall be made within a reasonable time after receipt of 
the appeal and shall be the final administrative action. It shall be 
issued to the appellant in writing with a statement of the reasons for 
the decision.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31925, June 11, 1998]



                   Subpart L--Miscellaneous Provisions



Sec. 700.90  Protection against claims.

    A person shall not be held liable for damages or penalties for any 
act or failure to act resulting directly or indirectly from compliance 
with any provision of this regulation, or an official action, 
notwithstanding that such provision or action shall subsequently be 
declared invalid by judicial or other competent authority.



Sec. 700.91  Records and reports.

    (a) Persons are required to make and preserve for at least three 
years, accurate and complete records of any transaction covered by this 
regulation (OMB control number 0694-0053) or an official action.
    (b) Records must be maintained in sufficient detail to permit the 
determination, upon examination, of whether each transaction complies 
with the provisions of this regulation or any official action. However, 
this regulation does not specify any particular method or system to be 
used.
    (c) Records required to be maintained by this regulation must be 
made available for examination on demand by duly authorized 
representatives of Commerce as provided in Sec. 700.71.
    (d) In addition, persons must develop, maintain, and submit any 
other records and reports to Commerce that may be required for the 
administration of the Defense Production Act, the Selective Service Act 
and related statutes, and this regulation.
    (e) Section 705(e) of the Defense Production Act provides that 
information obtained under this section which the President deems 
confidential, or with reference to which a request for confidential 
treatment is made by the person furnishing such information, shall not 
be published or disclosed unless the President determines that the 
withholding of this information is contrary to the interest of the 
national defense. Information required to be submitted to Commerce in 
connection with the enforcement or administration of the Act, this 
regulation, or an official action, is deemed to be confidential under 
section 705(e) of the Act and shall not be published or disclosed except 
as required by law.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31924, 31925, June 11, 1998]



Sec. 700.92  Applicability of this regulation and official actions.

    (a) This regulation and all official actions, unless specifically 
stated otherwise, apply to transactions in any

[[Page 88]]

state, territory, or possession of the United States and the District of 
Columbia.
    (b) This regulation and all official actions apply not only to 
deliveries to other persons but also include deliveries to affiliates 
and subsidiaries of a person and deliveries from one branch, division, 
or section of a single entity to another branch, division, or section 
under common ownership or control.
    (c) This regulation and its schedules shall not be construed to 
affect any administrative actions taken by Commerce, or any outstanding 
contracts or orders placed pursuant to any of the regulations, orders, 
schedules or delegations of authority under the Defense Materials System 
and Defense Priorities System previously issued by Commerce. Such 
actions, contracts, or orders shall continue in full force and effect 
under this regulation unless modified or terminated by proper authority.
    (d) The repeal of the regulations, orders, schedules and delegations 
of authority of the Defense Materials System (DMS) and Defense 
Priorities System (DPS) shall not have the effect to release or 
extinguish any penalty or liability incurred under the DMS/DPS. The DMS/
DPS shall be treated as still remaining in force for the purpose of 
sustaining any action for the enforcement of such penalty or liability.



Sec. 700.93  Communications.

    All communications concerning this regulation, including requests 
for copies of the regulation and explanatory information, requests for 
guidance or clarification, and requests for adjustment or exception 
shall be addressed to the Office of Industrial Resource Administration, 
Room 3876, U.S. Department of Commerce, Washington, DC 20230, Ref: DPAS; 
telephone: (202) 482-3634 or FAX: (202) 482-5650.

[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as 
amended at 63 FR 31925, June 11, 1998]


     Schedule I to Part 700--Approved Programs and Delegate Agencies

    The programs listed in this schedule have been approved for 
priorities and allocations support under this part. They have equal 
preferential status. The Department of Commerce has authorized the 
Delegate Agencies to use this part in support of those programs assigned 
to them, as indicated below.

----------------------------------------------------------------------------------------------------------------
       Program identification symbol            Approved program                    Delegate agency
----------------------------------------------------------------------------------------------------------------
Defense programs:
    A1....................................  Aircraft................  Department of Defense.\1\
    A2....................................  Missiles................      Do.
    A3....................................  Ships...................      Do.
    A4....................................  Tank--Automotive........      Do.
    A5....................................  Weapons.................      Do.
    A6....................................  Ammunition..............      Do.
    A7....................................  Electronic and                Do.
                                             communications
                                             equipment.
    B1....................................  Military building             Do.
                                             supplies.
    B8....................................  Production equipment          Do.
                                             (for defense
                                             contractor's account).
    B9....................................  Production equipment          Do.
                                             (Government owned).
    C1....................................  Food resources (combat        Do.
                                             rations).
    C2....................................  Department of Defense         Do.
                                             construction.
    C3....................................  Maintenance, repair, and      Do.
                                             operating supplies
                                             (MRO) for Department of
                                             Defense facilities.
    C9....................................  Miscellaneous...........      Do.
International defense programs:
    Canada:
        D1................................  Canadian military         Department of Commerce.
                                             programs.
        D2................................  Canadian production and       Do.
                                             construction.
        D3................................  Canadian atomic energy        Do.
                                             program.
    Other Foreign Nations:
        G1................................  Certain munitions items   Department of Commerce.
                                             purchased by foreign
                                             governments through
                                             domestic commercial
                                             channels for export.
        G2................................  Certain direct defense        Do.
                                             needs of foreign
                                             governments other than
                                             Canada.
        G3................................  Foreign nations (other        Do.
                                             than Canada) production
                                             and construction.

[[Page 89]]

 
    Co-Production:
        J1................................  F-16 Co-Production        Departments of Commerce and Defense.
                                             Program.
Atomic energy programs:
    E1....................................  Construction............  Department of Energy.
    E2....................................  Operations--including         Do.
                                             maintenance, repair,
                                             and operating supplies
                                             (MRO).
    E3....................................  Privately owned               Do.
                                             facilities.
Domestic energy programs:
    F1....................................  Exploration, production,  Department of Energy.
                                             refining, and
                                             transportation.
    F2....................................  Conservation............      Do.
    F3....................................  Construction, repair,         Do.
                                             and maintenance.
Other defense, energy, and related
 programs:
    H1....................................  Certain combined orders   Department of Commerce.
                                             (see section 700.17(c)).
    H5....................................  Private domestic              Do.
                                             production.
    H6....................................  Private domestic              Do.
                                             construction.
    H7....................................  Maintenance, repair, and      Do.
                                             operating supplies
                                             (MRO).
    H8....................................  Designated Programs.....      Do.
    K1....................................  Federal supply items....  General Services Administration.
    N1....................................  Emergency preparedness    Federal Emergency Management Agency.
                                             activities.
----------------------------------------------------------------------------------------------------------------
\1\ Department of Defense includes: Armed Services--Army, Navy (including Marines and Coast Guard), and Air
  Force; Component Agencies, including Defense Logistics Agency, National Security Agency, Defense Advanced
  Research Projects Agency, Defense Information Systems Agency, Defense Nuclear Agency, Defense Mapping Agency,
  and On-Site Inspection Agency; and Associated Agencies, including Central Intelligence Agency and National
  Aeronautics and Space Administration.


[63 FR 31925, June 11, 1998]

  Appendix I to Part 700--Form BXA-999--Request for Special Priorities 
                               Assistance

[[Page 90]]

[GRAPHIC] [TIFF OMITTED] TR11JN98.008


[[Page 91]]


[GRAPHIC] [TIFF OMITTED] TR11JN98.009


[[Page 92]]


[GRAPHIC] [TIFF OMITTED] TR11JN98.010


[[Page 93]]


[GRAPHIC] [TIFF OMITTED] TR11JN98.011


[[Page 94]]



[63 FR 31926, June 11, 1998]



PART 701--REPORTING OF OFFSETS AGREEMENTS IN SALES OF WEAPON SYSTEMS OR DEFENSE-RELATED ITEMS TO FOREIGN COUNTRIES OR FOREIGN FIRMS--Table of Contents




Sec.
701.1  Purpose.
701.2  Definitions.
701.3  Applicability and scope.
701.4  Procedures.
701.5  Confidentiality.

    Authority: Title I, sec. 124, Pub. L 102-558, 106 Stat. 4207 (50 
U.S.C App. 2099).

    Source: 59 FR 61796, Dec. 2, 1994, unless otherwise noted.



Sec. 701.1  Purpose.

    The Defense Production Act Amendments of 1992 require the Secretary 
of Commerce to promulgate regulations for U.S. firms entering into 
contracts for the sale of defense articles or defense services to 
foreign countries or foreign firms that are subject to offset agreements 
exceeding $5,000,000 in value to furnish information regarding such 
agreements. The Secretary of Commerce has designated the Bureau of 
Export Administration as the organization responsible for implementing 
this provision. The information provided by U.S. firms will be 
aggregated and used to determine the impact of offset transactions on 
the defense preparedness, industrial competitiveness, employment, and 
trade of the United States. Summary reports will be submitted annually 
to the Congress pursuant Section 309 of the Defense Production Act of 
1950, as amended.



Sec. 701.2  Definitions.

    (a) Offsets--Compensation practices required as a condition of 
purchase in either government-to-government or commercial sales of 
defense articles and/or defense services as defined by the Arms Export 
Control Act and the International Traffic in Arms Regulations.
    (b) Military Export Sales--Exports that are either Foreign Military 
Sales (FMS) or commercial (direct) sales of defense articles and/or 
defense services as defined by the Arms Export Control Act and 
International Traffic in Arms Regulations.
    (c) Prime Contractor--A firm that has a sales contract with a 
foreign entity or with the U.S. Government for military export sales.
    (d) United States--Includes the 50 states, the District of Columbia, 
Puerto Rico, and U.S. territories.
    (e) Offset Agreement--Any offset as defined above that the U.S. firm 
agrees to in order to conclude a military export sales contract. This 
includes all offsets, whether they are ``best effort'' agreements or are 
subject to penalty clauses.
    (f) Offset Transaction--Any activity for which the U.S. firm claims 
credit for full or partial fulfillment of the offset agreement. 
Activities to implement offset agreements may include, but are not 
limited to, coproduction, licensed production, subcontractor production, 
overseas investment, technology transfer countertrade, barter, 
counterpurchase, and buy back.
    (g) Direct Offset--Contractual arrangements that involve defense 
articles and services referenced in the sales agreement for military 
exports.
    (h) Indirect Offset--Contractual arrangements that involve defense 
goods and services unrelated to the exports referenced in the sales 
agreement.



Sec. 701.3  Applicability and scope.

    (a) This rule applies to U.S. firms entering contracts for the sale 
of defense articles or defense services (as defined in the Arms Export 
Control Act and International Traffic in Arms Regulations) to a foreign 
country or foreign firm for which the contract is subject to an offset 
agreement exceeding $5,000,000 in value.
    (b) This rule applies to all offset transactions completed in 
performance of existing offset commitments since January 1, 1993 for 
which offset credit of $250,000 or more has been claimed from the 
foreign representative, and new offset agreements entered into since 
that time.



Sec. 701.4  Procedures.

    (a) To avoid double counting, firms should report only offset 
transactions for which they are directly responsible for reporting to 
the foreign customer

[[Page 95]]

(i.e., prime contractors should report for their subcontractors if the 
subcontractors are not a direct party to the offset agreement).
    (b) Reports should be delivered to the Offsets Program Manager, U.S. 
Department of Commerce, Office of Strategic Industries and Economic 
Security, Bureau of Export Administration, Room 3878, 14th Street and 
Pennsylvania Avenue, N.W., Washington DC 20230. The first industry 
reports should be submitted to the Bureau of Export Administration not 
later than March 15, 1995 and should cover offset transactions completed 
during the calendar year 1993, as well as information regarding 
unfulfilled offset agreements. After this initial submission, companies 
should provide information once yearly not later than June 15 covering 
the preceding calendar year. All submissions should include a point of 
contact (name and telephone number) and should be by a company official 
authorized to provide such information.
    (c) Companies may submit this information in computerized 
spreadsheet/database format (e.g., Lotus 1-2-3, Quattro Pro, dbase IV) 
using a 3.5 inch 1.44 megabyte diskette, accompanied by a printed copy.
    (d) Offset Transaction Reporting. (1) Reports should include an 
itemized list of offset transactions completed during the reporting 
period, including the following data elements (Estimates are acceptable 
when actual figures are unavailable; estimated figures should be 
followed by the letter ``E''):
    (i) Name of Country--Country of entity purchasing the weapon system, 
defense item or service subject to offset.
    (ii) Name or Description of Weapon system, Defense Item, or Service 
Subject to Offset.
    (iii) Name of Offset Fulfilling Entity--Entity fulfilling offset 
transaction (including first tier subcontractors).
    (iv) Name of Offset Receiving Entity--Entity receiving benefits from 
offset transaction.
    (v) Offset Credit Value--Dollar value credits claimed by fulfilling 
entity including any intangible factors/multipliers.
    (vi) Actual Offset Value--Dollar value of the offset transaction 
without multipliers/intangible factors.
    (vii) Description of Offset Product/Service--Short description of 
the type of offset (e.g., coproduction, technology transfer, subcontract 
activity, training, purchase, cash payment, etc.).
    (viii) Broad Industry Category--Broad classification of the industry 
in which the offset transaction was fulfilled (e.g., aerospace, 
electronics, chemicals, industrial machinery, textiles, etc.). Firms may 
request a list of the Standard Industry Classification (SIC) codes to 
assist in identifying an appropriate industry category. Forward such 
requests to the Offsets Program Manager, U.S. Department of Commerce, 
Office of Strategic Industries and Economic Security, Bureau of Export 
Administration, Room 3878, 14th Street and Pennsylvania Avenue, N.W., 
Washington, D.C. 20230 or Fax 202-482-5650.
    (ix) Direct or Indirect Offset--Specify whether the offset 
transaction was direct or indirect offset.
    (x) Name of Country in Which Offset was Fulfilled--United States, 
purchasing country, or third country.
    (2) Offset transactions of the same type (same fulfilling entity, 
receiving entity, and offset product/service) completed during the same 
reporting period may be combined.
    (3) Any necessary comments or explanations relating to the above 
information should be footnoted and supplied on separate sheets attached 
to the report.
    (e) Reporting on Offset Agreements Entered Into. (1) In addition to 
the itemized list of offset transactions completed during the year as 
specified above, U.S. firms should provide information regarding new 
offset agreements entered into during the year, including the following 
elements:
    (i) Name of Country--Country of entity purchasing the weapon system, 
defense item, or service subject to offset;
    (ii) Name or Description of Weapon System, Defense Item, or Service 
Subject to Offset;
    (iii) Names/Titles of Signatories to the Offset Agreement;

[[Page 96]]

    (iv) Value of Export Sale Subject to Offset (approximate);
    (v) Total Value of the Offset Agreement;
    (vi) Term of Offset Agreement (months);
    (vii) Description of Performance Measures--(e.g., ``Best Efforts,'' 
Liquidated Damages, (describe)).
    (2) [Reserved]



Sec. 701.5  Confidentiality.

    (a) As provided by Sec. 309(c) of the Defense Production Act of 
1950, as amended, BXA shall not publicly disclose the information it 
receives pursuant to this part, unless the firm furnishing the 
information subsequently specifically authorizes public disclosure.
    (b) Public disclosure must be authorized in writing by an official 
of the firm competent to make such an authorization.
    (c) Nothing in this provision shall prevent the use of data 
aggregated from information provided pursuant to this part in the 
summary report to the Congress described in Sec. 701.1.

                        PARTS 702-704 [RESERVED]



PART 705--EFFECT OF IMPORTED ARTICLES ON THE NATIONAL SECURITY--Table of Contents




Sec.
705.1  Definitions.
705.2  Purpose.
705.3  Commencing an investigation.
705.4  Criteria for determining effect of imports on the national 
          security.
705.5  Request or application for an investigation.
705.6  Confidential information.
705.7  Conduct of an investigation.
705.8  Public hearings.
705.9  Emergency action.
705.10  Report of an investigation and recommendation.
705.11  Determination by the President and adjustment of imports.
705.12  Disposition of an investigation and report to the Congress.

    Authority: Section 232 of the Trade Expansion Act of 1962, as 
amended (19 U.S.C. 1862) and Reorg. Plan No. 3 of 1979 (44 FR 69273, 
December 3, 1979).

    Source: 47 FR 14693, Apr. 6, 1982, unless otherwise noted. 
Redesignated at 54 FR 601, Jan. 9, 1989.



Sec. 705.1  Definitions.

    As used in this part:
    Department means the United States Department of Commerce and 
includes the Secretary of Commerce and the Secretary's designees.
    Secretary means the Secretary of Commerce or the Secretary's 
designees.
    Applicant means the person or entity submitting a request or 
application for an investigation pursuant to this part.



Sec. 705.2  Purpose.

     These regulations set forth the procedures by which the Department 
shall commence and conduct an investigation to determine the effect on 
the national security of the imports of any article. Based on this 
investigation, the Secretary shall make a report and recommendation to 
the President for action or inaction regarding an adjustment of the 
imports of the article.



Sec. 705.3  Commencing an investigation.

    (a) Upon request of the head of any government department or agency, 
upon application of an interested party, or upon motion of the 
Secretary, the Department shall immediately conduct an investigation to 
determine the effect on the national security of the imports of any 
article.
    (b) The Secretary shall immediately provide notice to the Secretary 
of Defense of any investigation initiated under this part.

[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989, and 
amended at 63 FR 31623, June 10, 1998]



Sec. 705.4  Criteria for determining effect of imports on the national security.

    (a) To determine the effect on the national security of the imports 
of the article under investigation, the Department shall consider the 
quantity of the article in question or other circumstances related to 
its import. With regard for the requirements of national security, the 
Department shall also consider the following:
    (1) Domestic production needed for projected national defense 
requirements;

[[Page 97]]

    (2) The capacity of domestic industries to meet projected national 
defense requirements;
    (3) The existing and anticipated availabilities of human resources, 
products, raw materials, production equipment and facilities, and other 
supplies and services essential to the national defense;
    (4) The growth requirements of domestic industries to meet national 
defense requirements and the supplies and services including the 
investment, exploration and development necessary to assure such growth; 
and
    (5) Any other relevant factors.
    (b) In recognition of the close relation between the strength of our 
national economy and the capacity of the United States to meet national 
security requirements, the Department shall also, with regard for the 
quantity, availability, character and uses of the imported article under 
investigation, consider the following:
    (1) The impact of foreign competition on the economic welfare of any 
domestic industry essential to our national security;
    (2) The displacement of any domestic products causing substantial 
unemployment, decrease in the revenues of government, loss of investment 
or specialized skills and productive capacity, or other serious effects; 
and
    (3) Any other relevant factors that are causing or will cause a 
weakening of our national economy.



Sec. 705.5  Request or application for an investigation.

    (a) A request or application for an investigation shall be in 
writing. The original and 12 copies shall be filed with the Director, 
Office of Strategic Industries and Economic Security, Room 3876, U.S. 
Department of Commerce, Washington, DC 20230.
    (b) When a request, application or motion is under investigation, or 
when an investigation has been completed pursuant to Sec. 705.10 of this 
part, any subsequently filed request or application concerning imports 
of the same or related article that does not raise new or different 
issues may be either consolidated with the investigation in progress as 
provided in Sec. 705.7(e) of this part, or rejected. In either event, an 
explanation for taking such action shall be promptly given to the 
applicant. If the request or application is rejected, it will not be 
returned unless requested by the applicant.
    (c) Requests or applications shall describe how the quantity, 
availability, character, and uses of a particular imported article, or 
other circumstances related to its import, affect the national security, 
and shall contain the following information to the fullest extent 
possible:
    (1) Identification of the applicant;
    (2) A precise description of the article;
    (3) Description of the domestic industry affected, including 
pertinent information regarding companies and their plants, locations, 
capacity and current output of the industry;
    (4) Pertinent statistics on imports and domestic production showing 
the quantities and values of the article;
    (5) Nature, sources, and degree of the competition created by 
imports of the article;
    (6) The effect that imports of the article may have upon the 
restoration of domestic production capacity in the event of national 
emergency;
    (7) Employment and special skills involved in the domestic 
production of the article;
    (8) Extent to which the national economy, employment, investment, 
specialized skills, and productive capacity is or will be adversely 
affected;
    (9) Revenues of Federal, State, or local Governments which are or 
may be adversely affected;
    (10) National security supporting uses of the article including data 
on applicable contracts or sub-contracts, both past and current; and
    (11) Any other information or advice relevant and material to the 
subject matter of the investigation.
    (d) Statistical material presented should be, if possible, on a 
calendar-year basis for sufficient periods of time to indicate trends. 
Monthly or quarterly data for the latest complete years should be 
included as well as any other breakdowns which may be pertinent to show 
seasonal or short-term factors.

[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989, and 
amended at 63 FR 31623, June 10, 1998]

[[Page 98]]



Sec. 705.6  Confidential information.

    (a) Any information or material which the applicant or any other 
party desires to submit in confidence at any stage of the investigation 
that would disclose national security classified information or business 
confidential information (trade secrets, commercial or financial 
information, or any other information considered senstitive or 
privileged), shall be submitted on separate sheets with the clear legend 
``National Security Classified'' or ``Business Confidential,'' as 
appropriate, marked at the top of each sheet. Any information or 
material submitted that is identified as national security classified 
must be accompanied at the time of filing by a statement indicating the 
degree of classification, the authority for the classification, and the 
identity of the classifying entity. By submitting information or 
material identified as business confidential, the applicant or other 
party represents that the information is exempted from public 
disclosure, either by the Freedom of Information Act (5 U.S.C. 552 et 
seq.) or by some other specific statutory exemption. Any request for 
business confidential treatment must be accompanied at the time of 
filing by a statement justifying non-disclosure and referring to the 
specific legal authority claimed.
    (b) The Department may refuse to accept as business confidential any 
information or material it considers not intended to be protected under 
the legal authority claimed by the applicant, or under other applicable 
legal authority. Any such information or material so refused shall be 
promptly returned to the submitter and will not be considered. However, 
such information or material may be resubmitted as non-confidential in 
which case it will be made part of the public record.



Sec. 705.7  Conduct of an investigation.

    (a) If the Department determines that it is appropriate to afford 
interested parties an opportunity to present information and advice 
relevant and material to an investigation, a public notice shall be 
published in the Federal Register soliciting from any interested party 
written comments, opinions, data, information or advice relative to the 
investigation. This material shall be submitted as directed within a 
reasonable time period to be specified in the notice. All material shall 
be submitted with 6 copies. In addition, public hearings may be held 
pursuant to Sec. 705.8 of this part.
    (b) All requests and applications filed and all material submitted 
by interested parties, except information on material that is classified 
or determined to be confidential as provided in Sec. 705.6 of this part, 
will be available for public inspection and copying in the Bureau of 
Export Administration Freedom of Information Records Inspection 
Facility, Room H-4525, U.S. Department of Commerce, Washington, DC 
20230, in accordance with regulations published in part 4 of title 15, 
Code of Federal Regulations.
    (c) Further information may be requested by the Department from 
other sources through the use of questionnaires, correspondence, or 
other appropriate means.
    (d) The Department shall, as part of an investigation, seek 
information and advice from, and consult with, appropriate officers of 
the United States or their designees, as shall be determined. The 
Department shall also consult with the Secretary of Defense regarding 
the methodological and policy questions raised in the investigation. 
Upon the request of the Secretary, the Secretary of Defense shall 
provide the Secretary with an assessment of the defense requirements of 
the article in question. Communications received from agencies of the 
U.S. government or foreign governments will not be made available for 
public inspection.
    (e) Any request or application that is filed while an investigation 
is in progress, concerning imports of the same or related article and 
raising similar issues, may be consolidated with the request, 
application or motion that initiated the investigation.

[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989 and 
amended at 54 FR 19355, May 5, 1989; 63 FR 31623, June 10, 1998]



Sec. 705.8  Public hearings.

    (a) If it is deemed appropriate by the Department, public hearings 
may be held to elicit further information.

[[Page 99]]

    (1) A notice of hearing shall be published in the Federal Register 
describing the date, time, place, the subject matter of each hearing and 
any other information relevant to the conduct of the hearing. The name 
of a person to contact for additional information or to request time to 
speak at the hearing shall also be included. Public hearings may be held 
in more than one location.
    (2) Hearings shall be open to the public unless national security 
classified information will be presented. In that event the presiding 
officer at the hearing shall close the hearing, as necessary, to all 
persons not having appropriate security clearances or not otherwise 
authorized to have access to such information. If it is known in 
sufficient time prior to the hearing that national security classified 
information will be presented the notice of hearing published in the 
Federal Register shall state that national security classified 
information will be presented and that the hearing will be open only to 
those persons having appropriate security clearances or otherwise 
specifically authorized to have access to such information.
    (b) Hearings shall be conducted as follows:
    (1) The Department shall appoint the presiding officer;
    (2) The presiding officer shall determine all procedural matters 
during the hearing;
    (3) Interested parties may appear, either in person or by 
representation, and produce oral or written information relevant and 
material to the subject matter of the investigation;
    (4) Hearings will be fact-finding proceedings without formal 
pleadings or adverse parties. Formal rules of evidence will not apply;
    (5) After a witness has testified, the presiding officer may 
question the witness. Questions submitted to the presiding officer in 
writing by any interested party may, at the discretion of the presiding 
officer, be posed to the witness. No cross examination of any witness by 
a party shall be allowed.
    (6) Each hearing will be stenographically reported. Transcripts of 
the hearing, excluding any national security classified information, may 
be purchased from the Department at actual cost of duplication, and will 
be available for public inspection in the Bureau of Export 
Administration Freedom of Information Records Inspection Facility, Room 
H-4525, U.S. Department of Commerce, Washington, DC 20230.

[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989 and 
amended at 54 FR 19355, May 5, 1989; 63 FR 31623, June 10, 1998]



Sec. 705.9  Emergency action.

    In emergency situations, or when in the judgment of the Department, 
national security interests require it, the Department may vary or 
dispense with any or all of the procedures set forth in Sec. 705.7 of 
this part.



Sec. 705.10  Report of an investigation and recommendation.

    (a) When an investigation conducted pursuant to this part is 
completed, a report of the investigation shall be promptly prepared.
    (b) The Secretary shall report to the President the findings of the 
investigation and a recommendation for action or inaction within 270 
days after beginning an investigation under this part.
    (c) An Executive Summary of the Secretary's report to the President 
of an investigation, excluding any classified or proprietary 
information, shall be published in the Federal Register. Copies of the 
full report, excluding any classified or proprietary information, will 
be available for public inspection and copying in the Bureau of Export 
Administration Freedom of Information Records Inspection Facility, Room 
H-4525, U.S. Department of Commerce, 14th Street, N.W., Washington, D.C. 
20230; tel. (202) 482-5653.

[63 FR 31623, June 10, 1998]



Sec. 705.11  Determination by the President and adjustment of imports.

    (a) Upon the submission of a report to the President by the 
Secretary under Sec. 705.10(b) of this part, in which the Department has 
found that an article is being imported into the United States in such 
quantities or under such circumstances as to threaten to impair the 
national security, the President is required by Section 232(c) of the 
Trade Expansion Act of 1962, as amended (19

[[Page 100]]

U.S.C. 1862(c)) to take the following action
    (1) Within 90 days after receiving the report from the Secretary, 
the President shall determine:
    (i) Whether the President concurs with the Department's finding; and
    (ii) If the President concurs, the nature and duration of the action 
that must be taken to adjust the imports of the article and its 
derivatives so that the such imports will not threaten to impair the 
national security.
    (2) If the President determines to take action under this section, 
such action must be taken no later than fifteen (15) days after making 
the determination.
    (3) By no later than thirty (30) days after making the 
determinations under paragraph (a)(1) of this section, the President 
shall submit to the Congress a written statement of the reasons why the 
President has decided to take action, or refused to take action.
    (b) If the action taken by the President under this section is the 
negotiation of an agreement to limit or restrict the importation into 
the United States of the article in question, and either no such 
agreement is entered into within 180 days after making the determination 
to take action, or an executed agreement is not being carried out or is 
ineffective in eliminating the threat to the national security, the 
President shall either:
    (1) Take such other action as deemed necessary to adjust the imports 
of the article so that such imports will not threaten to impair the 
national security. Notice of any such additional action taken shall be 
published in the Federal Register; or
    (2) Not take any additional action. This determination and the 
reasons on which it is based, shall be published in the Federal 
Register.

[63 FR 31623, June 10, 1998]



Sec. 705.12  Disposition of an investigation and report to the Congress.

    (a) Upon the disposition of each request, application, or motion 
made under this part, a report of such disposition shall be submitted by 
the Secretary to the Congress and published in the Federal Register.
    (b) As required by Section 232(e) of the Trade Expansion Act of 
1962, as amended (19 U.S.C. 1862(c)), the President shall submit to the 
Congress an annual report on the operation of this part.

[63 FR 31623, June 10, 1998]

                        PARTS 706-709  [RESERVED]

[[Page 101]]



                         SUBCHAPTER B [RESERVED]



                        PARTS 710-729  [RESERVED]



             SUBCHAPTER C--EXPORT ADMINISTRATION REGULATIONS





PART 730--GENERAL INFORMATION--Table of Contents




Sec.
730.1  What these regulations cover.
730.2  Statutory authority.
730.3  Dual use exports.
730.4  Other control agencies and departments.
730.5  Coverage of more than exports.
730.6  Control purposes.
730.7  License requirements and exceptions.
730.8  How to proceed and where to get help.
730.9  How the Bureau of Export Administration is organized.
730.10  Advisory information.

Supplement No. 1 to Part 730--Information Collection Requirements Under 
          the Paperwork Reduction Act: OMB Control Numbers
Supplement No. 2 to Part 730--Technical Advisory Committees
Supplement No. 3 to Part 730--Other U.S. Government Departments and 
          Agencies With Export Control Responsibilities

    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); 18 U.S.C. 2510 et seq.; 22 U.S.C. 287c; 
22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; Sec. 201, Pub. L. 104-58, 109 
Stat. 557 (30 U.S.C. 185(s)); 30 U.S.C. 185(u); 42 U.S.C. 2139a; 42 
U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; 50 U.S.C. app. 5; E.O. 
12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 11912, 41 FR 15825, 
3 CFR, 1976 Comp., p. 114; E.O. 12002, 42 FR 35623, 3 CFR, 1977 Comp., 
p.133; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12214, 
45 FR 29783, 3 CFR, 1980 Comp., p. 256; E.O. 12851, 58 FR 33181, 3 CFR, 
1993 Comp., p. 608; E.O. 12867, 58 FR 51747, 3 CFR, 1993 Comp., p. 649; 
E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899; E.O. 12924, 59 FR 
43437, 3 CFR, 1994 Comp., p. 917; E.O. 12938, 59 FR 59099, 3 CFR, 1994 
Comp., p. 950; Executive Order 13026 (November 15, 1996, 61 FR 58767); 
Notice of August 15, 1995 (60 FR 42767, August 17, 1995); and Notice of 
August 14, 1996 (61 FR 42527); E.O. 12981 (60 FR 62981).

    Source: 61 FR 12734, Mar. 25, 1996, unless otherwise noted.



Sec. 730.1  What these regulations cover.

    In this part, references to the Export Administration Regulations 
(EAR) are references to 15 CFR chapter VII, subchapter C. The EAR are 
issued by the United States Department of Commerce, Bureau of Export 
Administration (BXA) under laws relating to the control of certain 
exports, reexports, and activities. In addition, the EAR implement 
antiboycott law provisions requiring regulations to prohibit specified 
conduct by United States persons that has the effect of furthering or 
supporting boycotts fostered or imposed by a country against a country 
friendly to United States. Supplement No. 1 to part 730 lists the 
control numbers assigned to information collection requirements under 
the EAR by the Office of Management and Budget pursuant to the Paperwork 
Reduction Act of 1995.



Sec. 730.2  Statutory authority.

    The EAR have been designed primarily to implement the Export 
Administration Act of 1979, as amended, 50 U.S.C. app. 2401-2420 (EAA). 
There are numerous other legal authorities underlying the EAR. These are 
listed in the Federal Register documents promulgating the EAR and at the 
beginning of each part of the EAR in the Code of Federal Regulations 
(CFR). From time to time, the President has exercised authority under 
the International Emergency Economic Powers Act with respect to the EAR 
(50 U.S.C. 1701-1706 (IEEPA)). The EAA is not permanent legislation, and 
when it has lapsed, Presidential executive orders under IEEPA have 
directed and authorized the continuation in force of the EAR.



Sec. 730.3  Dual use exports.

    The convenient term dual use is sometimes used to distinguish the

[[Page 102]]

types of items covered by the EAR from those that are covered by the 
regulations of certain other U.S. government departments and agencies 
with export licensing responsibilities. In general, the term dual use 
serves to distinguish EAR-controlled items that can be used both in 
military and other strategic uses (e.g., nuclear) and commercial 
applications. In general, the term dual use serves to distinguish EAR-
controlled items that can be used both in military and other strategic 
uses and in civil applications from those that are weapons and military 
related use or design and subject to the controls of the Department of 
State or subject to the nuclear related controls of the Department of 
Energy or the Nuclear Regulatory Commission. Note, however, that 
although the short-hand term dual use may be employed to refer to the 
entire scope of the EAR, the EAR also apply to some items that have 
solely civil uses.



Sec. 730.4  Other control agencies and departments.

    In addition to the departments and agencies mentioned in Sec. 730.3 
of this part, other departments and agencies have jurisdiction over 
certain narrower classes of exports and reexports. These include the 
Department of Treasury's Office of Foreign Assets Control (OFAC), which 
administers controls against certain countries that are the object of 
sanctions affecting not only exports and reexports, but also imports and 
financial dealings. For your convenience, Supplement No. 3 to part 730 
identifies other departments and agencies with regulatory jurisdiction 
over certain types of exports and reexports. This is not a comprehensive 
list, and the brief descriptions are only generally indicative of the 
types of controls administered and/or enforced by each agency.



Sec. 730.5  Coverage of more than exports.

    The core of the export control provisions of the EAR concerns 
exports from the United States. You will find, however, that some 
provisions give broad meaning to the term ``export'', apply to 
transactions outside of the United States, or apply to activities other 
than exports.
    (a) Reexports. Commodities, software, and technology that have been 
exported from the United States are generally subject to the EAR with 
respect to reexport. Many such reexports, however, may go to many 
destinations without a license or will qualify for an exception from 
licensing requirements.
    (b) Foreign products. In some cases, authorization to export 
technology from the United States will be subject to assurances that 
items produced abroad that are the direct product of that technology 
will not be exported to certain destinations without authorization from 
BXA.
    (c) Scope of ``exports''. Certain actions that you might not regard 
as an ``export'' in other contexts do constitute an export subject to 
the EAR. The release of technology to a foreign national in the United 
States through such means as demonstration or oral briefing is deemed an 
export. Other examples of exports under the EAR include the return of 
foreign equipment to its country of origin after repair in the United 
States, shipments from a U.S. foreign trade zone, and the electronic 
transmission of non-public data that will be received abroad.
    (d) U.S. person activities. To counter the proliferation of weapons 
of mass destruction, the EAR restrict the involvement of ``United States 
persons'' anywhere in the world in exports of foreign-origin items, or 
in providing services or support, that may contribute to such 
proliferation. The EAR also restrict technical assistance by U.S. 
persons with respect to encryption commodities or software.

[61 FR 12734, Mar. 25, 1996, as amended at 61 FR 68577, Dec. 30, 1996]



Sec. 730.6  Control purposes.

    The export control provisions of the EAR are intended to serve the 
national security, foreign policy, nonproliferation, and short supply 
interests of the United States and, in some cases, to carry out its 
international obligations. Some controls are designed to restrict access 
to dual use items by countries or persons that might apply such items to 
uses inimical to U.S. interests. These include controls designed to stem 
the proliferation of weapons of mass destruction and controls designed

[[Page 103]]

to limit the military and terrorism support capability of certain 
countries. The effectiveness of many of the controls under the EAR is 
enhanced by their being maintained as part of multilateral control 
arrangements. Multilateral export control cooperation is sought through 
arrangements such as the Nuclear Suppliers Group, the Australia Group, 
and the Missile Technology Control Regime. The EAR also include some 
export controls to protect the United States from the adverse impact of 
the unrestricted export of commodities in short supply.



Sec. 730.7  License requirements and exceptions.

    A relatively small percentage of exports and reexports subject to 
the EAR require an application to BXA for a license. Many items are not 
on the Commerce Control List (CCL) (Supplement No. 1 to Sec. 774.1 of 
the EAR), or, if on the CCL, require a license to only a limited number 
of countries. Other transactions may be covered by one or more of the 
License Exceptions in the EAR. In such cases no application need be made 
to BXA.



Sec. 730.8  How to proceed and where to get help.

    (a) How the EAR are organized. The Export Administration Regulations 
(EAR) are structured in a logical manner. In dealing with the EAR you 
may find it helpful to be aware of the overall organization of these 
regulations. In order to determine what the rules are and what you need 
to do, review the titles and the introductory sections of the parts of 
the EAR.
    (1) How do you go about determining your obligations under the EAR? 
Part 732 of the EAR provides steps you may follow to determine your 
obligations under the EAR. You will find guidance to enable you to tell 
whether or not your transaction is subject to the EAR and, if it is, 
whether it qualifies for a License Exception or must be authorized 
through issuance of a license.
    (2) Are your items or activities subject to the EAR at all? Part 734 
of the EAR defines the items and activities that are subject to the EAR. 
Note that the definition of ``items subject to the EAR'' includes, but 
is not limited to, items listed on the Commerce Control List in part 774 
of the EAR.
    (3) If subject to the EAR, what do the EAR require? Part 736 of the 
EAR lists all the prohibitions that are contained in the EAR. Note that 
certain prohibitions (General Prohibitions One through Three) apply to 
items as indicated on the CCL, and others (General Prohibitions Four 
through Ten) prohibit certain activities and apply to all items subject 
to the EAR unless otherwise indicated.
    (4) Do you need a license for your item or activity? What policies 
will BXA apply if you do need to submit license application? The EAR 
have four principal ways of describing license requirements:
    (i) The EAR may require a license to a country if your item is 
listed on the CCL and the Country Chart in part 738 of the EAR tells 
that a license is required to that country. Virtually all Export Control 
Classification Numbers (ECCN) on the CCL are covered by the Country 
Chart in part 738 of the EAR. That part identifies the limited number of 
entries that are not included on the Chart. These ECCNs will state the 
specific countries that require a license or refer you to a self-
contained section, i.e., Short Supply in part 754 of the EAR, or 
Embargoes in part 746 of the EAR. If a license is required, you should 
consult part 740 of the EAR which describes the License Exception that 
may be available for items on the CCL. Part 742 of the EAR describes the 
licensing policies that BXA will apply in reviewing an application you 
file. Note that part 754 of the EAR on short supply controls and part 
746 on embargoes are self-contained parts that include the available 
exceptions and licensing policy.
    (ii) A license requirement may be based on the end-use or end-user 
in a transaction, primarily for proliferation reasons. Part 744 of the 
EAR describes such requirements and relevant licensing policies and 
includes both restrictions on items and restrictions on the activities 
of U.S. persons.
    (iii) A license is required for virtually all exports to embargoed 
destinations, such as Cuba. Part 746 of the EAR describes all the 
licensing requirements, license review policies and License Exceptions 
that apply to such

[[Page 104]]

destinations. If your transaction involves one of these countries, you 
should first look at this part. This part also describes controls that 
may be maintained under the EAR to implement UN sanctions.
    (iv) In addition, under Secs. 736.2(b)(9) and (10) of the EAR, you 
may not engage in a transaction knowing a violation is about to occur or 
violate any orders, terms, and conditions under the EAR. Part 764 of the 
EAR describes prohibited transactions with a person denied export 
privileges or activity that violates the terms or conditions of a denial 
order.
    (5) How do you file a license application and what will happen to 
the application once you do file it? What if you need authorization for 
multiple transactions? Parts 748 and 750 of the EAR provide information 
on license submission and processing. Part 752 of the EAR provides for a 
Special Comprehensive License that authorizes multiple transactions. If 
your application is denied, part 756 of the EAR provides rules for 
filing appeals.
    (6) How do you clear shipments with the U.S. Customs Service? Part 
758 of the EAR describes the requirements for clearance of exports.
    (7) Where do you find the rules on restrictive trade practices and 
boycotts? Part 760 of the EAR deals with restrictive trade practices and 
boycotts.
    (8) Where are the rules on recordkeeping and enforcement? Part 762 
of the EAR sets out your recordkeeping requirements, and parts 764 and 
766 of the EAR deal with violations and enforcement proceedings.
    (9) What is the effect of foreign availability? Part 768 of the EAR 
provides rules for determining foreign availability of items subject to 
controls.
    (10) Do the EAR provide definitions and interpretations? Part 770 of 
the EAR contains interpretations and part 772 of the EAR lists 
definitions used.
    (b) Why the EAR are so detailed. Some people will find the great 
length of the EAR and their extensive use of technical terms 
intimidating. BXA believes, however, that such detail and precision can 
and does serve the interests of the public. The detailed listing of 
technical parameters in the CCL establishes precise, objective criteria. 
This should, in most cases, enable you to ascertain the appropriate 
control status. Broader, more subjective criteria would leave exporters 
and reexporters more dependent upon interpretations and rulings by BXA 
officials. Moreover, much of the detail in the CCL is derived from 
multilaterally adopted lists, and the specificity serves to enhance the 
uniformity and effectiveness of international control practices and to 
promote a ``level playing field''. The detailed presentation of such 
elements as licensing and export clearance procedures enables you to 
find in one place what you need to know to comply with pertinent 
requirements. Of special importance is the detailed listing of License 
Exception criteria, as these will enable you to determine quickly, and 
with confidence, that you may proceed with a transaction without delay. 
Finally, some of the detail results from the need to draft the EAR with 
care in order to avoid loop-holes and to permit effective enforcement.
    (c) Where to get help. Throughout the EAR you will find information 
on offices you can contact for various purposes and types of 
information. General information including; assistance in understanding 
the EAR, information on how to obtain forms, electronic services, 
publications, and information on training programs offered by BXA, is 
available from the Office of Exporter Services at the following 
locations:

Exporter Counselling Division, U.S. Department of Commerce, 14th and 
Pennsylvania Avenue, N.W., Room H1099D, Washington, D.C., 20230, 
Telephone number: (202) 482-4811, Facsimile number: (202) 482-3617
    and
Western Regional Office, U.S. Department of Commerce, 3300 Irvine 
Avenue, Suite 345, Newport Beach, California 92660, Telephone number: 
(714) 660-0144, Facsimile number: (714) 660-9347
    and
Santa Clara Branch Office, U.S. Department of Commerce, 5201 Great 
America Parkway, Suite 333, Santa Clara, California 95054, Telephone 
number: (408) 748-7450, Facsimile number: (408) 748-7470.



Sec. 730.9  How the Bureau of Export Administration is organized.

    Functionally, the Bureau of Export Administration is divided into 
two

[[Page 105]]

branches, Export Administration and Export Enforcement. Also, BXA 
manages a number of Technical Advisory Committees consisting of industry 
and government representatives which advise and assist BXA and other 
agencies with respect to actions designed to implement the EAR.
    (a) Export Administration. Export Administration implements and 
administers the export controls reflected in the EAR. Export 
Administration consists of five offices located in Washington D.C. and 
two field offices in California under the supervision of the Assistant 
Secretary for Export Administration:
    (1) The Office of Nuclear and Missile Technology Controls is 
responsible for policy and technical issues and license applications 
related to the Nuclear Suppliers Group and the Missile Technology 
Control Regime. This office has responsibility for items associated with 
those regimes, and missile and nuclear related exports and reexports 
subject to the Enhanced Proliferation Control Initiative.
    (2) The Office Chemical/Biological Controls and Treaty Compliance is 
responsible for implementing multilateral export controls under the 
Australia Group. This office has licensing responsibility for items 
associated with the Australia Group and related exports and reexports 
subject to the Enhanced Proliferation Control Initiative.
    (3) The Office of Strategic Trade and Foreign Policy Controls is 
responsible for implementing multilateral export controls dealing with 
conventional arms and related dual use items. This office is also 
responsible for computer export control policies, and implements U.S. 
foreign policy controls (e.g., crime control, anti-terrorism, and 
regional stability). It also has licensing responsibility for items 
controlled for national security and foreign policy reasons.
    (4) The Office of Exporter Services is responsible for the Special 
Comprehensive License, processing and routing all license applications, 
and preparing responses to requests for advisory opinions and commodity 
classifications. This office also provides counselling to exporters and 
reexporters, conducts educational seminars for the business community, 
maintains the Export Administration Regulations, and coordinates the 
operations of two field offices listed in Sec. 730.8(c) of this part.
    (5) The Office of Strategic Industries and Economic Security 
implements programs to ensure the continued health of the U.S. defense 
industrial base, facilitating diversification of U.S. defense related 
industries into civilian markets, and promoting the conversion of 
military enterprises. This office is also responsible for analyzing the 
economic impact of U.S. export controls on industrial competitiveness.
    (b) Export Enforcement. Export Enforcement implements the 
enforcement provisions of the EAR, including part 760 of the EAR 
(Restrictive Trade Practices and Boycotts). This office also conducts 
outreach programs to assist members of the public in understanding their 
obligation under EAR. The Office of Export Enforcement is organized into 
three offices under the supervision of the Assistant Secretary for 
Export Enforcement.
    (1) The Office of Export Enforcement (OEE) is comprised of an office 
in Washington, D.C. and eight field offices. OEE is staffed with 
criminal investigators and analysts. This office investigates 
allegations of violations and supports administrative and criminal 
enforcement proceedings. The addresses and telephone numbers of the 
eight field offices are listed in Sec. 764.5(c)(7) of the EAR.
    (2) The Office of Enforcement Support (OES) is located in 
Washington, D.C. OES supports BXA's preventive enforcement efforts, 
including conducting pre-license checks and post-shipment verifications. 
OES also provides administrative and analytical support for OEE.
    (3) The Office of Antiboycott Compliance administers and enforces 
the provisions of part 760 of the EAR (Restrictive Trade Practices and 
Boycotts). It investigates and prepares cases on alleged violations of 
this part.
    (c) Technical Advisory Committees. (1) The Technical Advisory 
Committees (TACs) provide advice and assistance to BXA from U.S. 
industry regarding the creation and implementation of export

[[Page 106]]

controls. For further information regarding establishment of TACs and 
other information, see Supplement No. 2 to part 730. Existing TACs 
include the following:
    (i) The Information Systems TAC;
    (ii) The Materials TAC;
    (iii) The Materials Processing Equipment TAC;
    (iv) The Regulations and Procedures TAC;
    (v) The Sensors and Instrumentation TAC; and
    (vi) The Transportation and Related Equipment TAC.
    (2) For more information. For information on attending a TAC meeting 
or on becoming a TAC member, please contact Ms. Lee Ann Carpenter, 
Director, TAC Unit, OAS-EA/BXA, Room 3886C, U.S. Department of Commerce, 
Washington, DC 20230; Telephone number: (202) 482-2583. FAX number: 
(202) 501-8024.

[61 FR 12734, Mar. 25, 1996, as amended at 62 FR 25452, May 9, 1997]



Sec. 730.10  Advisory information.

    The general information in this part is just that--general. To 
achieve brevity, so as to give you a quick overview, the information in 
this part is selective, incomplete, and not expressed with regulatory 
precision. The controlling language is the language of succeeding parts 
of the EAR and of any other laws or regulations referred to or 
applicable. The content of this part is not to be construed as modifying 
or interpreting any other language or as in any way, limiting the 
authority of BXA, any of its components or any other government 
department or agency. You should not take any action based solely on 
what you read in this part.

Supplement No. 1 to Part 730--Information Collection Requirements Under 
            the Paperwork Reduction Act: OMB Control Numbers

    This supplement lists the control numbers assigned to the 
information collection requirements for the Bureau of Export 
Administration by the Office of Management and Budget (OMB), pursuant to 
the Paperwork Reduction Act of 1995. This supplement complies with the 
requirements of section 3506(c)(1)(B)(i) of the Paperwork Reduction Act 
requiring agencies to display current control numbers assigned by the 
Director of OMB for each agency information collection requirement.

------------------------------------------------------------------------
                                            15 CFR part or section where
          Current OMB control No.            collections of information
                                             are identified or described
------------------------------------------------------------------------
0694-0001.................................  Sec.  748.12(d) of the EAR.
0694-0004.................................  Part 768 of the EAR.
0694-0008.................................  Sec.  748.13, Supplement No.
                                             5 to part 748 of the EAR.
0694-0009.................................  Sec.  748.10(e) of the EAR.
0694-0012.................................  Part 760 and Sec.  762.2(b)
                                             of the EAR.
0694-0013.................................  Part 774 of the EAR.
0694-0015.................................  Sec.  773.3 of the EAR.
0694-0016.................................  Secs.  748.13 and 762.2(b)
                                             of the EAR.
0694-0017.................................  Sec.  748.10 of the EAR.
0694-0021.................................  Secs.  748.11 and 762.2(b)
                                             of the EAR.
0694-0023.................................  Secs.  740.3(d) and 740.4(c)
                                             of the EAR.
0694-0025.................................  Secs.  754.4 and 762.2(b) of
                                             the EAR.
0694-0026.................................  Sec.  754.3 of the EAR.
0694-0027.................................  Sec.  754.2 of the EAR.
0694-0029.................................  Sec.  740.4(a) of the EAR.
0694-0030.................................  Supplement No. 2 to part
                                             748, paragraph (p) of the
                                             EAR.
0694-0031.................................  Sec.  750.9 of the EAR.
0694-0032.................................  Sec.  748.4(d)(2) of the
                                             EAR.
0694-0033.................................  Secs.  740.7(b) and 762.2(b)
                                             of the EAR.
0694-0038.................................  Sec.  758.6(e)(2) of the
                                             EAR.
0694-0040.................................  Secs.  758.5(c)(2) and 758.8
                                             of the EAR.
0694-0047.................................  Supplement No. 2 to part
                                             748, paragraph (o)(2) of
                                             the EAR.
0694-0048.................................  Sec.  748.3 of the EAR.
0694-0050.................................  Sec.  752.5(c)(5) of the
                                             EAR.
0694-0051.................................  Sec.  750.10 of the EAR.
0694-0058.................................  Secs.  762.2(b) and 764.5 of
                                             the EAR.
0694-0064.................................  Secs.  748.9 and 762.2(b) of
                                             the EAR.
0694-0065.................................  Sec.  754.4(c) of the EAR of
                                             the EAR.
0694-0073.................................  Sec.  742.12, Supplement No.
                                             3 to part 742, and Sec.
                                             762.2(b) of the EAR.
0694-0078.................................  Supplement No. 1 to part 774
                                             of the EAR.
0694-0086.................................  Supplement No. 1 to part 774
                                             of the EAR.
0694-0088.................................  Parts 746, 748, and 752;
                                             Sec.  762.2(b) of the EAR.
0694-0089.................................  Part 752 and Sec.  762.2(b)
                                             of the EAR.
0694-0093.................................  Secs.  748.10 and 762.2(b)
                                             of the EAR.
0694-0094.................................  Part 758 of the EAR of the
                                             EAR.
0694-0095.................................  Secs.  740.7(a)(3)(ii) and
                                             758.1(d) of the EAR.
0694-0096.................................  Part 760, Sec.  762.6(a) of
                                             the EAR.
0694-0097.................................  Secs.  752.15(b), 758.6, and
                                             762.2(b) of the EAR.
0694-0102.................................  Secs.  754.6 and 754.7 of
                                             the EAR.
0694-0101.................................  Sec.  734.4 of the EAR.
0694-0100.................................  Supplement No. 1 to part
                                             730.
0607-0001.................................  Sec.  758.2(m) of the EAR.
0607-0018.................................  Secs.  740.1(d),
                                             740.3(a)(3), 752.7(b), Sec.
                                              752.15(a) of the EAR.
                                            Secs.  754.2(h) and (i),
                                             754.4(c) 758.1, Secs.
                                             758.2(m) and 758.3 of the
                                             EAR.
0607-0152.................................  Secs.  740.1(d),
                                             740.3(a)(3), 752.7(b),
                                             Secs.  752.15(a) of the
                                             EAR.
                                            Secs.  754.2(h) and (i),
                                             754.4(c), 758.1, Secs.
                                             758.2(m), and 758.3 of the
                                             EAR.
------------------------------------------------------------------------

       Supplement No. 2 to Part 730--Technical Advisory Committees

    (a) Purpose. The purpose of this supplement is to describe the 
procedures and criteria for the establishment and operation of Technical 
Advisory Committees.

[[Page 107]]

    (b) Technical advisory committees. Any producer of articles, 
materials, or supplies, including technology, software, and other 
information, that are subject to export controls, or are being 
considered for such controls because of their significance to the 
national security of the United States, may request the Secretary of 
Commerce to establish a technical advisory committee, under the 
provisions of section 5(h) of the Export Administration Act of 1979, as 
amended (EAA) to advise and assist the Department of Commerce and other 
appropriate U.S. Government agencies or officials with respect to 
questions involving technical matters; worldwide availability and actual 
utilization of production technology; licensing procedures that affect 
the level of export controls applicable to a clearly defined grouping of 
articles, materials, or supplies, including technology, software, or 
other information; and exports and reexports subject to all controls 
that the United States maintains including proposed revisions of any 
such controls. If producers of articles, materials, or supplies, 
including technology, software, and other information, that are subject 
to export controls because of their significance to the national 
security of the United States, wish a trade association or other 
representative to submit a written request on their behalf for the 
appointment to a TAC, such request shall be submitted in accordance with 
paragraph (b)(4) of this supplement.
    (1) Form and substance of requests. Each request for the appointment 
of a TAC shall be submitted in writing to: Assistant Secretary for 
Export Administration, P.O. Box 273, Washington, DC 20044.
    The request shall include:
    (i) A description of the articles, materials, or supplies including 
technology and software, in terms of a clear, cohesive grouping (citing 
the applicable Export Control Classification Numbers where practical);
    (ii) A statement of the reasons for requesting the appointment of a 
TAC; and
    (iii) Any information in support of any contention that may be made 
that the request meets the criteria described in paragraph (b)(2) of 
this supplement.
    (2) Consideration of request for establishment of a TAC. The 
Department of Commerce will review all requests for the establishment of 
a TAC to determine if the following criteria are met:
    (i) That a substantial segment of the industry producing the 
specified articles, materials, or supplies including technology desires 
such a committee; and
    (ii) That the evaluation of such articles, materials, or supplies 
including technology and software for export control purposes is 
difficult because of questions involving technical matters, worldwide 
availability and actual utilization of production and software 
technology, or licensing procedures.
    (3) Requests by a substantial segment of an industry. In determining 
whether or not a substantial segment of any industry has requested the 
appointment of a TAC, the Department of Commerce will consider:
    (i) The number of persons or firms requesting the establishment of a 
TAC for a particular grouping of commodities, software and technology in 
relation to the total number of U.S. producers of such items; and
    (ii) The volume of annual production by such persons or firms of 
each item in the grouping in relation to the total U.S. production. 
Generally, a substantial segment of an industry (for purposes of this 
supplement) shall consist of:
    (A) Not less than 30 percent of the total number of U.S. producers 
of the items concerned; or
    (B) Three or more U.S. producers who produce a combined total of not 
less than 30 percent of the total U.S. annual production, by dollar 
value of the items concerned; or
    (C) Not less than 20 percent of the total number of U.S. producers 
of the items concerned, provided that the total of their annual 
production thereof is not less than 20 percent of the total U.S. annual 
production, by dollar value.
    (iii) If it is determined that a substantial segment of the industry 
concerned has requested the establishment of a TAC concerning a specific 
grouping of items that the Department of Commerce determines difficult 
to evaluate for export control purposes, BXA will establish and use the 
TAC requested.
    (4) Requests from trade associations or other representatives. 
Requests from trade associations or other representatives of U.S. 
producers for the establishment of a TAC must comply with the provisions 
of paragraphs (b) (1) through (3) of this supplement. In addition, in 
order to assist BXA in determining whether the criteria described in 
paragraph (b)(3) of this supplement have been met, a trade association 
or other representative submitting a request for the establishment of a 
TAC should include the following information:
    (i) The total number of firms in the particular industry;
    (ii) The total number of firms in the industry that have authorized 
the trade association or other representative to act in their behalf in 
this matter;
    (iii) The approximate amount of total U.S. annual production by 
dollar value of the items concerned produced by those firms that have 
authorized the trade association or other representative to act in their 
behalf; and
    (iv) A description of the method by which authorization to act on 
behalf of these producers was obtained.
    (5) Nominations for membership on TACs. When the Department of 
Commerce determines that the establishment of a TAC is

[[Page 108]]

warranted, it will request nominations for membership on the committee 
among the producers of the items and from any other sources that may be 
able to suggest well-qualified nominees.
    (6) Selection of industry members of committee. Industry members of 
a TAC will be selected by the Department of Commerce from a list of the 
nominees who have indicated their availability for service on the 
committee. To the extent feasible, the Department of Commerce will 
select a committee balanced to represent all significant facets of the 
industry involved, taking into consideration such factors as the size of 
the firms, their geographical distribution, and their product lines. No 
industry representative shall serve on a TAC for more than four 
consecutive years. The membership of a member who is absent from four 
consecutive meetings shall be terminated.
    (7) Government members. Government members of a TAC will be selected 
by the Department of Commerce from the agencies having an interest in 
the subject matter concerned.
    (8) Invitation to serve on committee. Invitations to serve on a TAC 
will be sent by letter to the selected nominees.
    (9) Election of Chair. The Chair of each TAC shall be elected by a 
vote of the majority of the members of the committee present and voting.
    (c) Charter. (1) No TAC established pursuant to this supplement 
shall meet or take any action until an advisory committee charter has 
been filed with the Assistant Secretary for Export Administration of the 
Department of Commerce and with the standing committees of the Senate 
and of the House of Representatives having legislative jurisdiction over 
the Department. Such charter shall contain the following information:
    (i) The committee's official designation;
    (ii) The committee's objectives and the scope of its activities;
    (iii) The period of time necessary for the committee to carry out 
its purposes;
    (iv) The agency or official to whom the committee reports;
    (v) The agency responsible for providing the necessary support for 
the committee;
    (vi) A description of the duties for which the committee is 
responsible, and, if such duties are not solely advisory, a 
specification of the authority for such functions;
    (vii) The estimated annual operating costs in dollars and years for 
such committee;
    (viii) The estimated number and frequency of committee meetings;
    (ix) The committee's termination date, if less than two years from 
the date of the committee's establishment; and
    (x) The date the charter is filed.
    (d) Meetings. (1) Each TAC established under the provisions of the 
EAA and paragraph (b) of this supplement shall meet at least once every 
three months at the call of its Chair unless it is specifically 
determined by the Chair, in consultation with other members of the 
committee, that a particular meeting is not necessary.
    (2) No TAC may meet except at the call of its Chair.
    (3) Each meeting of a TAC shall be conducted in accordance with an 
agenda approved by a designated Federal government employee.
    (4) No TAC shall conduct a meeting in the absence of a designated 
Federal government employee who shall be authorized to adjourn any 
advisory committee meeting, whenever the Federal government employee 
determines adjournment to be in the public interest.
    (e) Public notice. Notice to the public of each meeting of a TAC 
will be issued at least 20 days in advance and will be published in the 
Federal Register. The notice will include the time and place of the 
meeting and the agenda.
    (f) Public attendance and participation. (1) Any member of the 
public who wishes to do so may file a written statement with any TAC 
before or after any meeting of a committee.
    (2) A request for an opportunity to deliver an oral statement 
relevant to matters on the agenda of a meeting of a TAC will be granted 
to the extent that the time available for the meeting permits. A 
committee may establish procedures requiring such persons to obtain 
advance approval for such participation.
    (3) Attendance at meetings of TACs will be open to the public unless 
it is determined pursuant to section 10(d) of the Federal Advisory 
Committee Act to be necessary to close all, or some portion, of the 
meeting to the public. A determination that a meeting or portion thereof 
be closed to the public may be made if all or a specific portion of a 
meeting of a TAC is concerned with matters described in section 552(b) 
of Title 5, U.S.C.
    (4) Participation by members of the public in open TAC meetings or 
questioning of committee members or other participants shall not be 
permitted except in accordance with procedures established by the 
committee.
    (5) Every effort will be made to accommodate all members of the 
public who wish to attend.
    (g) Minutes. (1) Detailed minutes of each meeting of each TAC will 
be kept and will contain a record of the persons present, a complete and 
accurate description of the matters discussed and conclusions reached, 
and copies of all reports received, issued, or approved by the TAC.
    (2) The accuracy of all the minutes will be certified to by the TAC 
Chair.
    (h) Records. (1) Subject to section 552 of Title 5, U.S.C. and 
Department of Commerce

[[Page 109]]

Administrative Order 205-12, ``Public Information,'' and ``Public 
Information'' regulations issued by the Department of Commerce that are 
contained in 15 CFR part 4, Subtitle A, the records, reports, 
transcripts, minutes, appendices, working papers, draft, studies, 
agenda, or other documents that were made available to or prepared for 
or by each TAC will be available for public inspection and copying.
    (2) Each TAC will prepare once each year a report describing its 
membership, functions, activities, and such related matters as would be 
informative to the public consistent with the policy of section 552(b) 
of Title 5, U.S.C.
    (3)(i) Requests for records should be addressed to: Bureau of Export 
Administration, Freedom of Information, Records Inspection Facility, 
U.S. Department of Commerce, Room 4513, Washington, DC 20230, Telephone 
(202) 482-2593.
    (ii) Rules concerning the use of the Records Inspection Facility are 
contained in 15 CFR part 4, Subtitle A, or may be obtained from this 
facility.
    (i) Compensation. If the Department of Commerce deems it 
appropriate, a member of a TAC may be reimbursed for travel, 
subsistence, and other necessary expenses incurred in connection with 
the member's duties.
    (j) Scope of advisory committee functions. All TACs are limited to 
the functions described in their charters.
    (k) Duration of committees. Each TAC will terminate at the end of 
two years from the date the committee was established or two years from 
the effective date of its most recent extension, whichever is later. 
Committees may be continued only for successive two-year periods by 
appropriate action taken by the authorized officer of the Department of 
Commerce prior to the date on which such advisory committee would 
otherwise terminate. TACs may be extended or terminated only after 
consultation with the committee.
    (l) Miscellaneous. (1) TACs established in accordance with paragraph 
(b) of this supplement must conform to the provisions of the Federal 
Advisory Committee Act (Pub. L. 92-463), Office of Management and Budget 
Circular A-63 (Revision of March 1974), ``Advisory Committee 
Management,'' Department of Commerce Administrative Order 205-12, 
``Public Information,'' the applicable provisions of the EAA, and any 
other applicable Department of Commerce regulations or procedures 
affecting the establishment or operation of advisory committees.
    (2) Whenever the Department of Commerce desires the advice or 
assistance of a particular segment of an industry with respect to any 
export control problem for which the service of a TAC, as described in 
paragraph (b) of this supplement is either unavailable or impracticable, 
an advisory committee may be established pursuant to the provisions of 
section 9 of the Federal Advisory Committee Act. Such committees will be 
subject to the requirements of the Federal Advisory Committee Act, OMB 
Circular A-63 (Revision of March 1974), ``Advisory Committee 
Management,'' Department of Commerce Administrative Order 205-12, 
``Public Information,'' and any other applicable Department of Commerce 
regulations or procedures affecting the establishment or operation of 
advisory committees.
    (3) Nothing in the provisions of this supplement shall be construed 
to restrict in any manner the right of any person or firm to discuss any 
export control matter with the Department of Commerce or to offer advice 
or information on export control matters. Similarly, nothing in these 
provisions shall be construed to restrict the Department of Commerce in 
consulting any person or firm relative to any export control matter.

  Supplement No. 3 to Part 730--Other U.S. Government Departments and 
              Agencies With Export Control Responsibilities

    Note:  The departments and agencies identified with an asterisk 
control exports for foreign policy or national security reasons and, in 
certain cases, such controls may overlap with the controls described in 
the EAR (see part 734 of the EAR).

                  Defense Services and Defense Articles

* Department of State, Office of Defense Trade Controls, Tel. (703) 875-
6644, Fax: (703) 875-6647.
    22 CFR parts 120 through 130.

                     Drugs, Chemicals and Precursors

Drug Enforcement Administration, International Chemical Control Unit, 
Tel. (202) 307-7202, Fax: (202) 307-8570.
    21 CFR parts 1311 through 1313.
Controlled Substances: Drug Enforcement Administration, International 
Drug Unit, Tel. (202) 307-2414, Fax: (202) 307-8570.
    21 CFR 1311 through 1313.
Drugs and Biologics: Food and Drug Administration, Import/Export, Tel. 
(301) 594-3150, Fax: (301) 594-0165.
    21 U.S.C. 301 et seq.
Investigational drugs permitted: Food and Drug Administration, 
International Affairs, Tel. (301) 443-4480, Fax: (301) 443-0235.
    21 CFR 312.1106.

             Fish and Wildlife Controls; Endangered Species

    Department of the Interior, Chief Office of Management Authority, 
Tel. (703) 358-2093, Fax: (703) 358-2280.
    50 CFR 17.21, 17.22, 17.31, 17.32.

[[Page 110]]

                Foreign Assets and Transactions Controls

* Department of Treasury, Office of Foreign Assets Control, Licensing, 
Tel. (202) 622-2480, Fax: (202) 622-1657.
    31 CFR parts 500 through 590.

                             Medical Devices

Food and Drug Administration, Office of Compliance, Tel. (301) 594-4699, 
Fax: (301) 594-4715.
    21 U.S.C. 301 et seq.

                     Natural Gas and Electric Power

Department of Energy, Office of Fuels Programs, Tel. (202) 586-9482, 
Fax: (202) 586-6050.
    10 CFR 205.300 through 205.379 and part 590.

                     Nuclear Materials and Equipment

* Nuclear Regulatory Commission, Office of International Programs, Tel. 
(301) 415-2344, Fax: (301) 415-2395.
    10 CFR part 110.

 Nuclear Technology; Technical Data for Nuclear Weapons/Special Nuclear 
                                Materials

* Department of Energy, Office of Arms Control and Non Proliferation, 
Export Control Division, Tel. (202) 586-2112, Fax: (202) 586-6977.
    10 CFR part 810.

                        Ocean Freight Forwarders

Federal Maritime Commission, Office of Freight Forwarders, Tel. (202) 
523-5843, Fax: (202) 523-5830.
    46 CFR part 510.

                     Patent Filing Data Sent Abroad

* Department of Commerce, Patent and Trademark Office, Licensing and 
Review; Tel. (703) 308-1722, Fax: (703) 305-3603, 3604.
    37 CFR part 5.

    Prohibition of Movement of American Carriers and Prohibition on 
            Transportation of Goods Destined for North Korea

Department of Transportation, Office of International Law, General 
Counsel, Tel. (202) 366-2972, Fax: (202) 366-9188.
    44 CFR part 403.

     U.S. Flagged or U.S. Manufactured Vessels Over 1,000 Gross Tons

U.S. Maritime Administration, Division of Vessel Transfer and Disposal, 
Tel. (202) 366-5821, Fax: (202) 366-3889.
    46 CFR part 221.



PART 732--STEPS FOR USING THE EAR--Table of Contents




Sec.
732.1  Steps overview.
732.2  Steps regarding scope of the EAR.
732.3  Steps regarding the ten general prohibitions.
732.4  Steps regarding License Exceptions.
732.5  Steps regarding Shipper's Export Declaration, Destination Control 
          Statements, record keeping, license applications, and other 
          requirements.
732.6  Steps for other requirements.

Supplement No. 1 to Part 732--Decision Tree
Supplement No. 2 to Part 732--Am I subject to the EAR?
Supplement No. 3 to Part 732--BXA's ``Know Your Customer'' Guidance and 
          Red Flags

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O. 
12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 3 CFR, 1995 
Comp., p. 228; Notice of August 15, 1995, 3 CFR, 1995 Comp., p. 501; 
Notice of August 14, 1996, 3 CFR, 1996 Comp., p. 298; and Notice of 
August 13, 1997 (62 FR 43629, August 15, 1997).

    Source: 61 FR 12740, Mar. 25, 1996, unless otherwise noted.



Sec. 732.1  Steps overview.

    (a)(1) Introduction. In this part, references to the EAR are 
references to 15 CFR chapter VII, subchapter C. This part is intended to 
help you determine your obligations under the EAR by listing logical 
steps in Sec. 732.2 through Sec. 732.5 of this part that you can take in 
reviewing these regulations. A flow chart describing these steps is 
contained in Supplement No. 1 to part 732. By cross-references to the 
relevant provisions of the EAR, this part describes the suggested steps 
for you to determine applicability of the following:
    (i) The scope of the EAR (part 734 of the EAR);
    (ii) Each of the general prohibitions (part 736 of the EAR);
    (iii) The License Exceptions (part 740 of the EAR); and
    (iv) Other requirements such as clearing your export with the U.S. 
Customs Service, keeping records, and completing and documenting license 
applications.
    (2) These steps describe the organization of the EAR, the 
relationship among the provisions of the EAR, and the appropriate order 
for you to consider the various provisions of the EAR.
    (b) Facts about your transaction. The following five types of facts 
determine

[[Page 111]]

your obligations under the EAR and will be of help to you in reviewing 
these steps:
    (1) What is it? What an item is, for export control purposes, 
depends on its classification, which is its place on the Commerce 
Control List (see part 774 of the EAR).
    (2) Where is it going? The country of ultimate destination for an 
export or reexport also determines licensing requirements (see parts 738 
and 774 of the EAR concerning the Country Chart and the Commerce Control 
List).
    (3) Who will receive it? The ultimate end-user of your item cannot 
be a bad end-user. See General Prohibition Four (Denial Orders) in 
Sec. 736.2(b)(4) and parts 744 and 764 of the EAR for a reference to the 
list of persons you may not deal with.
    (4) What will they do with it? The ultimate end-use of your item 
cannot be a bad end-use. See General Prohibition Five (End-Use End-User) 
in Sec. 736.2(b)(5) and part 744 of the EAR for general end-use and end-
user restrictions.
    (5) What else do they do? Conduct such as contracting, financing, 
and freight forwarding in support of a proliferation project (as 
described in Sec. 744.6 of the EAR) may prevent you from dealing with 
someone.
    (c) Are your items and activities subject to the EAR? You should 
first determine whether your commodity, software, or technology is 
subject to the EAR (see part 734 of the EAR concerning scope), and Steps 
1 through 6 help you do that. For exports from the United States, only 
Steps 1 and 2 are relevant. If you already know that your item or 
activity is subject to the EAR, you should go on to consider the ten 
general prohibitions in part 736 of the EAR. If your item or activity is 
not subject to the EAR, you have no obligations under the EAR and may 
skip the remaining steps.
    (d) Does your item or activity require a license under one or more 
of the ten general prohibitions? (1) Brief summary of the ten general 
prohibitions. The general prohibitions are found in part 736 of the EAR 
and referred to in these steps. They consist, very briefly, of the 
following:
    (i) General Prohibition One (Exports and Reexports): Export and 
reexport of controlled items to listed countries.
    (ii) General Prohibition Two (Parts and Components Reexports): 
Reexport and export from abroad of foreign-made items incorporating more 
than a de minimis amount of controlled U.S. content.
    (iii) General Prohibition Three (Foreign-produced Direct Product 
Reexports): Reexport and export from abroad of the foreign-produced 
direct product of U.S. technology and software.
    (iv) General Prohibition Four (Denial Orders): Engaging in actions 
prohibited by a denial order.
    (v) General Prohibition Five (End-Use End-User): Export or reexport 
to prohibited end-user or end-users.
    (vi) General Prohibition Six (Embargo): Export or reexport to 
embargoed destinations.
    (vii) General Prohibition Seven (U.S. Person Proliferation 
Activity): Support of proliferation activities.
    (viii) General Prohibition Eight (In-Transit): In-transit shipments 
and items to be unladen from vessels and aircraft.
    (ix) General Prohibition Nine (Orders, Terms and Conditions): 
Violation of any orders, terms, or conditions.
    (x) General Prohibition Ten (Knowledge Violation to Occur): 
Proceeding with transactions with knowledge that a violation has 
occurred or is about to occur.
    (2) Controls on items on the Commerce Control List (CCL). If your 
item or activity is subject to the EAR, you should determine whether any 
one or more of the ten general prohibitions require a license for your 
export, reexport, or activity. Steps 7 through 11 refer to 
classification of your item on the Commerce Control List (CCL) (part 774 
of the EAR) and how to use the Country Chart (Supplement No. 1 to part 
738 of the EAR) to determine whether a license is required based upon 
the classification of your item. These steps refer to General 
Prohibitions One (Exports and Reexports), Two (Parts and Components 
Reexports), and Three (Foreign-Produced Direct Product Reexports) for 
all countries except: Cuba, Iran, Iraq, Libya,

[[Page 112]]

and North Korea. For these countries, you may skip Steps 7 through 11 
and go directly to Step 12.
    (3) Controls on activities. Steps 12 through 18 refer to General 
Prohibitions Four through Ten. Those general prohibitions apply to all 
items subject to the EAR, not merely those items listed on the CCL in 
part 774 of the EAR. For example, they refer to the general prohibitions 
for persons denied export privileges, prohibited end-uses and end-users, 
embargoed countries (e.g., Cuba, Iran, Iraq, Libya, and North Korea), 
prohibited activities of U.S. persons in support of proliferation of 
weapons of mass destruction, prohibited unlading of shipments, 
compliance with orders, terms and conditions, and activities when a 
violation has occurred or is about to occur.
    (4) General prohibitions. If none of the ten general prohibitions 
applies, you should skip the steps concerning License Exceptions and for 
exports from the United States, review Steps 27 through 29 concerning 
Shipper's Export Declarations to be filed with the U.S. Customs Service, 
Destination Control Statements for export control documents, and 
recordkeeping requirements.
    (e) Is a License Exception available to overcome the license 
requirement? If you decide by reviewing the CCL in combination with the 
Country Chart that a license is required for your destination, you 
should determine whether a License Exception will except you from that 
requirement. Steps 20 through 24 help you determine whether a License 
Exception is available. Note that generally License Exceptions are not 
available to overcome General Prohibitions Four through Ten. However, 
selected License Exceptions for embargoed destinations are specified in 
part 746 of the EAR and License Exceptions for short supply controls are 
specified in part 754 of the EAR. If a License Exception is available 
and the export is from the United States, you should review Steps 26 
through 28 concerning Shipper's Export Declarations to be filed with the 
U.S. Customs Service, Destination Control Statements for export control 
documents and recordkeeping requirements. If a License Exception is not 
available, go on to Steps 25 through 29.
    (f) How do you apply for a license? If you must file a license 
application, you should review the requirements of part 748 of the EAR 
as suggested by Step 26. Then you should review Steps 27 through 29 
concerning Shipper's Export Declarations to be filed with the U.S. 
Customs Service, Destination Control Statements for export control 
documents, and recordkeeping requirements.

[61 FR 12740, Mar. 25, 1996, as amended at 62 FR 25453, May 9, 1997]



Sec. 732.2  Steps regarding scope of the EAR.

    Steps 1 though 6 are designed to aid you in determining the scope of 
the EAR. A flow chart describing these steps is contained in Supplement 
No. 2 to part 732.
    (a) Step 1: Items subject to the exclusive jurisdiction of another 
Federal agency. This step is relevant for both exports and reexports. 
Determine whether your item is subject to the exclusive jurisdiction of 
another Federal Agency as provided in Sec. 734.3 of the EAR.
    (1) If your item is subject to the exclusive jurisdiction of another 
Federal agency, comply with the regulations of that agency. You need not 
comply with the EAR and may skip the remaining steps.
    (2) If your item is not subject to the exclusive jurisdiction of 
another federal agency, then proceed to Step 2 in paragraph (b) of this 
section.
    (b) Step 2: Publicly available technology and software. This step is 
relevant for both exports and reexports. Determine if your technology or 
software is publicly available as defined and explained at part 734 of 
the EAR. Supplement No. 1 to part 734 of the EAR contains several 
practical examples describing publicly available technology and software 
that is outside the scope of the EAR. The examples are illustrative, not 
comprehensive. Note that encryption software controlled for EI reasons 
under ECCN 5D002 on the Commerce Control List (refer to Supplement No.1 
to part 774 of the EAR) shall be subject to the EAR even if publicly 
available. Accordingly, the provisions of the EAR concerning the public 
availability of items

[[Page 113]]

are not applicable to encryption items controlled for ``EI'' reasons 
under ECCN 5D002.
    (1) If your technology or software is publicly available, and 
therefore outside the scope of the EAR, you may proceed with the export 
or reexport if you are not a U.S. person subject to General Prohibition 
Seven. If you are a U.S. person, go to Step 15 at Sec. 732.3(j) of this 
part. If you are a U.S. person and General Prohibition Seven concerning 
proliferation activity of U.S. persons does not apply, then you may 
proceed with the export or reexport of your publicly available 
technology or software. Note that all U.S. persons are subject to the 
provisions of General Prohibition Seven.
    (2) If your technology or software is not publicly available and you 
are exporting from the United States, skip to Step 7 in Sec. 732.3(b) of 
this part concerning the general prohibitions.
    (3) If you are exporting items from a foreign country, you should 
then proceed to Step 3 in paragraph (c) of this section and the other 
steps concerning the scope of the EAR.
    (c) Step 3: Reexport of U.S.-origin items. This step is appropriate 
only for reexporters. For an item in a foreign country, you should 
determine whether the item is of U.S. origin. If it is of U.S.-origin, 
skip to Step 7 in Sec. 732.3(b) of this part. If it is not of U.S. 
origin, then proceed to Step 4 in paragraph (d) of this section.
    (d) Step 4: Foreign-made items incorporating less than the de 
minimis level of U.S. parts, components, and materials. This step is 
appropriate only for items that are made outside the United States and 
not currently in the U.S. Note that encryption items controlled for EI 
reasons under ECCNs 5A002, 5D002 or 5E002 on the Commerce Control List 
(refer to Supplement No. 1 to part 774 of the EAR) shall be subject to 
the EAR even if they incorporate less than the de minimis level of U.S. 
content. Accordingly, the provisions of the EAR concerning de minimis 
levels are not applicable to encryption items controlled for ``EI'' 
reasons under ECCNs 5A002, 5D002, or 5E002.
    (1) For an item made in a foreign country, you should determine 
whether controlled U.S.-origin parts, components, or materials are 
incorporated as provided in Sec. 734.4 of the EAR. Also, determine the 
value of the U.S.-origin controlled content as provided in Supplement 
No. 2 to part 734 of the EAR.
    (2) To determine the value of the U.S.-origin controlled content, 
you should classify the U.S.-origin content on the CCL, determine those 
items that would require a license from BXA for reexport to the ultimate 
destination of the foreign-made product if such parts, components, or 
materials were reexported to that destination in the form received, and 
divide the total value of the controlled U.S. parts, components, and 
materials incorporated into the foreign-made item by the sale price of 
the foreign-made item.
    (3) If no U.S. parts, components, or materials are incorporated or 
if the incorporated U.S. parts, components, and materials are below the 
de minimis level described in Sec. 734.4 of the EAR, then the foreign-
made item is not subject to the EAR by reason of the parts and 
components rule, the classification of a foreign-made item is irrelevant 
in determining the scope of the EAR, and you should skip Step 4 and go 
on to consider Step 6 regarding the foreign-produced direct product 
rule.
    (4) If controlled parts, components, or materials are incorporated 
and are above the de minimis level, then you should go on to Step 5.
    (e) Step 5: Foreign-made items incorporating more than the de 
minimis level of U.S. parts, components, or materials. This step is 
appropriate only for foreign-made items incorporating certain U.S. 
parts. If the incorporated U.S. parts exceed the relevant de minimis 
level, then your export from abroad is subject to the EAR. You then 
should skip to Step 7 at Sec. 732.3 of this part and consider the steps 
regarding all other general prohibitions, License Exceptions, and other 
requirements.
    (f) Step 6: Foreign-made items produced with certain U.S. technology 
for export to specified destinations. This step is appropriate for 
foreign-made items in foreign countries.
    (1) If your foreign-produced item is described in an entry on the 
CCL and the Country Chart requires a license to your export or reexport 
destination for national security reasons, you should

[[Page 114]]

determine whether your item is subject to General Prohibition Three 
(Foreign-Produced Direct Product Reexports) (Sec. 736.2(b)(3) of the 
EAR). Your item is subject to the EAR if it is captured by General 
Prohibition Three (Foreign-Produced Direct Product Reexports), and that 
prohibition applies if your transaction meets each of the following 
conditions:
    (i) Country scope of prohibition. Your export or reexport 
destination for the direct product is Cuba, North Korea, Libya, or a 
destination in Country Group D:1 (see Supplement No. 1 to part 740 of 
the EAR) (reexports of foreign-produced direct products exported to 
other destinations are not subject to General Prohibition Three);
    (ii) Scope of technology or software used to create direct products 
subject to the prohibition. Technology or software that was used to 
create the foreign-produced direct product, and such technology or 
software that was subject to the EAR and required a written assurance as 
a supporting document for a license or as a precondition for the use of 
License Exception TSR in Sec. 740.6 of the EAR (reexports of foreign-
produced direct products created with other technology and software are 
not subject to General Prohibition Three); and
    (iii) Scope of direct products subject to the prohibition. The 
foreign-produced direct products are subject to national security 
controls as designated on the proper ECCN of the Commerce Control List 
in part 774 of the EAR (reexports of foreign-produced direct products 
not subject to national security controls are not subject to General 
Prohibition Three).
    (2) License Exceptions. Each License Exception described in part 740 
of the EAR overcomes this General Prohibition Three if all terms and 
conditions of a given License Exception are met by the exporter or 
reexporter.
    (3) Subject to the EAR. If your item is captured by the foreign-
produced direct product control at General Prohibition Three, then your 
export from abroad is subject to the EAR. You should next consider the 
steps regarding all other general prohibitions, License Exceptions, and 
other requirements. If your item is not captured by General Prohibition 
Three, then your export from abroad is not subject to the EAR. You have 
completed the steps necessary to determine whether your transaction is 
subject to the EAR, and you may skip the remaining steps. Note that in 
summary, items in foreign countries are subject to the EAR when they 
are:
    (i) U.S.-origin commodities, software and technology unless 
controlled for export exclusively by another Federal agency or unless 
publicly available;
    (ii) Foreign-origin commodities, software, and technology that are 
within the scope of General Prohibition Two (Parts and Components 
Reexports), or General Prohibition Three (Foreign-Produced Direct 
Product Reexports). (However, such foreign-made items are also outside 
the scope of the EAR if they are controlled for export exclusively by 
another Federal agency or publicly available.)

[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 61 
FR 68577, Dec. 30, 1996; 62 FR 25453, May 9, 1997; 63 FR 50520, Sept. 
22, 1998]



Sec. 732.3  Steps regarding the ten general prohibitions.

    (a) Introduction. If your item or activity is subject to the scope 
of the EAR, you should then consider each of the ten general 
prohibitions listed in part 736 of the EAR. General Prohibitions One 
((Exports and Reexports), Two (Parts and Components Reexports), and 
Three (Foreign-Produced Direct Product Reexports) (Sec. 736.2(b) (1), 
(2), and (3) of the EAR) are product controls that are shaped and 
limited by parameters specified on the CCL and Country Chart. General 
Prohibitions Four through Ten are prohibitions on certain activities 
that are not allowed without authorization from BXA, and these 
prohibitions apply to all items subject to the EAR unless otherwise 
specified (Sec. 736.2(b) (4) through (10) of the EAR).
    (b) Step 7: Classification. (1) You should classify your items in 
the relevant entry on the CCL, and you may do so on your own without the 
assistance of BXA. You are responsible for doing so correctly, and your 
failure to correctly classify your items does not relieve you of the 
obligation to obtain

[[Page 115]]

a license when one is required by the EAR.
    (2) You have a right to request the applicable classification of 
your item from BXA, and BXA has a duty to provide that classification to 
you. For further information on how to obtain classification assistance 
from BXA, see part 748 of the EAR.
    (3) For items subject to the EAR but not listed on the CCL, the 
proper classification is EAR99. This number is a ``basket'' for items 
not specified under any CCL entry and appears at the end of each 
Category on the CCL.
    (c) Step 8: Country of ultimate destination. You should determine 
the country of ultimate destination. The country of destination 
determines the applicability of several general prohibitions, License 
Exceptions, and other requirements. Note that part 754 of the EAR 
concerning short supply controls is self-contained and is the only 
location in the EAR that contains both the prohibitions and exceptions 
applicable to short supply controls.
    (d) Step 9: Reason for control and the Country Chart. (1) Reason for 
control and column identifier within the Export Control Classification 
Number (ECCN). Once you have determined that your item is controlled by 
a specific ECCN, you must use information contained in the ``License 
Requirements'' section of that ECCN in combination with the Country 
Chart to decide whether a license is required under General Prohibitions 
One, Two, or Three to a particular destination. The CCL and the Country 
Chart are taken together to define these license requirements. The 
applicable ECCN will indicate the reason or reasons for control for 
items within that ECCN. For example, ECCN 6A007 is controlled for 
national security, missile technology, and anti-terrorism reasons.
    (2) Reason for control within the Country Chart. With each of the 
applicable Country Chart column identifiers noted in the correct ECCN, 
turn to the Country Chart. Locate the correct Country Chart column 
identifier on the horizontal axis, and determine whether an ``X'' is 
marked in the cell next to the destination in question. Consult 
Sec. 738.4 of the EAR for comprehensive instructions on using the 
Country Chart and a detailed example.
    (i) An ``X'' in the cell or cells for the relevant country and 
reason(s) for control column indicates that a license is required for 
General Prohibitions One (Exports and Reexports in the Form Received), 
Two (Parts and Components Reexports), and Three (Foreign-Produced Direct 
Product Reexports). (See Sec. 736.2 (b)(1), (b)(2), and (b)(3) of the 
EAR).
    (ii) If one or more cells have an ``X'' in the relevant column, a 
license is required unless you qualify for a License Exception described 
in part 740 of the EAR. If a cell does not contain an ``X'' for your 
destination in one or more relevant columns, a license is not required 
under the CCL and the Country Chart.
    (iii) Additional controls may apply to your export. You must go on 
to steps 12 through 18 described in paragraphs (g) to (m) of this 
section to determine whether additional limits described in General 
Prohibition Two (Parts and Components Reexports) and General Prohibition 
Three (Foreign-Produced Direct Product Reexports ) apply to your 
proposed transaction. If you are exporting an item from the United 
States, you should skip Step 10 and Step 11. Proceed directly to Step 12 
in paragraph (g) of this section.
    (3) License requirements not on the Country Chart. There are two 
instances where the Country Chart cannot be used to determine if a 
license is required. Items controlled for short supply reasons are not 
governed by the Country Chart. Part 754 of the EAR contains license 
requirements and License Exceptions for items subject to short supply 
controls. A limited number of ECCNs contained on the CCL do not identify 
a Country Chart column identifier. In these instances, the ECCN states 
whether a license is required and for which destinations. See 
Sec. 738.3(a) of the EAR for a list of the ECCNs for which you do not 
need to consult the Country Chart to determine licensing requirements.
    (4) Destinations subject to embargo provisions. The Country Chart 
does not apply to Cuba, Iran, Iraq, Libya, and North Korea; and for 
those countries

[[Page 116]]

you should review the embargo provisions at part 746 of the EAR and may 
skip this step concerning the Country Chart. For Angola, Bosnia-
Herzegovina, Croatia, Rwanda, and Serbia and Montenegro the Country 
Chart provides for certain license requirements, and part 746 of the EAR 
provides additional requirements.
    (5) Items subject to the EAR but not on the CCL. Items subject to 
the EAR that are not on the CCL are properly classified EAR99. For such 
items, you may skip this step and proceed directly with Step 12 in 
paragraph (g) of this section.
    (e) Step 10: Foreign-made items incorporating U.S.-origin items and 
the de minimis rule. (1) Parts and components rule. The following 
considerations are appropriate for items abroad and are the same steps 
necessary to determine whether a foreign-made item incorporating U.S. 
parts, components, or materials is subject to the EAR. If your foreign-
made item is described in an entry on the CCL and the Country Chart 
requires a license to your export or reexport destination, you should 
determine whether the controlled U.S.-origin commodities, software, or 
technology incorporated into the foreign-made item exceeds the de 
minimis level applicable to the ultimate destination of the foreign-made 
item, as follows:
    (i) A 10% de minimis level to embargoed and terrorist-supporting 
countries; or
    (ii) A 25% de minimis level to all other countries.
    (2) Guidance for calculations. For guidance on how to calculate the 
U.S.-controlled content, refer to Supplement No. 2 to part 734 of the 
EAR. Note that certain rules issued by the Office of Foreign Assets 
Control, certain exports from abroad by U.S.-owned or controlled 
entities may be prohibited notwithstanding the de minimis provisions of 
the EAR. In addition, the de minimis exclusions from the parts and 
components rule do not relieve U.S. persons of the obligation to refrain 
from supporting the proliferation of weapons of mass-destruction and 
missiles as provided in General Prohibition Seven (U.S. Person 
Proliferation Activity) described in Sec. 736.2(b)(7) of the EAR. Note 
that encryption items controlled for EI reasons under ECCNs 5A002, 5D002 
or 5E002 on the Commerce Control List (refer to Supplement No.1 to part 
774 of the EAR) shall be subject to the EAR even if they incorporate 
less than the de minimis level of U.S. content. Accordingly, the 
provisions of the EAR concerning de minimis levels are not applicable to 
encryption items controlled for ``EI'' reasons under ECCN 5A002, ECCN 
5D002, or ECCN 5E002.
    (f) Step 11: Foreign-produced direct product. The following 
considerations are appropriate for items abroad and are the same 
considerations necessary to determine whether a foreign-produced direct 
product is subject to the EAR under Step 6 in Sec. 732.2(f) of this 
part.
    (1) If your foreign-produced item is described in an entry on the 
CCL and the Country Chart requires a license to your export or reexport 
destination for national security reasons, you must determine whether 
your item is subject to General Prohibition Three (Foreign-Produced 
Direct Product Reexports) (Sec. 736.2(b)(3) of the EAR). Your item is 
subject to this general prohibition if your transaction meets each of 
the following conditions:
    (i) Country scope of prohibition. Your export or reexport 
destination for the direct product is Cuba, Libya, North Korea, or a 
destination in Country Group D:1 (see Supplement No. 1 to part 740 of 
the EAR) (reexports of foreign-produced direct products exported to 
other destinations are not subject to General Prohibition Three 
described in Sec. 736.2(b)(3) of the EAR);
    (ii) Scope of technology or software used to create direct products 
subject to the prohibition. Technology or software that was used to 
create the foreign-produced direct product, and such technology or 
software that was subject to the EAR and required a written assurance as 
a supporting document for a license or as a precondition for the use of 
License Exception TSR in Sec. 740.6 of the EAR (reexports of foreign-
produced direct products created with other technology and software are 
not subject to General Prohibition Three); and
    (iii) Scope of direct products subject to the prohibition. The 
foreign-produced direct products are controlled for national security 
reasons indicated in an ECCN on the CCL (reexports of foreign-

[[Page 117]]

produced direct products not subject to national security controls are 
not subject to General Prohibition Three).
    (2) License Exceptions. Each License Exception described in part 740 
of the EAR overcomes General Prohibition Three (Foreign-Produced Direct 
Product Reexports) if all terms and conditions of a given License 
Exception are met by the exporter or reexporter.
    (g) Step 12: Persons denied export privileges. (1) Determine whether 
your transferee, ultimate end-user, any intermediate consignee, or any 
other party to a transaction is a person denied export privileges. (See 
part 764 of the EAR). While it is not a violation of General Prohibition 
Four (Denial Orders) (Sec. 736.2(b)(4) of the EAR) to fail to check the 
Denied Persons List prior to a transfer, it is nonetheless a violation 
of the EAR to engage in any activity that violates the terms or 
conditions of a denial order. General Prohibition Four (Denial Orders) 
applies to all items subject to the EAR, i.e. both items on the CCL and 
within EAR99.
    (2) There are no License Exceptions to General Prohibition Four 
(Denial Orders). The prohibition concerning persons denied export 
privileges may be overcome only by a specific authorization from BXA, 
something that is rarely granted.
    (h) STEP 13: Prohibited end-uses and end-users. (1) Review the end-
uses and end-users prohibited under General Prohibition Five (End-Use 
and End-User) (Sec. 736.2(b)(5) of the EAR) described in part 744 of the 
EAR. Part 744 of the EAR contains all the end-use and end-user license 
requirements, and those are in addition to the license requirements 
under General Prohibitions One (Exports and Reexports), Two (Parts and 
Components Reexports), and Three (Foreign-produced Direct Product 
Reexports). Unless otherwise indicated, the license requirements of 
General Prohibition Five (End-Use and End-User) described in part 744 of 
the EAR apply to all items subject to the EAR, i.e. both items on the 
CCL and within EAR99. Moreover, the requirements of General Prohibition 
Five (End-Use and End-User) are in addition to various end-use and end-
user limitations placed on certain License Exceptions.
    (2) Under License Exception TSU (Sec. 740.13 of the EAR), 
operational technology and software (OTS), sales technology (STS), and 
software updates (SUD) overcome General Prohibition Five (End-Use and 
End-User) (Sec. 736.2(b)(5) of the EAR) if all terms and conditions of 
these provisions are met by the exporter or reexporter.
    (i) Step 14: Embargoed countries and special destinations. If your 
destination for any item is Bosnia-Herzegovina, Croatia, Cuba, Iran, 
Iraq, Libya, North Korea, Rwanda, or Serbia and Montenegro, you must 
consider the requirements of part 746 of the EAR. Unless otherwise 
indicated, General Prohibition Six (Embargo) applies to all items 
subject to the EAR, i.e. both items on the CCL and within EAR99. You may 
not make an export or reexport contrary to the provisions of part 746 of 
the EAR without a license unless:
    (1) You are exporting or reexporting only publicly available 
technology or software or other items outside the scope of the EAR, or
    (2) You qualify for a License Exception referenced in part 746 of 
the EAR concerning embargoed destinations. You may not use a License 
Exception described in part 740 of the EAR to overcome General 
Prohibition Six (Embargo) (Sec. 736.2(b)(6) of the EAR) unless it is 
specifically authorized in part 746 of the EAR. Note that part 754 of 
the EAR concerning short supply controls is self-contained and is the 
only location in the EAR for both the prohibitions and exceptions 
applicable to short supply controls.
    (j) Step 15: Proliferation activity of U.S. persons unrelated to 
exports and reexports. (1) Review the scope of activity prohibited by 
General Prohibition Seven (U.S. Person Proliferation Activity) 
(Sec. 736.2(b)(7) of the EAR) as that activity is described in 
Sec. 744.6 of the EAR. Keep in mind that such activity is not limited to 
exports and reexports and is not limited to items subject to General 
Prohibition One (Exports and Reexports), Two (Parts and Components 
Reexports), and Three (Foreign-Produced Direct Product Reexports). 
Moreover, such activity extends to services and dealing in wholly 
foreign-origin items in support of the specified proliferation

[[Page 118]]

activity and is not limited to items listed on the CCL or included in 
EAR99.
    (2) Review the definition of U.S. Person in part 744 of the EAR.
    (k) Step 16: In-transit. Shippers and operators of vessels or 
aircraft should review General Prohibition Eight (In-Transit) to 
determine the countries in which you may not unladen or ship certain 
items in-transit. General Prohibition Eight applies to all items subject 
to the EAR, i.e. both items on the CCL and within EAR99.
    (l) Step 17: Review orders, terms, and conditions. Review the 
orders, terms, and conditions applicable to your transaction. General 
Prohibition Nine (Orders, Terms, and Conditions) prohibits the violation 
of any orders, terms, and conditions imposed under the EAR. Terms and 
conditions are frequently contained in licenses. In addition, the ten 
general prohibitions (part 736 of the EAR) and the License Exceptions 
(part 740 of the EAR) impose terms and conditions or limitations on your 
proposed transactions and use of License Exceptions. A given license or 
License Exception may not be used unless each relevant term or condition 
is met.
    (m) Step 18: Review the ``Know Your Customer'' Guidance and General 
Prohibition Ten (Knowledge Violation to Occur). License requirements 
under the EAR are determined solely by the classification, end-use, end-
user, ultimate destination, and conduct of U.S. persons. Supplement No. 
1 to part 732 of the EAR is intended to provide helpful guidance 
regarding the process for the evaluation of information about customers, 
end-uses, and end-users. General Prohibition Ten (Knowledge Violation to 
Occur) prohibits anyone from proceeding with a transaction with 
knowledge that a violation of the EAR has occurred or is about to occur. 
It also prohibits related shipping, financing, and other services. 
General Prohibition Ten applies to all items subject to the EAR, i.e. 
both items on the CCL and within EAR99.
    (n) Step 19: Complete the review of the general prohibitions. After 
completion of Steps described in this section and review of all ten 
general prohibitions in part 736 of the EAR, including cross-referenced 
regulations in the EAR, you will know which, if any, of the ten general 
prohibitions of the EAR apply to you and your contemplated transaction 
or activity.
    (1) If none of the ten general prohibitions is applicable to your 
export from the United States, no license from BXA is required, you do 
not need to qualify for a License Exception under part 740 of the EAR. 
You should skip the Steps in Sec. 732.4 of this part regarding License 
Exceptions and proceed directly to the Steps in Sec. 732.5 of this part 
regarding recordkeeping, clearing the U.S. Customs Service with the 
appropriate Shipper's Export Declaration, and using the required 
Destination Control Statement.
    (2) If none of the ten general prohibitions is applicable to your 
reexport or export from abroad, no license is required and you should 
skip all remaining Steps.
    (3) If one or more of the ten general prohibitions are applicable, 
continue with the remaining steps.

[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 61 
FR 68577, Dec. 30, 1996; 62 FR 25453, May 9, 1997; 63 FR 50520, Sept. 
22, 1998]



Sec. 732.4  Steps regarding License Exceptions.

    (a) Introduction to Steps for License Exceptions. If your export or 
reexport is subject to the EAR and is subject to General Prohibitions 
One (Exports and Reexports), Two (Parts and Components Reexports), or 
Three (Foreign-Produced Direct Product Reexports), consider the steps 
listed in paragraph (b) of this section. If your export or reexport is 
subject to General Prohibitions Four (Denial Orders), Seven (U.S. Person 
Proliferation Activity), Eight (In-Transit), Nine (Orders, Terms, and 
Conditions), or Ten (Knowledge Violation to Occur), there are no License 
Exceptions available for your export or reexport. If your export is 
subject to General Prohibition Five (End-Use End-User), consult part 744 
of the EAR. If your export or reexport is subject to General Prohibition 
Six (Embargo), consult part 746 of the EAR for applicable License 
Exceptions.
    (b) Steps for License Exceptions. (1) Step 20: Applicability of 
General Prohibitions. Determine whether any one or

[[Page 119]]

more of the general prohibitions described in Sec. 736.2(b) of the EAR 
apply to your export or reexport. If no general prohibition applies to 
your export or reexport, then you may proceed with your export or 
reexport and need not review part 740 of the EAR regarding License 
Exceptions. You are reminded of your recordkeeping obligations related 
to the clearance of the U.S. Customs Service provided in parts 762 and 
758 of the EAR.
    (2) Step 21: Applicability of restrictions on all License 
Exceptions. Determine whether any one or more of the restrictions in 
Sec. 740.2 of the EAR applies to your export or reexport. If any one or 
more of these restrictions apply, there are no License Exceptions 
available to you, and you must either obtain a license or refrain from 
the export or reexport.
    (3) Step 22: Terms and conditions of the License Exceptions. (i) If 
none of the restrictions in Sec. 740.2 of the EAR applies, then review 
each of the License Exceptions to determine whether any one of them 
authorizes your export or reexport. Eligibility for License Exceptions 
is based on the item, the country of ultimate destination, the end-use, 
and the end-user, along with any special conditions imposed within a 
specific License Exception.
    (ii) You may meet the conditions for more than one License 
Exception. Moreover, although you may not qualify for some License 
Exceptions you may qualify for others. Review the broadest License 
Exceptions first, and use any License Exception available to you. You 
are not required to use the most restrictive applicable License 
Exception. If you fail to qualify for the License Exception that you 
first consider, you may consider any other License Exception until you 
have determined that no License Exception is available.
    (iii) License Exceptions TMP, RPL, BAG, AVS, GOV, and TSU authorize 
exports notwithstanding the provisions of the CCL. List-based License 
Exceptions (LVS, GBS, CIV, TSR, and CTP) are available only to the 
extent specified on the CCL. Part 740 of the EAR provides authorization 
for reexports only to the extent each License Exception expressly 
authorizes reexports. License Exception APR authorizes reexports only.
    (iv) If you are exporting under License Exceptions GBS, CIV, LVS, 
CTP, TSR, or GOV, you should review Sec. 743.1 of the EAR to determine 
the applicability of certain reporting requirements.
    (4) Step 23: Scope of License Exceptions. Some License Exceptions 
are limited by country or by type of item.
    (i) Countries are arranged in country groups for ease of reference. 
For a listing of country groups, please refer to Supplement No. 1 to 
part 740 of the EAR. Unless otherwise indicated in a License Exception, 
License Exceptions do not apply to any exports or reexports to embargoed 
destinations. If your export or reexport is subject to General 
Prohibition Six (Embargo) for embargoed destinations, License Exceptions 
are only available to the extent specifically provided in part 746 of 
the EAR concerning embargoed destinations.
    (ii) Special commodity controls apply to short supply items. No 
License Exceptions described in part 740 of the EAR may be used for 
items listed on the CCL as controlled for Short Supply reasons. License 
Exceptions for short supply items are found in part 754 of the EAR.
    (5) Step 24: Compliance with all terms and conditions. If a License 
Exception is available, you may proceed with your export or reexport. 
However, you must meet all the terms and conditions required by the 
License Exception that you determined authorized your export or 
reexport. You must also consult part 758 and 762 of the EAR to determine 
your recordkeeping and documentation requirements.
    (6) Step 25: License requirements. If no License Exception is 
available, then you must either obtain a license before proceeding with 
your export or reexport or you must refrain from the proposed export or 
reexport.
    (7) Step 26: License applications. If you are going to file a 
license application with BXA, you should first review the requirements 
at part 748 of the EAR. Exporters, reexporters, and exporters

[[Page 120]]

from abroad should review the instructions concerning applications and 
required support documents prior to submitting an application for a 
license.

[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 63 
FR 2456, Jan. 15, 1998]



Sec. 732.5  Steps regarding Shipper's Export Declaration, Destination Control Statements, record keeping, license applications, and other requirements.

    (a) Step 27--Shipper's Export Declaration. You should review 
Sec. 758.3 of the EAR to determine what notations you must enter on the 
Shipper's Export Declaration (SED). These steps should be reviewed by 
exporters. Reexporters and firms exporting from abroad may skip Steps 27 
through 29 and proceed directly to Sec. 732.6 of this part.
    (1) NLR. The term ``NLR'' represents exports of listed items when no 
license is required. Such exports do not require that you qualify for a 
License Exception. The symbol ``NLR'' is required on the SED under two 
circumstances. First, NLR is the correct symbol when exporting an item 
subject to the EAR not listed on the CCL. Such items are classified 
EAR99. Secondly, certain items are listed on the CCL but do not require 
a license to all destinations under General Prohibitions One (Exports 
and Reexports in the Form Received), Two (Parts and Components 
Reexports), or Three (Foreign-Produced Direct Product Reexports) 
(Sec. 736.2 (b)(1), (b)(2), or (b)(3) of the EAR). Such items do not 
have an ``X'' in the appropriate cell on the Country Chart. If General 
Prohibitions Four through Ten (Sec. 736.2 (b)(4) of the EAR) through 
(b)(10) of the EAR) also do not apply, you must clear exports of such 
items by entering the symbol ``NLR'' in the appropriate place on the 
SED.
    (2) License Exception symbol. You must enter on any required SED the 
letter code (e.g., LVS, TMP) of the License Exceptions under which you 
are exporting. In the case of License Exceptions LVS, GBS, and CIV, the 
ECCN of the item being exported must also be entered when an SED is 
required. Please refer to Sec. 758.3 of the EAR for detailed information 
on use of SEDs.
    (3) License number. If you are exporting under a license, enter the 
license number on the SED as required by Sec. 758.3 of the EAR.
    (b) Step 28: Destination Control Statement. You are required to 
enter an appropriate Destination Control Statement (DCS) on commercial 
documents in accordance with the DCS requirements of Sec. 758.6 of the 
EAR. Exporters should review Sec. 758.6 of the EAR and use the DCS as 
required. Reexporters and exporters from abroad should review Sec. 752.6 
for DCS requirements when using a Special Comprehensive License. 
Otherwise, DCS requirements do not apply to reexports and exports from 
abroad.
    (c) Step 29: Recordkeeping. Records of transactions involving 
exports under any license or License Exception must be maintained in 
accordance with the recordkeeping requirements of part 762 of the EAR.

[61 FR 12740, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996]



Sec. 732.6  Steps for other requirements.

    Sections 732.1 through 732.4 of this part are useful in determining 
the license requirements that apply to you. Other portions of the EAR 
impose other obligations and requirements. Some of them are:
    (a) Requirements relating to the use of a license in Sec. 758.2 of 
the EAR.
    (b) Obligations of carriers, forwarders, exporters and others to 
take specific steps and prepare and deliver certain documents to assure 
that items subject to the EAR are delivered to the destination to which 
they are licensed or authorized by a License Exception or some other 
provision of the regulations in Sec. 758.4 through Sec. 758.6 of the 
EAR.
    (c) Duty of carriers to return or unload shipments at the direction 
of U.S. Government officials (see Sec. 758.8 of the EAR).
    (d) Specific obligations imposed on parties to Special Comprehensive 
licenses in part 752 of the EAR.
    (e) Recordkeeping requirements imposed in part 762 of the EAR.
    (f) Requirements of part 764 of the EAR to disclose facts that may 
come

[[Page 121]]

to your attention after you file a license application or make other 
statements to the government concerning a transaction or proposed 
transaction that is subject to the EAR.
    (g) Certain obligations imposed by part 760 of the EAR on parties 
who receive requests to take actions related to foreign boycotts and 
prohibits certain actions relating to those boycotts.
[GRAPHIC] [TIFF OMITTED] TR09MY97.000


[62 FR 25454, May 9, 1997]

[[Page 122]]

[GRAPHIC] [TIFF OMITTED] TR09MY97.001



[[Page 123]]



[62 FR 25455, May 9, 1997]

Supplement No. 3 to Part 732--BXA's ``Know Your Customer'' Guidance and 
                                Red Flags

                     ``Know Your Customer'' Guidance

    Various requirements of the EAR are dependent upon a person's 
knowledge of the end-use, end-user, ultimate destination, or other facts 
relating to a transaction or activity. These provisions include the 
nonproliferation-related ``catch-all'' sections and the prohibition 
against proceeding with a transaction with knowledge that a violation of 
the EAR has occurred or is about to occur.
    (a) BXA provides the following guidance on how individuals and firms 
should act under this knowledge standard. This guidance does not change 
or interpret the EAR.
    (1) Decide whether there are ``red flags''. Take into account any 
abnormal circumstances in a transaction that indicate that the export 
may be destined for an inappropriate end-use, end-user, or destination. 
Such circumstances are referred to as ``red flags''. Included among 
examples of red flags are orders for items that are inconsistent with 
the needs of the purchaser, a customer declining installation and 
testing when included in the sales price or when normally requested, or 
requests for equipment configurations that are incompatible with the 
stated destination (e.g., 120 volts in a country with 220 volts). 
Commerce has developed lists of such red flags that are not all-
inclusive but are intended to illustrate the types of circumstances that 
should cause reasonable suspicion that a transaction will violate the 
EAR.
    (2) If there are ``red flags'', inquire. If there are no ``red 
flags'' in the information that comes to your firm, you should be able 
to proceed with a transaction in reliance on information you have 
received. That is, absent ``red flags'' (or an express requirement in 
the EAR), there is no affirmative duty upon exporters to inquire, 
verify, or otherwise ``go behind'' the customer's representations. 
However, when ``red flags'' are raised in information that comes to your 
firm, you have a duty to check out the suspicious circumstances and 
inquire about the end-use, end-user, or ultimate country of destination. 
The duty to check out ``red flags'' is not confined to the use of 
License Exceptions affected by the ``know'' or ``reason to know'' 
language in the EAR. Applicants for licenses are required by part 748 of 
the EAR to obtain documentary evidence concerning the transaction, and 
misrepresentation or concealment of material facts is prohibited, both 
in the licensing process and in all export control documents. You can 
rely upon representations from your customer and repeat them in the 
documents you file unless red flags oblige you to take verification 
steps.
    (3) Do not self-blind. Do not cut off the flow of information that 
comes to your firm in the normal course of business. For example, do not 
instruct the sales force to tell potential customers to refrain from 
discussing the actual end-use, end-user, and ultimate country of 
destination for the product your firm is seeking to sell. Do not put on 
blinders that prevent the learning of relevant information. An 
affirmative policy of steps to avoid ``bad'' information would not 
insulate a company from liability, and it would usually be considered an 
aggravating factor in an enforcement proceeding.
    (4) Employees need to know how to handle ``red flags''. Knowledge 
possessed by an employee of a company can be imputed to a firm so as to 
make it liable for a violation. This makes it important for firms to 
establish clear policies and effective compliance procedures to ensure 
that such knowledge about transactions can be evaluated by responsible 
senior officials. Failure to do so could be regarded as a form of self-
blinding.
    (5) Reevaluate all the information after the inquiry. The purpose of 
this inquiry and reevaluation is to determine whether the ``red flags'' 
can be explained or justified. If they can, you may proceed with the 
transaction. If the ``red flags'' cannot be explained or justified and 
you proceed, you run the risk of having had ``knowledge'' that would 
make your action a violation of the EAR.
    (6) Refrain from the transaction or advise BXA and wait. If you 
continue to have reasons for concern after your inquiry, then you should 
either refrain from the transaction or submit all the relevant 
information to BXA in the form of an application for a license or in 
such other form as BXA may specify.
    (b) Industry has an important role to play in preventing exports and 
reexports contrary to the national security and foreign policy interests 
of the United States. BXA will continue to work in partnership with 
industry to make this front line of defense effective, while minimizing 
the regulatory burden on exporters. If you have any question about 
whether you have encountered a ``red flag'', you may contact the Office 
of Export Enforcement at 1-800-424-2980 or the Office of Exporter 
Services at (202) 482-4532.

                                Red Flags

    Possible indicators that an unlawful diversion might be planned by 
your customer include the following:
    1. The customer or purchasing agent is reluctant to offer 
information about the end-use of a product.
    2. The product's capabilities do not fit the buyer's line of 
business; for example, a small bakery places an order for several 
sophisticated lasers.

[[Page 124]]

    3. The product ordered is incompatible with the technical level of 
the country to which the product is being shipped. For example, 
semiconductor manufacturing equipment would be of little use in a 
country without an electronics industry.
    4. The customer has little or no business background.
    5. The customer is willing to pay cash for a very expensive item 
when the terms of the sale call for financing.
    6. The customer is unfamiliar with the product's performance 
characteristics but still wants the product.
    7. Routine installation, training or maintenance services are 
declined by the customer.
    8. Delivery dates are vague, or deliveries are planned for out-of-
the-way destinations.
    9. A freight forwarding firm is listed as the product's final 
destination.
    10. The shipping route is abnormal for the product and destination.
    11. Packaging is inconsistent with the stated method of shipment or 
destination.
    12. When questioned, the buyer is evasive or unclear about whether 
the purchased product is for domestic use, export or reexport.

[61 FR 12740, Mar. 25, 1996. Redesignated and amended at 62 FR 25453, 
25456, May 9, 1997]



PART 734--SCOPE OF THE EXPORT ADMINISTRATION REGULATIONS--Table of Contents




Sec.
734.1  Introduction.
734.2  Important EAR terms and principles.
734.3  Items subject to the EAR.
734.4  De minimis U.S. content.
734.5  Activities of U.S. and foreign persons subject to the EAR.
734.6  Assistance available from BXA for determining licensing and other 
          requirements.
734.7  Published information and software.
734.8  Information resulting from fundamental research.
734.9  Educational information.
734.10  Patent applications.
734.11  Government-sponsored research covered by contract controls.
734.12  Effect on foreign laws and regulations.

Supplement No. 1 to Part 734--Questions and Answers--Technology and 
          Software Subject to the EAR
Supplement No. 2 to Part 734--Calculation of Values for De Minimus Rules

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O. 
12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 12938, 59 FR 59099, 
3 CFR, 1994 Comp., p. 950; Executive Order 13026 (November 15, 1996, 61 
FR 58767); Notice of August 15, 1995 (60 FR 42767, August 17, 1995); and 
Notice of August 14, 1996 (61 FR 42527).

    Source: 61 FR 12746, Mar. 25, 1996, unless otherwise noted.



Sec. 734.1  Introduction.

    (a) In this part, references to the Export Administration 
Regulations (EAR) are references to 15 CFR chapter VII, subchapter C. 
This part describes the scope of the Export Administration Regulations 
(EAR) and explains certain key terms and principles used in the EAR. 
This part provides the rules you need to use to determine whether items 
and activities are subject to the EAR. This part is the first step in 
determining your obligations under the EAR. If your item or activity is 
not subject to the EAR, then you do not have any obligations under the 
EAR and you do not need to review other parts of the EAR. If you already 
know that your item or activity is subject to the EAR, you do not need 
to review this part and you can go on to review other parts of the EAR 
to determine your obligations. This part also describes certain key 
terms and principles used in the EAR. Specifically, it includes the 
following terms: ``subject to the EAR,'' ``items subject to the EAR,'' 
``export,'' and ``reexport.'' These and other terms are also included in 
part 772 of the EAR, Definitions of Terms, and you should consult part 
772 of the EAR for the meaning of terms used in the EAR. Finally, this 
part makes clear that compliance with the EAR does not relieve any 
obligations imposed under foreign laws.
    (b) This part does not address any of the provisions set forth in 
part 760 of the EAR, Restrictive Trade Practices or Boycotts.
    (c) This part does not define the scope of legal authority to 
regulate exports, including reexports, or activities found in the Export 
Administration Act and other statutes. What this part does do is set 
forth the extent to which such legal authority has been exercised 
through the EAR.



Sec. 734.2  Important EAR terms and principles.

    (a) Subject to the EAR--Definition. (1) ``Subject to the EAR'' is a 
term used in the EAR to describe those items and

[[Page 125]]

activities over which BXA exercises regulatory jurisdiction under the 
EAR. Conversely, items and activities that are not subject to the EAR 
are outside the regulatory jurisdiction of the EAR and are not affected 
by these regulations. The items and activities subject to the EAR are 
described in Sec. 734.2 through Sec. 734.5 of this part. You should 
review the Commerce Control List (CCL) and any applicable parts of the 
EAR to determine whether an item or activity is subject to the EAR. 
However, if you need help in determining whether an item or activity is 
subject to the EAR, see Sec. 734.6 of this part. Publicly available 
technology and software not subject to the EAR are described in 
Sec. 734.7 through Sec. 734.11 and Supplement No. 1 to this part.
    (2) Items and activities subject to the EAR may also be controlled 
under export-related programs administered by other agencies. Items and 
activities subject to the EAR are not necessarily exempted from the 
control programs of other agencies. Although BXA and other agencies that 
maintain controls for national security and foreign policy reasons try 
to minimize overlapping jurisdiction, you should be aware that in some 
instances you may have to comply with more than one regulatory program.
    (3) The term ``subject to the EAR'' should not be confused with 
licensing or other requirements imposed in other parts of the EAR. Just 
because an item or activity is subject to the EAR does not mean that a 
license or other requirement automatically applies. A license or other 
requirement applies only in those cases where other parts of the EAR 
impose a licensing or other requirement on such items or activities.
    (b) Export and reexport--(1) Definition of export. ``Export'' means 
an actual shipment or transmission of items subject to the EAR out of 
the United States, or release of technology or software subject to the 
EAR to a foreign national in the United States, as described in 
paragraph (b)(2)(ii) of this section. See part 772 of the EAR for the 
definition that applies to exports of satellites subject to the EAR. See 
paragraph (b)(9) of this section for the definition that applies to 
exports of encryption source code and object code software subject to 
the EAR.
    (2) Export of technology or software. (See paragraph (b)(9) for 
provisions that apply to encryption source code and object code 
software.) ``Export'' of technology or software, excluding encryption 
software subject to ``EI'' controls, includes:
    (i) Any release of technology or software subject to the EAR in a 
foreign country; or
    (ii) Any release of technology or source code subject to the EAR to 
a foreign national. Such release is deemed to be an export to the home 
country or countries of the foreign national. This deemed export rule 
does not apply to persons lawfully admitted for permanent residence in 
the United States and does not apply to persons who are protected 
individuals under the Immigration and Naturalization Act (8 U.S.C. 
1324b(a)(3)). Note that the release of any item to any party with 
knowledge a violation is about to occur is prohibited by 
Sec. 736.2(b)(10) of the EAR.
    (3) Definition of ``release'' of technology or software. Technology 
or software is ``released'' for export through:
    (i) Visual inspection by foreign nationals of U.S.-origin equipment 
and facilities;
    (ii) Oral exchanges of information in the United States or abroad; 
or
    (iii) The application to situations abroad of personal knowledge or 
technical experience acquired in the United States.
    (4) Definition of reexport. ``Reexport'' means an actual shipment or 
transmission of items subject to the EAR from one foreign country to 
another foreign country; or release of technology or software subject to 
the EAR to a foreign national outside the United States, as described in 
paragraph (b)(5) of this section. See part 772 of the EAR for the 
definition that applies to reexports of satellites subject to the EAR.
    (5) Reexport of technology or software. Any release of technology or 
source code subject to the EAR to a foreign national of another country 
is a deemed reexport to the home country or countries of the foreign 
national.

[[Page 126]]

However, this deemed reexport definition does not apply to persons 
lawfully admitted for permanent residence. The term ``release'' is 
defined in paragraph (b)(3) of this section. Note that the release of 
any item to any party with knowledge or reason to know a violation is 
about to occur is prohibited by Sec. 736.2(b)(10) of the EAR.
    (6) For purposes of the EAR, the export or reexport of items subject 
to the EAR that will transit through a country or countries or be 
transshipped in a country or countries to a new country or are intended 
for reexport to the new country, are deemed to be exports to the new 
country.
    (7) If a territory, possession, or department of a foreign country 
is not listed on the Country Chart in Supplement No. 1 to part 738 of 
the EAR, the export or reexport of items subject to the EAR to such 
destination is deemed under the EAR to be an export to the foreign 
country. For example, a shipment to the Cayman Islands, a dependent 
territory of the United Kingdom, is deemed to be a shipment to the 
United Kingdom.
    (8) Export or reexport of items subject to the EAR does not include 
shipments among any of the states of the United States, the Commonwealth 
of Puerto Rico, or the Commonwealth of the Northern Mariana Islands or 
any territory, dependency, or possession of the United States. These 
destinations are listed in Schedules C & E, Classification of Country 
and Territory Designations for U.S. Export Statistics, issued by the 
Bureau of the Census.
    (9) Export of encryption source code and object code software. (i) 
For purposes of the EAR, the export of encryption source code and object 
code software means:
    (A) An actual shipment, transfer, or transmission out of the United 
States (see also paragraph (b)(9)(ii) of this section); or
    (B) A transfer of such software in the United States to an embassy 
or affiliate of a foreign country.
    (ii) The export of encryption source code and object code software 
controlled for EI reasons under ECCN 5D002 on the Commerce Control List 
(see Supplement No. 1 to part 774 of the EAR) includes downloading, or 
causing the downloading of, such software to locations (including 
electronic bulletin boards, Internet file transfer protocol, and World 
Wide Web sites) outside the U.S. (except Canada), or making such 
software available for transfer outside the United States (except 
Canada), over wire, cable, radio, electromagnetic, photo optical, 
photoelectric or other comparable communications facilities accessible 
to persons outside the United States (except Canada), including 
transfers from electronic bulletin boards, Internet file transfer 
protocol and World Wide Web sites, unless the person making the software 
available takes precautions adequate to prevent unauthorized transfer of 
such code outside the United States or Canada. Such precautions shall 
include ensuring that the facility from which the software is available 
controls the access to and transfers of such software through such 
measures as:
    (A) The access control system, either through automated means or 
human intervention, checks the address of every system requesting or 
receiving a transfer and verifies that such systems are located within 
the United States or Canada;
    (B) The access control system provides every requesting or receiving 
party with notice that the transfer includes or would include 
cryptographic software subject to export controls under the Export 
Administration Regulations, and that anyone receiving such a transfer 
cannot export the software without a license; and
    (C) Every party requesting or receiving a transfer of such software 
must acknowledge affirmatively that he or she understands that the 
cryptographic software is subject to export controls under the Export 
Administration Regulations and that anyone receiving the transfer cannot 
export the software without a license. BXA will consider acknowledgments 
in electronic form provided that they are adequate to assure legal 
undertakings similar to written acknowledgments.

[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68578, Dec. 30, 1996; 
63 FR 50520, Sept. 22, 1998]

[[Page 127]]



Sec. 734.3  Items subject to the EAR.

    (a) Except for items excluded in paragraph (b) of this section, the 
following items are subject to the EAR:
    (1) All items in the United States, including in a U.S. Foreign 
Trade Zone or moving intransit through the United States from one 
foreign country to another;
    (2) All U.S. origin items wherever located;
    (3) U.S. origin parts, components, materials or other commodities 
incorporated abroad into foreign-made products, U.S. origin software 
commingled with foreign software, and U.S. origin technology commingled 
with foreign technology, in quantities exceeding de minimis levels as 
described in Sec. 734.4 and Supplement No. 2 of this part;
    (4) Certain foreign-made direct products of U.S. origin technology 
or software, as described in Sec. 736.2(b)(3) of the EAR. The term 
``direct product'' means the immediate product (including processes and 
services) produced directly by the use of technology or software; and
    (5) Certain commodities produced by any plant or major component of 
a plant located outside the United States that is a direct product of 
U.S.-origin technology or software, as described in Sec. 736.2(b)(3) of 
the EAR.
    (b) The following items are not subject to the EAR:
    (1) Items that are exclusively controlled for export or reexport by 
the following departments and agencies of the U.S. Government which 
regulate exports or reexports for national security or foreign policy 
purposes:
    (i) Department of State. The International Traffic in Arms 
Regulations (22 CFR part 121) administered by the Office of Defense 
Trade Controls relate to defense articles and defense services on the 
U.S. Munitions List. Section 38 of the Arms Export Control Act (22 
U.S.C. 2778).
    (ii) Treasury Department, Office of Foreign Assets Control (OFAC). 
Regulations administered by OFAC implement broad controls and embargo 
transactions with certain foreign countries. These regulations include 
controls on exports and reexports to certain countries (31 CFR chapter 
V). Trading with the Enemy Act (50 U.S.C. app. section 1 et seq.), and 
International Emergency Economic Powers Act (50 U.S.C. 1701, et seq.)
    (iii) U.S. Nuclear Regulatory Commission (NRC). Regulations 
administered by NRC control the export and reexport of commodities 
related to nuclear reactor vessels (10 CFR part 110). Atomic Energy Act 
of 1954, as amended (42 U.S.C. part 2011 et seq.).
    (iv) Department of Energy (DOE). Regulations administered by DOE 
control the export and reexport of technology related to the production 
of special nuclear materials (10 CFR part 810). Atomic Energy Act of 
1954, as amended (42 U.S.C. section 2011 et seq.).
    (v) Patent and Trademark Office (PTO). Regulations administered by 
PTO provide for the export to a foreign country of unclassified 
technology in the form of a patent application or an amendment, 
modification, or supplement thereto or division thereof (37 CFR part 5). 
BXA has delegated authority under the Export Administration Act to the 
PTO to approve exports and reexports of such technology which is subject 
to the EAR. Exports and reexports of such technology not approved under 
PTO regulations must comply with the EAR.
    (2) Prerecorded phonograph records reproducing in whole or in part, 
the content of printed books, pamphlets, and miscellaneous publications, 
including newspapers and periodicals; printed books, pamphlets, and 
miscellaneous publications including bound newspapers and periodicals; 
children's picture and painting books; newspaper and periodicals, 
unbound, excluding waste; music books; sheet music; calendars and 
calendar blocks, paper; maps, hydrographical charts, atlases, 
gazetteers, globe covers, and globes (terrestrial and celestial); 
exposed and developed microfilm reproducing, in whole or in part, the 
content of any of the above; exposed and developed motion picture film 
and soundtrack; and advertising printed matter exclusively related 
thereto.
    (3) Publicly available technology and software, except software 
controlled for EI reasons under ECCN 5D002 on the Commerce Control List, 
that:
    (i) Are already published or will be published as described in 
Sec. 734.7 of this part;

[[Page 128]]

    (ii) Arise during, or result from, fundamental research, as 
described in Sec. 734.8 of this part;
    (iii) Are educational, as described in Sec. 734.9 of this part;
    (iv) Are included in certain patent applications, as described in 
Sec. 734.10 of this part.
    Note to paragraphs (b)(2) and (b)(3) of this section: A printed book 
or other printed material setting forth encryption source code is not 
itself subject to the EAR (see Sec. 734.3(b)(2)). However, 
notwithstanding Sec. 734.3(b)(2), encryption source code in electronic 
form or media (e.g., computer diskette or CD ROM) remains subject to the 
EAR (see Sec. 734.3(b)(3)).
    (4) Foreign made items that have greater than the de minimis U.S. 
content based on the principles described in Sec. 734.4 of this part.
    (c) ``Items subject to the EAR'' consist of the items listed on the 
Commerce Control List (CCL) in part 774 of the EAR and all other items 
which meet the definition of that term. For ease of reference and 
classification purposes, items subject to the EAR which are not listed 
on the CCL are designated as ``EAR99.''

[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 65464, Dec. 13, 1996; 
61 FR 68578, Dec. 30, 1996; 62 FR 25456, May 9, 1997]



Sec. 734.4  De minimis U.S. content.

    (a) There is no de minimis level for the export from a foreign 
country of a foreign-made computer exceeding 7000 MTOPS containing U.S.-
origin controlled semiconductors (other than memory circuits) classified 
under ECCN 3A001 or high speed interconnect devices (ECCN 4A003.g) to 
Computer Tier 3 and 4 countries described in Sec. 742.12 of the EAR.
    (b) There is no de minimis level for the reexport of foreign-origin 
items that incorporate the following:
    (1) Items controlled by ECCN 9A004.a; or
    (2) ``Information security'' systems and equipment, cryptographic 
devices, software and components specifically designed or modified 
therefor, and related technology controlled for ``EI'' reasons under 
ECCNs 5A002, 5D002, and 5E002. Certain mass market encryption software 
may become eligible for de minimis only after a one-time BXA review 
(refer to Sec. 742.15(b)(1)).
    (c) Except as provided in paragraph (a) of this section for certain 
computers, the following reexports are not subject to the EAR when made 
to either an embargoed country listed in part 746 of the EAR or to a 
terrorist-supporting country as described in part 742 of the EAR:
    (1) Reexports of a foreign-made commodity incorporating controlled 
U.S.-origin commodities valued at 10% or less of the total value of the 
foreign-made commodity;
    (2) Reexports of foreign-made software incorporating controlled 
U.S.-origin software valued at 10% or less of the total value of the 
foreign-made software; or
    (3) Reexports of foreign technology commingled with or drawn from 
controlled U.S.-origin technology valued at 10% or less of the total 
value of the foreign technology.
    (d) Except as provided in paragraph (a) of this section for certain 
computers, for all other countries not included in paragraph (b) of this 
section the following reexports are not subject to the EAR:
    (1) Reexports of a foreign-made commodity incorporating controlled 
U.S.-origin commodities valued at 25% or less of the total value of the 
foreign-made commodity;
    (2) Reexports of foreign-made software incorporating controlled 
U.S.-origin software valued at 25% or less of the total value of the 
foreign-made software; or
    (3) Reexports of foreign technology commingled with or drawn from 
controlled U.S.-origin technology valued at 25% or less of the total 
value of the foreign technology.
    (e) For purposes of determining de minimis levels, technology and 
source code used to design or produce foreign-made commodities or 
software are not considered to be incorporated into such foreign-made 
commodities or software. Commodities subject only to short supply 
controls are not included in calculating U.S. content.
    (f) You are responsible for making the necessary calculations to 
determine whether the de minimis provisions

[[Page 129]]

apply to your situation. See Supplement No. 2 to part 734 for guidance 
regarding calculation of U.S. controlled content.
    (g) See Sec. 770.3 of the EAR for principles that apply to 
commingled U.S.-origin technology and software.
    (h) Notwithstanding the provisions of paragraphs (c) and (d) of this 
section, U.S.-origin technology controlled by ECCN 9E003a.1 through 
a.12, and .f, and related controls, and encryption software controlled 
for ``EI'' reasons under ECCN 5D002 or encryption technology controlled 
for ``EI'' reasons under ECCN 5E002 do not lose their U.S.-origin when 
redrawn, used, consulted, or otherwise commingled abroad in any respect 
with other software or technology of any other origin. Therefore, any 
subsequent or similar software or technology prepared or engineered 
abroad for the design, construction, operation, or maintenance of any 
plant or equipment, or part thereof, which is based on or uses any such 
U.S.-origin software or technology is subject to the EAR.

[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 54543, Oct. 21, 1996; 
61 FR 65464, Dec. 13, 1996; 61 FR 68578, Dec. 30, 1996; 62 FR 25456, May 
9, 1997; 63 FR 50520, Sept. 22, 1998]



Sec. 734.5  Activities of U.S. and foreign persons subject to the EAR.

    The following kinds of activities are subject to the EAR:
    (a) Certain activities of U.S. persons related to the proliferation 
of chemical or biological weapons or of missile technology as described 
in Sec. 744.6 of the EAR.
    (b) Activities of U.S. or foreign persons prohibited by any order 
issued under the EAR, including a Denial Order issued pursuant to part 
766 of the EAR.
    (c) Technical assistance by U.S. persons with respect to encryption 
commodities or software as described in Sec. 744.9 of the EAR.

[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68578, Dec. 30, 1996]



Sec. 734.6  Assistance available from BXA for determining licensing and other requirements.

    (a) If you are not sure whether a commodity, software, technology, 
or activity is subject to the EAR, or is subject to licensing or other 
requirements under the EAR, you may ask BXA for an advisory opinion, 
classification, or a determination whether a particular item or activity 
is subject to the EAR. In many instances, including those where the item 
is specially designed, developed, configured, adapted, or modified for 
military application, the item may fall under the licensing jurisdiction 
of the Department of State and may be subject to the controls of the 
International Traffic in Arms Regulations (22 CFR parts 120 through 130) 
(ITAR). In order to determine if the Department of State has licensing 
jurisdiction over an item, you should submit a request for a commodity 
jurisdiction determination to the Department of State, Office of Defense 
Trade Controls. Exporters should note that in a very limited number of 
cases, the categories of items may be subject to both the ITAR and the 
EAR. The relevant departments are working to eliminate any unnecessary 
overlaps that may exist.
    (b) As the agency responsible for administering the EAR, BXA is the 
only agency that has the responsibility for determining whether an item 
or activity is subject to the EAR and, if so, what licensing or other 
requirements apply under the EAR. Such a determination only affects EAR 
requirements, and does not affect the applicability of any other 
regulatory programs.
    (c) If you need help in determining BXA licensing or other 
requirements you may ask BXA for help by following the procedures 
described in Sec. 748.3 of the EAR.



Sec. 734.7  Published information and software.

    (a) Information is ``published'' when it becomes generally 
accessible to the interested public in any form, including:
    (1) Publication in periodicals, books, print, electronic, or any 
other media available for general distribution to any member of the 
public or to a community of persons interested in the subject matter, 
such as those in a scientific or engineering discipline, either free or 
at a price that does not exceed

[[Page 130]]

the cost of reproduction and distribution (See Supplement No. 1 to this 
part, Questions A(1) through A(6));
    (2) Ready availability at libraries open to the public or at 
university libraries (See Supplement No. 1 to this part, Question A(6));
    (3) Patents and open (published) patent applications available at 
any patent office; and
    (4) Release at an open conference, meeting, seminar, trade show, or 
other open gathering.
    (i) A conference or gathering is ``open'' if all technically 
qualified members of the public are eligible to attend and attendees are 
permitted to take notes or otherwise make a personal record (not 
necessarily a recording) of the proceedings and presentations.
    (ii) All technically qualified members of the public may be 
considered eligible to attend a conference or other gathering 
notwithstanding a registration fee reasonably related to cost and 
reflecting an intention that all interested and technically qualified 
persons be able to attend, or a limitation on actual attendance, as long 
as attendees either are the first who have applied or are selected on 
the basis of relevant scientific or technical competence, experience, or 
responsibility (See Supplement No. 1 to this part, Questions B(1) 
through B(6)).
    (iii) ``Publication'' includes submission of papers to domestic or 
foreign editors or reviewers of journals, or to organizers of open 
conferences or other open gatherings, with the understanding that the 
papers will be made publicly available if favorably received. (See 
Supplement No. 1 to this part, Questions A(1) and A(3)).
    (b) Software and information is published when it is available for 
general distribution either for free or at a price that does not exceed 
the cost of reproduction and distribution. See Supplement No. 1 to this 
part, Questions G(1) through G(3).
    (c) Notwithstanding paragraphs (a) and (b) of this section, note 
that encryption software controlled under ECCN 5D002 for ``EI'' reasons 
on the Commerce Control List (refer to Supplement No. 1 to part 774 of 
the EAR) remains subject to the EAR even when publicly available.

[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 65464, Dec. 13, 1996; 
61 FR 68578, Dec. 30, 1996]



Sec. 734.8  Information resulting from fundamental research.

    (a) Fundamental research. Paragraphs (b) through (d) of this section 
and Sec. 734.11 of this part provide specific rules that will be used to 
determine whether research in particular institutional contexts 
qualifies as ``fundamental research''. The intent behind these rules is 
to identify as ``fundamental research'' basic and applied research in 
science and engineering, where the resulting information is ordinarily 
published and shared broadly within the scientific community. Such 
research can be distinguished from proprietary research and from 
industrial development, design, production, and product utilization, the 
results of which ordinarily are restricted for proprietary reasons or 
specific national security reasons as defined in Sec. 734.11(b) of this 
part. (See Supplement No. 1 to this part, Question D(8)). Note that the 
provisions of this section do not apply to encryption software 
controlled under ECCN 5D002 for ``EI'' reasons on the Commerce Control 
List (refer to Supplement No. 1 to part 774 of the EAR).
    (b) University based research. (1) Research conducted by scientists, 
engineers, or students at a university normally will be considered 
fundamental research, as described in paragraphs (b) (2) through (6) of 
this section. (``University'' means any accredited institution of higher 
education located in the United States.)
    (2) Prepublication review by a sponsor of university research solely 
to insure that the publication would not inadvertently divulge 
proprietary information that the sponsor has furnished to the 
researchers does not change the status of the research as fundamental 
research. However, release of information from a corporate sponsor to 
university researchers where the research results are subject to 
prepublication review, is subject to the EAR. (See Supplement No. 1 to 
this part, Questions D(7), D(9), and D(10).)

[[Page 131]]

    (3) Prepublication review by a sponsor of university research solely 
to ensure that publication would not compromise patent rights does not 
change the status of fundamental research, so long as the review causes 
no more than a temporary delay in publication of the research results.
    (4) The initial transfer of information from an industry sponsor to 
university researchers is subject to the EAR where the parties have 
agreed that the sponsor may withhold from publication some or all of the 
information so provided. (See Supplement No. 1 to this part, Question 
D(2).)
    (5) University based research is not considered ``fundamental 
research'' if the university or its researchers accept (at the request, 
for example, of an industrial sponsor) other restrictions on publication 
of scientific and technical information resulting from the project or 
activity. Scientific and technical information resulting from the 
research will nonetheless qualify as fundamental research once all such 
restrictions have expired or have been removed. (See Supplement No. 1 to 
this part, Question D(7) and D(9).)
    (6) The provisions of Sec. 734.11 of this part will apply if a 
university or its researchers accept specific national security controls 
(as defined in Sec. 734.11 of this part) on a research project or 
activity sponsored by the U.S. Government. (See Supplement No. 1 to this 
part, Questions E(1) and E(2).)
    (c) Research based at Federal agencies or FFRDCs. Research conducted 
by scientists or engineers working for a Federal agency or a Federally 
Funded Research and Development Center (FFRDC) may be designated as 
``fundamental research'' within any appropriate system devised by the 
agency or the FFRDC to control the release of information by such 
scientists and engineers. (See Supplement No. 1 to this part, Questions 
D(8) and D(11).)
    (d) Corporate research. (1) Research conducted by scientists or 
engineers working for a business entity will be considered ``fundamental 
research'' at such time and to the extent that the researchers are free 
to make scientific and technical information resulting from the research 
publicly available without restriction or delay based on proprietary 
concerns or specific national security controls as defined in 
Sec. 734.11(b) of this part.
    (2) Prepublication review by the company solely to ensure that the 
publication would compromise no proprietary information provided by the 
company to the researchers is not considered to be a proprietary 
restriction under paragraph (d)(1) of this section. However, paragraph 
(d)(1) of this section does not authorize the release of information to 
university researchers where the research results are subject to 
prepublication review. (See Supplement No. 1 to this part, Questions 
D(8), D(9), and D(10).)
    (3) Prepublication review by the company solely to ensure that 
prepublication would compromise no patent rights will not be considered 
a proprietary restriction for this purpose, so long as the review causes 
no more than a temporary delay in publication of the research results.
    (4) However, the initial transfer of information from a business 
entity to researchers is not authorized under the ``fundamental 
research'' provision where the parties have agreed that the business 
entity may withhold from publication some or all of the information so 
provided.
    (e) Research based elsewhere. Research conducted by scientists or 
engineers who are not working for any of the institutions described in 
paragraphs (b) through (d) of this section will be treated as corporate 
research, as described in paragraph (d) of this section. (See Supplement 
No. 1 to this part, Question D(8).)

[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68579, Dec. 30, 1996; 
62 FR 25456, May 9, 1997]



Sec. 734.9  Educational information.

    ``Educational information'' referred to in Sec. 734.3(b)(3)(iii) of 
this part is not subject to the EAR if it is released by instruction in 
catalog courses and associated teaching laboratories of academic 
institutions. Dissertation research is discussed in Sec. 734.8(b) of 
this part. (Refer to Supplement No. 1 to this part, Question C(1) 
through C(6)). Note that the provisions of this section do not apply to 
encryption software controlled under ECCN 5D002 for ``EI''

[[Page 132]]

reasons on the Commerce Control List (refer to Supplement No. 1 to part 
774 of the EAR).

[61 FR 68579, Dec. 30, 1996]



Sec. 734.10  Patent applications.

    The information referred to in Sec. 734.3(b)(3)(iv) of this part is:
    (a) Information contained in a patent application prepared wholly 
from foreign-origin technical data where the application is being sent 
to the foreign inventor to be executed and returned to the United States 
for subsequent filing in the U.S. Patent and Trademark Office;
    (b) Information contained in a patent application, or an amendment, 
modification, supplement or division of an application, and authorized 
for filing in a foreign country in accordance with the regulations of 
the Patent and Trademark Office, 37 CFR part 5; 1 or
---------------------------------------------------------------------------

    \1\ Regulations issued by the Patent and Trademark Office in 37 CFR 
part 5 provide for the export to a foreign country of unclassified 
technical data in the form of a patent application or an amendment, 
modification, or supplement thereto or division thereof.
---------------------------------------------------------------------------

    (c) Information contained in a patent application when sent to a 
foreign country before or within six months after the filing of a United 
States patent application for the purpose of obtaining the signature of 
an inventor who was in the United States when the invention was made or 
who is a co-inventor with a person residing in the United States.



Sec. 734.11  Government-sponsored research covered by contract controls.

    (a) If research is funded by the U.S. Government, and specific 
national security controls are agreed on to protect information 
resulting from the research, Sec. 734.3(b)(3) of this part will not 
apply to any export or reexport of such information in violation of such 
controls. However, any export or reexport of information resulting from 
the research that is consistent with the specific controls may 
nonetheless be made under this provision.
    (b) Examples of ``specific national security controls'' include 
requirements for prepublication review by the Government, with right to 
withhold permission for publication; restrictions on prepublication 
dissemination of information to non-U.S. citizens or other categories of 
persons; or restrictions on participation of non-U.S. citizens or other 
categories of persons in the research. A general reference to one or 
more export control laws or regulations or a general reminder that the 
Government retains the right to classify is not a ``specific national 
security control''. (See Supplement No. 1 to this part, Questions E(1) 
and E(2).)



Sec. 734.12  Effect on foreign laws and regulations.

    Any person who complies with any of the license or other 
requirements of the EAR is not relieved of the responsibility of 
complying with applicable foreign laws and regulations. Conversely, any 
person who complies with the license or other requirements of a foreign 
law or regulation is not relieved of the responsibility of complying 
with U.S. laws and regulations, including the EAR.

  Supplement No. 1 to Part 734--Questions and Answers--Technology and 
                       Software Subject to the EAR

    This Supplement No. 1 contains explanatory questions and answers 
relating to technology and software that is subject to the EAR. It is 
intended to give the public guidance in understanding how BXA interprets 
this part, but is only illustrative, not comprehensive. In addition, 
facts or circumstances that differ in any material way from those set 
forth in the questions or answers will be considered under the 
applicable provisions of the EAR. Exporters should note that the 
provisions of this supplement do not apply to encryption software 
(including source code) transferred from the U.S. Munitions List to the 
Commerce Control List consistent with E.O. 13026 of November 15, 1996 
(61 FR 58767) and pursuant to the Presidential Memorandum of that date. 
See Sec. 742.15 of the EAR. This supplement is divided into nine 
sections according to topic as follows:
    Section A: Publication of technology and exports and reexports of 
technology that has been or will be published.
    Section B: Release of technology at conferences.
    Section C: Educational instruction.
    Section D: Research, correspondence, and informal scientific 
exchanges.

[[Page 133]]

    Section E: Federal contract controls.
    Section F: Commercial consulting.
    Section G: Software.
    Section H: Availability in a public library.
    Section I: Miscellaneous.

                         Section A: Publication

    Question A(1): I plan to publish in a foreign journal a scientific 
paper describing the results of my research, which is in an area listed 
in the EAR as requiring a license to all countries except Canada. Do I 
need a license to send a copy to my publisher abroad?
    Answer: No. This export transaction is not subject to the EAR. The 
EAR do not cover technology that is already publicly available, as well 
as technology that is made public by the transaction in question 
(Secs. 734.3 and 734.7 of this part). Your research results would be 
made public by the planned publication. You would not need a license.
    Question A(2): Would the answer differ depending on where I work or 
where I performed the research?
    Answer: No. Of course, the result would be different if your 
employer or another sponsor of your research imposed restrictions on its 
publication (Sec. 734.8 of this part).
    Question (A)3: Would I need a license to send the paper to the 
editors of a foreign journal for review to determine whether it will be 
accepted for publication?
    Answer: No. This export transaction is not subject to the EAR 
because you are submitting the paper to the editors with the intention 
that the paper will be published if favorably received 
(Sec. 734.7(a)(4)(iii) of this part).
    Question A(4): The research on which I will be reporting in my paper 
is supported by a grant from the Department of Energy (DOE). The grant 
requires prepublication clearance by DOE. Does that make any difference 
under the Export Administration Regulations?
    Answer: No, the transaction is not subject to the EAR. But if you 
published in violation of any Department of Energy controls you have 
accepted in the grant, you may be subject to appropriate administrative, 
civil, or criminal sanctions under other laws.
    Question A(5): We provide consulting services on the design, layout, 
and construction of integrated circuit plants and production lines. A 
major part of our business is the publication for sale to clients of 
detailed handbooks and reference manuals on key aspects on the design 
and manufacturing processes. A typical cost of publishing such a 
handbook and manual might be $500; the typical sales price is about 
$15,000. Is the publication and sale of such handbooks or manuals 
subject to the EAR?
    Answer: Yes. The price is above the cost of reproduction and 
distribution (Sec. 734.7(a)(1) of this part). Thus, you would need to 
obtain a license or qualify for a License Exception before you could 
export or reexport any of these handbooks or manuals.
    Question A(6): My Ph.D. thesis is on technology, listed in the EAR 
as requiring a license to all destinations except Canada, which has 
never been published for general distribution. However, the thesis is 
available at the institution from which I took the degree. Do I need a 
license to send another copy to a colleague overseas?
    Answer: That may depend on where in the institution it is available. 
If it is not readily available in the university library (e.g., by 
filing in open stacks with a reference in the catalog), it is not 
``publicly available'' and the export or reexport would be subject to 
the EAR on that ground. The export or reexport would not be subject to 
the EAR if your Ph.D. research qualified as ``fundamental research'' 
under Sec. 734.8 of this part. If not, however, you will need to obtain 
a license or qualify for a License Exception before you can send a copy 
out of the country.
    Question A(7): We sell electronically recorded information, 
including software and databases, at wholesale and retail. Our products 
are available by mail order to any member of the public, though intended 
for specialists in various fields. They are priced to maximize sales to 
persons in those fields. Do we need a license to sell our products to 
foreign customers?
    Answer: You would not need a license for otherwise controlled 
technology or software if the technology and software are made publicly 
available at a price that does not exceed the cost of production and 
distribution to the technical community. Even if priced at a higher 
level, the export or reexport of the technology or software source code 
in a library accessible to the public is not subject to the EAR 
(Sec. 734.7(a) of this part).

                         Section B: Conferences

    Question B(1): I have been invited to give a paper at a prestigious 
international scientific conference on a subject listed as requiring a 
license under the EAR to all countries, except Canada. Scientists in the 
field are given an opportunity to submit applications to attend. 
Invitations are given to those judged to be the leading researchers in 
the field, and attendance is by invitation only. Attendees will be free 
to take notes, but not make electronic or verbatim recordings of the 
presentations or discussions. Some of the attendees will be foreigners. 
Do I need a license to give my paper?
    Answer: No. Release of information at an open conference and 
information that has been released at an open conference is not subject 
to the EAR. The conference you describe fits the definition of an open 
conference (Sec. 734.7(a) of this part).

[[Page 134]]

    Question B(2): Would it make any difference if there were a 
prohibition on making any notes or other personal record of what 
transpires at the conference?
    Answer: Yes. To qualify as an ``open'' conference, attendees must be 
permitted to take notes or otherwise make a personal record (although 
not necessarily a recording). If note taking or the making of personal 
records is altogether prohibited, the conference would not be considered 
``open''.
    Question B(3): Would it make any difference if there were also a 
registration fee?
    Answer: That would depend on whether the fee is reasonably related 
to costs and reflects an intention that all interested and technically 
qualified persons should be able to attend (Sec. 734.7(a)(4)(ii) of this 
part).
    Question B(4): Would it make any difference if the conference were 
to take place in another country?
    Answer: No.
    Question B(5): Must I have a license to send the paper I propose to 
present at such a foreign conference to the conference organizer for 
review?
    Answer: No. A license is not required under the EAR to submit papers 
to foreign organizers of open conferences or other open gatherings with 
the intention that the papers will be delivered at the conference, and 
so made publicly available, if favorably received. The submission of the 
papers is not subject to the EAR (Sec. 734.7(a)(4)(iii) of this part).
    Question B(6): Would the answers to any of the foregoing questions 
be different if my work were supported by the Federal Government?
    Answer: No. You may export and reexport the papers, even if the 
release of the paper violates any agreements you have made with your 
government sponsor. However, nothing in the EAR relieves you of 
responsibility for conforming to any controls you have agreed to in your 
Federal grant or contract.

                   Section C: Educational Instruction

    Question C(1): I teach a university graduate course on design and 
manufacture of very high-speed integrated circuitry. Many of the 
students are foreigners. Do I need a license to teach this course?
    Answer: No. Release of information by instruction in catalog courses 
and associated teaching laboratories of academic institutions is not 
subject to the EAR (Sec. 734.9 of this part).
    Question C(2): Would it make any difference if some of the students 
were from countries to which export licenses are required?
    Answer: No.
    Question C(3): Would it make any difference if I talk about recent 
and as yet unpublished results from my laboratory research?
    Answer: No.
    Question C(4): Even if that research is funded by the Government?
    Answer: Even then, but you would not be released from any separate 
obligations you have accepted in your grant or contract.
    Question C(5): Would it make any difference if I were teaching at a 
foreign university?
    Answer: No.
    Question C(6): We teach proprietary courses on design and 
manufacture of high-performance machine tools. Is the instruction in our 
classes subject to the EAR?
    Answer: Yes. That instruction would not qualify as ``release of 
educational information'' under Sec. 734.9 of this part because your 
proprietary business does not qualify as an ``academic institution'' 
within the meaning of Sec. 734.9 of this part. Conceivably, however, the 
instruction might qualify as ``release at an open * * * seminar, * * * 
or other open gathering'' under Sec. 734.7(a) of this part. The 
conditions for qualification of such a seminar or gathering as ``open'', 
including a fee ``reasonably related to costs (of the conference, not of 
producing the data) and reflecting an intention that all interested and 
technically qualified persons be able to attend,'' would have to be 
satisfied.

 Section D: Research, Correspondence, and Informal Scientific Exchanges

    Question D(1): Do I need a license in order for a foreign graduate 
student to work in my laboratory?
    Answer: Not if the research on which the foreign student is working 
qualifies as ``fundamental research'' under Sec. 734.8 of this part. In 
that case, the research is not subject to the EAR.
    Question D(2): Our company has entered into a cooperative research 
arrangement with a research group at a university. One of the 
researchers in that group is a PRC national. We would like to share some 
of our proprietary information with the university research group. We 
have no way of guaranteeing that this information will not get into the 
hands of the PRC scientist. Do we need to obtain a license to protect 
against that possibility?
    Answer: No. The EAR do not cover the disclosure of information to 
any scientists, engineers, or students at a U.S. university in the 
course of industry-university research collaboration under specific 
arrangements between the firm and the university, provided these 
arrangements do not permit the sponsor to withhold from publication any 
of the information that he provides to the researchers. However, if your 
company and the researchers have agreed to a prohibition on publication, 
then you must obtain a license or qualify for a License Exception before

[[Page 135]]

transferring the information to the university. It is important that you 
as the corporate sponsor and the university get together to discuss 
whether foreign nationals will have access to the information, so that 
you may obtain any necessary authorization prior to transferring the 
information to the research team.
    Question D(3): My university will host a prominent scientist from 
the PRC who is an expert on research in engineered ceramics and 
composite materials. Do I require a license before telling our visitor 
about my latest, as yet unpublished, research results in those fields?
    Answer: Probably not. If you performed your research at the 
university, and you were subject to no contract controls on release of 
the research, your research would qualify as ``fundamental research'' 
(Sec. 734.8(a) of this part). Information arising during or resulting 
from such research is not subject to the EAR (Sec. 734.3(b)(3) of this 
part).
    You should probably assume, however, that your visitor will be 
debriefed later about anything of potential military value he learns 
from you. If you are concerned that giving such information to him, even 
though permitted, could jeopardize U.S. security interests, the Commerce 
Department can put you in touch with appropriate Government scientists 
who can advise you. Write to Department of Commerce, Bureau of Export 
Administration, P.O. Box 273, Washington, DC 20044.
    Question D(4): Would it make any difference if I were proposing to 
talk with a PRC expert in China?
    Answer: No, if the information in question arose during or resulted 
from the same ``fundamental research.''
    Question D(5): Could I properly do some work with him in his 
research laboratory inside China?
    Answer: Application abroad of personal knowledge or technical 
experience acquired in the United States constitutes an export of that 
knowledge and experience, and such an export may be subject to the EAR. 
If any of the knowledge or experience you export in this way requires a 
license under the EAR, you must obtain such a license or qualify for a 
License Exception.
    Question D(6): I would like to correspond and share research results 
with an Iranian expert in my field, which deals with technology that 
requires a license to all destinations except Canada. Do I need a 
license to do so?
    Answer: Not as long as we are still talking about information that 
arose during or resulted from research that qualifies as ``fundamental'' 
under the rules spelled out in Sec. 734.8(a) of this part.
    Question D(7): Suppose the research in question were funded by a 
corporate sponsor and I had agreed to prepublication review of any paper 
arising from the research?
    Answer: Whether your research would still qualify as ``fundamental'' 
would depend on the nature and purpose of the prepublication review. If 
the review is intended solely to ensure that your publications will 
neither compromise patent rights nor inadvertently divulge proprietary 
information that the sponsor has furnished to you, the research could 
still qualify as ``fundamental.'' But if the sponsor will consider as 
part of its prepublication review whether it wants to hold your new 
research results as trade secrets or otherwise proprietary information 
(even if your voluntary cooperation would be needed for it to do so), 
your research would no longer qualify as ``fundamental.'' As used in 
these regulations it is the actual and intended openness of research 
results that primarily determines whether the research counts as 
``fundamental'' and so is not subject to the EAR.
    Question D(8): In determining whether research is thus open and 
therefore counts as ``fundamental,'' does it matter where or in what 
sort of institution the research is performed?
    Answer: In principle, no. ``Fundamental research'' is performed in 
industry, Federal laboratories, or other types of institutions, as well 
as in universities. The regulations introduce some operational 
presumptions and procedures that can be used both by those subject to 
the regulations and by those who administer them to determine with some 
precision whether a particular research activity is covered. Recognizing 
that common and predictable norms operate in different types of 
institutions, the regulations use the institutional locus of the 
research as a starting point for these presumptions and procedures. 
Nonetheless, it remains the type of research, and particularly the 
intent and freedom to publish, that identifies ``fundamental research,'' 
not the institutional locus (Sec. 734.8(a) of this part).
    Question D(9): I am doing research on high-powered lasers in the 
central basic-research laboratory of an industrial corporation. I am 
required to submit the results of my research for prepublication review 
before I can publish them or otherwise make them public. I would like to 
compare research results with a scientific colleague from Vietnam and 
discuss the results of the research with her when she visits the United 
States. Do I need a license to do so?
    Answer: You probably do need a license (Sec. 734.8(d) of this part). 
However, if the only restriction on your publishing any of that 
information is a prepublication review solely to ensure that publication 
would compromise no patent rights or proprietary information provided by 
the company to the researcher your research may be considered 
``fundamental research,'' in which case you

[[Page 136]]

may be able to share information because it is not subject to the EAR. 
Note that the information will be subject to the EAR if the 
prepublication review is intended to withhold the results of the 
research from publication.
    Question D(10): Suppose I have already cleared my company's review 
process and am free to publish all the information I intend to share 
with my colleague, though I have not yet published?
    Answer: If the clearance from your company means that you are free 
to make all the information publicly available without restriction or 
delay, the information is not subject to the EAR. (Sec. 734.8(d) of this 
part)
    Question D(11): I work as a researcher at a Government-owned, 
contractor-operated research center. May I share the results of my 
unpublished research with foreign nationals without concern for export 
controls under the EAR?
    Answer: That is up to the sponsoring agency and the center's 
management. If your research is designated ``fundamental research'' 
within any appropriate system devised by them to control release of 
information by scientists and engineers at the center, it will be 
treated as such by the Commerce Department, and the research will not be 
subject to the EAR. Otherwise, you would need to obtain a license or 
qualify for a License Exception, except to publish or otherwise make the 
information public (Sec. 734.8(c) of this part).

                  Section E: Federal Contract Controls

    Question E(1): In a contract for performance of research entered 
into with the Department of Defense (DOD), we have agreed to certain 
national security controls. DOD is to have ninety days to review any 
papers we proposed before they are published and must approve assignment 
of any foreign nationals to the project. The work in question would 
otherwise qualify as ``fundamental research'' section under Sec. 734.8 
of this part. Is the information arising during or resulting from this 
sponsored research subject to the EAR?
    Answer: Under Sec. 734.11 of this part, any export or reexport of 
information resulting from government-sponsored research that is 
inconsistent with contract controls you have agreed to will not qualify 
as ``fundamental research'' and any such export or reexport would be 
subject to the EAR. Any such export or reexport that is consistent with 
the controls will continue to be eligible for export and reexport under 
the ``fundamental research'' rule set forth in Sec. 734.8(a) of this 
part. Thus, if you abide by the specific controls you have agreed to, 
you need not be concerned about violating the EAR. If you violate those 
controls and export or reexport information as ``fundamental research'' 
under Sec. 734.8(a) of this part, you may subject yourself to the 
sanctions provided for under the EAR, including criminal sanctions, in 
addition to administrative and civil penalties for breach of contract 
under other law.
    Question E(2): Do the Export Administration Regulations restrict my 
ability to publish the results of my research?
    Answer: The Export Administration Regulations are not the means for 
enforcing the national security controls you have agreed to. If such a 
publication violates the contract, you would be subject to 
administrative, civil, and possible criminal penalties under other law.

                    Section F: Commercial Consulting

    Question F(1): I am a professor at a U.S. university, with expertise 
in design and creation of submicron devices. I have been asked to be a 
consultant for a ``third-world'' company that wishes to manufacture such 
devices. Do I need a license to do so?
    Answer: Quite possibly you do. Application abroad of personal 
knowledge or technical experience acquired in the United States 
constitutes an export of that knowledge and experience that is subject 
to the Export Administration Regulations. If any part of the knowledge 
or experience your export or reexport deals with technology that 
requires a license under the EAR, you will need to obtain a license or 
qualify for a License Exception.

                    Section G: Software 2
---------------------------------------------------------------------------

    \2\ Exporters should note that these provisions do not apply to 
software controlled under the International Traffic in Arms Regulations 
(e.g., certain encryption software).
---------------------------------------------------------------------------

    Question G(1): Is the export or reexport of software in machine 
readable code subject to the EAR when the source code for such software 
is publicly available?
    Answer: If the source code of a software program is publicly 
available, then the machine readable code compiled from the source code 
is software that is publicly available and therefore not subject to the 
EAR.
    Question G(2): Is the export or reexport of software sold at a price 
that does not exceed the cost of reproduction and distribution subject 
to the EAR?
    Answer: Software in machine readable code is publicly available if 
it is available to a community at a price that does not exceed the cost 
of reproduction and distribution. Such reproduction and distribution 
costs may include variable and fixed allocations of overhead and normal 
profit for the reproduction and distribution functions either in your 
company or in a third party distribution system. In your company, such 
costs may not include recovery for development, design, or acquisition. 
In this case, the provider of the software does not receive a fee for 
the inherent value of the software.

[[Page 137]]

    Question G(3): Is the export or reexport of software subject to the 
EAR if it is sold at a price BXA concludes in a classification letter to 
be sufficiently low so as not to subject it to the EAR?
    Answer: In response to classification requests, BXA may choose to 
classify certain software as not subject to the EAR even though it is 
sold at a price above the costs of reproduction and distribution as long 
as the price is nonetheless sufficiently low to qualify for such a 
classification in the judgment of BXA.

                Section H: Available in a Public Library

    Question H(1): Is the export or reexport of information subject to 
the EAR if it is available in a library and sold through an electronic 
or print service?
    Answer: Electronic and print services for the distribution of 
information may be relatively expensive in the marketplace because of 
the value vendors add in retrieving and organizing information in a 
useful way. If such information is also available in a library--itself 
accessible to the public--or has been published in any way, that 
information is ``publicly available'' for those reasons, and the 
information itself continues not to be subject to the EAR even though 
you access the information through an electronic or print service for 
which you or your employer pay a substantial fee.
    Question H(2): Is the export or reexport of information subject to 
the EAR if the information is available in an electronic form in a 
library at no charge to the library patron?
    Answer: Information available in an electronic form at no charge to 
the library patron in a library accessible to the public is information 
publicly available even though the library pays a substantial 
subscription fee for the electronic retrieval service.
    Question H(3): Is the export or reexport of information subject to 
the EAR if the information is available in a library and sold for more 
than the cost of reproduction and distribution?
    Answer: Information from books, magazines, dissertations, papers, 
electronic data bases, and other information available in a library that 
is accessible to the public is not subject to the EAR. This is true even 
if you purchase such a book at more than the cost of reproduction and 
distribution. In other words, such information is ``publicly available'' 
even though the author makes a profit on your particular purchase for 
the inherent value of the information.

                        Section I: Miscellaneous

    Question I(1): The manufacturing plant that I work at is planning to 
begin admitting groups of the general public to tour the plant 
facilities. We are concerned that a license might be required if the 
tour groups include foreign nationals. Would such a tour constitute an 
export? If so, is the export subject to the EAR?
    Answer: The EAR define exports and reexports of technology to 
include release through visual inspection by foreign nationals of U.S.-
origin equipment and facilities. Such an export or reexport qualifies 
under the ``publicly available'' provision and would not be subject to 
the EAR so long as the tour is truly open to all members of the public, 
including your competitors, and you do not charge a fee that is not 
reasonably related to the cost of conducting the tours. Otherwise, you 
will have to obtain a license, or qualify for a License Exception, prior 
to permitting foreign nationals to tour your facilities (Sec. 734.7 of 
this part).
    Question I(2): Is the export or reexport of information subject to 
the EAR if the information is not in a library or published, but sold at 
a price that does not exceed the cost of reproduction and distribution?
    Answer: Information that is not in a library accessible to the 
public and that has not been published in any way, may nonetheless 
become ``publicly available'' if you make it both available to a 
community of persons and if you sell it at no more than the cost of 
reproduction and distribution. Such reproduction and distribution costs 
may include variable and fixed cost allocations of overhead and normal 
profit for the reproduction and distribution functions either in your 
company or in a third party distribution system. In your company, such 
costs may not include recovery for development, design, or acquisition 
costs of the technology or software. The reason for this conclusion is 
that the provider of the information receives nothing for the inherent 
value of the information.
    Question I(3): Is the export or reexport of information contributed 
to an electronic bulletin board subject to the EAR?
    Answer: Assume each of the following:
    1. Information is uploaded to an electronic bulletin board by a 
person that is the owner or originator of the information;
    2. That person does not charge a fee to the bulletin board 
administrator or the subscribers of the bulletin board; and
    3. The bulletin board is available for subscription to any 
subscriber in a given community regardless of the cost of subscription.
    Such information is ``publicly available'' and therefore not subject 
to the EAR even if it is not elsewhere published and is not in a 
library. The reason for this conclusion is that the bulletin board 
subscription charges or line charges are for distribution exclusively, 
and the provider of the information receives nothing for the inherent 
value of the information.

[[Page 138]]

    Question I(4): Is the export or reexport of patented information 
fully disclosed on the public record subject to the EAR?
    Answer: Information to the extent it is disclosed on the patent 
record open to the public is not subject to the EAR even though you may 
use such information only after paying a fee in excess of the costs of 
reproduction and distribution. In this case the seller does receive a 
fee for the inherent value of the technical data; however, the export or 
reexport of the information is nonetheless not subject to the EAR 
because any person can obtain the technology from the public record and 
further disclose or publish the information. For that reason, it is 
impossible to impose export controls that deny access to the 
information.

[61 FR 12746, Mar. 25, 1996, as amended at 61 FR 68579, Dec. 30, 1996; 
62 FR 25456, May 9, 1997]

Supplement No. 2 to Part 734--Calculation of Values for De Minimis Rules

    (a) Use the following guidelines in determining values for 
establishing exemptions or for submission of a request for 
authorization:
    (1) U.S. content value.
    (i) U.S. content value is the delivered cost to the foreign 
manufacturer of the U.S. origin parts, components, or materials. (When 
affiliated firms have special arrangements that result in lower than 
normal pricing, the cost should reflect ``fair market'' prices that 
would normally be charged to similar, unaffiliated customers.)
    (ii) In calculating the U.S. content value, do not include parts, 
components, or materials that could be exported from the United States 
to the new country of destination without a license (designated as 
``NLR'') or under License Exception GBS (see part 740 of the EAR) or 
under NLR for items classified as EAR99.
    (2) The foreign-made product value is the normal selling price 
f.o.b. factory (excluding value added taxes or excise taxes).
    (3) To determine the value of the U.S.-origin controlled content, 
you should classify the U.S.-origin content on the Commerce Control 
List, determine those items that would require a license from BXA for 
reexport to the ultimate destination of the foreign-made product if such 
parts, components, or materials were reexported to that destination in 
the form received, and divide the total value of the controlled U.S. 
parts, components, and materials incorporated into the foreign-made item 
by the sale price of the foreign-made item.
    (4) If no U.S. parts, components or materials are incorporated or if 
the incorporated U.S. parts, components, and materials are below the de 
minimis level, then the foreign-made item is not subject to the EAR by 
reason of Sec. 734.4 of this part, the classification of a foreign-made 
item is irrelevant in determining the scope of the EAR, and you should 
skip Step 4 in Sec. 732.2(d) and go on to consider Step 6 in 
Sec. 732.2(f) of the EAR regarding the foreign-produced direct product 
rule.
    Note to paragraph (a)--U.S. origin peripheral or accessory devices 
that are merely rack mounted with or cable connected into foreign 
equipment are not deemed to be incorporated components even though 
intended for use with products made abroad. Rather, such items are 
treated as U.S. items that retain their identity and remain subject to 
the EAR.
    (b) One-time report prior to reliance upon the de minimis exclusion. 
Report requirement. Before you may rely upon the de minimis exclusion 
for foreign software and technology commingled with U.S. software or 
technology, you must file a one-time report for the foreign software or 
technology. The report must include the percentage of U.S.-content by 
value and a description of your calculations including relevant values, 
assumptions, and the basis or methodologies for making the percentage 
calculation. The three criteria important to BXA in its review of your 
report will be the export price of the U.S.-content, the assumption 
regarding future sales of software, and the choice of the scope of 
foreign technology. Your methodologies must be based upon the accounting 
standards used in the operation of your business, and you must specify 
that standard in your report. Regardless of the accounting systems, 
standard, or conventions you use in the operation of your business, you 
may not depreciate the fair market values reported or otherwise reduce 
the fair market values by other accounting conventions such as 
depreciation. You may rely upon the de minimis exclusion from the 
commingled rule only to the extent you have reported the relevant 
calculations, values, assumptions, and the basis or methodologies for 
the calculations. These values may be historic or projected. You may 
rely on projected values only to the extent that and for so long as they 
remain consistent with your report or future values reduce the U.S.-
content under your reported assumptions, basis, and methodologies. You 
are not required to file the above report if you do not choose to take 
advantage of the de minimis exclusion from the commingled rule.
    (2) Export price. The report must include a description of the U.S.-
content including its classification on the Commerce Control List, its 
performance characteristics and features, and the method of calculating 
its fair market value. The fair market value shall be the arms-length 
transaction price, if it is available. If an arms-length transaction 
price is unavailable, then the report will describe the

[[Page 139]]

valuation method chosen to calculate or derive the fair market value. 
Such methods may include comparable market prices or costs of production 
and distribution. This rule does not require calculations based upon any 
one accounting system or U.S. accounting standards. However, you must 
specify the accepted accounting standards you have chosen, and cost-
based methods of valuation must be based upon records you maintain in 
the normal course of business. You should also indicate whether reported 
values are actual arms-length market prices or derived from comparable 
transactions or costs of production, overhead, and profit. For example, 
if you chose to make calculations under the transfer pricing rules of 
the United States Internal Revenue Code at section 482, your report 
should indicate that this is the source for your methodology, and you 
should also indicate which of the several methodologies in these 
transfer pricing rules you have chosen.
    (3) Future software sales. For calculations of U.S.-content in 
foreign software, you shall include your historic and estimated future 
software sales in units and value along with the rationale and basis for 
those estimates in the report. Unlike parts incorporated into 
commodities, the cost of U.S. software code will be attributed or 
allocated to the future sales of foreign-made software incorporating the 
U.S. code, to determine the percentage of U.S. controlled content. In 
making this calculation for foreign-made software, you must make an 
estimate of future software sales of that foreign software if it is 
commingled with or incorporated with the U.S. code. The value of the 
U.S. code commingled with or incorporated into the foreign made software 
shall be divided by the total selling price of all foreign-made software 
units already sold, plus the total selling price of all foreign-made 
software units estimated for future sales.
    (4) Foreign technology and software. For calculations of U.S.-
content in foreign technology and software, you shall include in the 
report a description of the foreign technology or software and a 
description of its fair market value along with the rationale and basis 
for the selection and valuation of such foreign software or technology. 
The report does not require information regarding destinations and end 
users for reexport. The purpose of the report is solely to permit the 
U.S. Government to evaluate the reasonableness of U.S.-content 
calculations.
    (5) Report and wait. If you have not been contacted by BXA 
concerning your report within thirty days after filing the report with 
BXA, you may rely upon the calculations in your report and the de 
minimis exclusions for software and technology for so long as you are 
not contacted by BXA. BXA may contact you concerning your report to 
inquire of you further or to indicate that BXA does not accept the 
assumptions or rationale for your calculations. If you receive such a 
contact or communication from BXA, you may not rely upon the de minimis 
exclusions for software and technology in Sec. 734.4 of this part until 
BXA has indicated whether or not you may do so in the future. You must 
include in your report the name, title, address, telephone number, and 
facsimile number of the person BXA may contact concerning your report.

[61 FR 12746, Mar. 25, 1996, as amended at 62 FR 25456, May 9, 1997]



PART 736--GENERAL PROHIBITIONS--Table of Contents




Sec.
736.1  Introduction.
736.2  General prohibitions and determination of applicability.

Supplement No. 1 to Part 736--General Orders
Supplement No. 2 to Part 736--Administrative Orders

    Authority: 50 U.S.C. app. 2401 et seq., 1701 et seq.; E.O. 12924, 59 
FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228 (1997); Notice of August 15, 1995, 3 CFR, 1995 Comp. 
501 (1996); Notice of August 14, 1996, 61 FR 42527, 3 CFR 1996 Comp., p. 
298 (1997); Notice of August 13, 1997 (62 FR 43629, August 15, 1997); 
and Notice of August 13, 1998 (62 FR 44121, August 17, 1998).

    Source: 61 FR 12754, Mar. 25, 1996, unless otherwise noted.



Sec. 736.1  Introduction.

    In this part, references to the EAR are references to 15 CFR chapter 
VII, subchapter C. A person may undertake transactions subject to the 
EAR without a license or other authorization, unless the regulations 
affirmatively state such a requirement. As such, if an export, reexport, 
or activity is subject to the EAR, the general prohibitions contained in 
this part and the License Exceptions specified in part 740 of the EAR 
must be reviewed to determine if a license is necessary. In the case of 
all exports from the United States, you must document your export as 
described in part 762 of the EAR regarding recordkeeping and clear your 
export through the U.S. Customs Service as described in part 758 of the 
EAR regarding export clearance requirements. Also note that for short 
supply controls all prohibitions and License Exceptions are in part 754 
of the EAR.
    (a) In this part we tell you:

[[Page 140]]

    (1) The facts that make your proposed export, reexport, or conduct 
subject to these general prohibitions, and
    (2) The ten general prohibitions.
    (b) Your obligations under the ten general prohibitions and under 
the EAR depend in large part upon the five types of information 
described in Sec. 736.2(a) of this part and upon the general 
prohibitions described in Sec. 736.2(b) of this part. The ten general 
prohibitions contain cross-references to other parts of the EAR that 
further define the breadth of the general prohibitions. For that reason, 
this part is not freestanding. In part 732, we provide certain steps you 
may follow in proper order to help you understand the general 
prohibitions and their relationship to other parts of the EAR.
    (c) If you violate any of these ten general prohibitions, or engage 
in other conduct contrary to the Export Administration Act, the EAR, or 
any order, license, License Exception, or authorization issued 
thereunder, as described in part 764 of the EAR regarding enforcement, 
you will be subject to the sanctions described in that part.



Sec. 736.2  General prohibitions and determination of applicability.

    (a) Information or facts that determine the applicability of the 
general prohibitions. The following five types of facts determine your 
obligations under the ten general prohibitions and the EAR generally:
    (1) Classification of the item. The classification of the item on 
the Commerce Control List (see part 774 of the EAR);
    (2) Destination. The country of ultimate destination for an export 
or reexport (see parts 738 and 774 of the EAR concerning the Country 
Chart and the Commerce Control List);
    (3) End-user. The ultimate end-user (see General Prohibition Four 
(paragraph (b)(4) of this section) and parts 744 and 764 of the EAR for 
a reference to the list of persons you may not deal with);
    (4) End-use. The ultimate end-use (see General Prohibition Five 
(paragraph (b)(5) of this section) and part 744 of the EAR for general 
end-use restrictions); and
    (5) Conduct. Conduct such as contracting, financing, and freight 
forwarding in support of a proliferation project as described in part 
744 of the EAR.
    (b) General prohibitions. The following ten general prohibitions 
describe certain exports, reexports, and other conduct, subject to the 
scope of the EAR, in which you may not engage unless you either have a 
license from the Bureau of Export Administration (BXA) or qualify under 
part 740 of the EAR for a License Exception from each applicable general 
prohibition in this paragraph. The License Exceptions at part 740 of the 
EAR apply only to General Prohibitions One (Exports and Reexports in the 
Form Received), Two (Parts and Components Reexports), and Three 
(Foreign-Produced Direct Product Reexports); however, selected License 
Exceptions are specifically referenced and authorized in part 746 of the 
EAR concerning embargo destinations and in Sec. 744.2(c) of the EAR 
regarding nuclear end-uses.
    (1) General Prohibition One--Export and reexport of controlled items 
to listed countries (Exports and Reexports). You may not, without a 
license or License Exception, export any item subject to the EAR to 
another country or reexport any item of U.S.-origin if each of the 
following is true:
    (i) The item is controlled for a reason indicated in the applicable 
Export Control Classification Number (ECCN), and
    (ii) Export to the country of destination requires a license for the 
control reason as indicated on the Country Chart at part 738 of the EAR. 
(The scope of this prohibition is determined by the correct 
classification of your item and the ultimate destination as that 
combination is reflected on the Country Chart.) 1 Note that 
each License Exception described at part 740 of the EAR supersedes 
General Prohibition One if all terms and conditions of a given License 
Exception are met by the exporter or reexporter.
---------------------------------------------------------------------------

    \1\ See part 738 of the EAR for selected controls that are not 
specified on the Country Chart.
---------------------------------------------------------------------------

    (2) General Prohibition Two--Reexport and export from abroad of 
foreign-made items incorporating more than a de minimis amount of 
controlled U.S. content (Parts and Components Reexports). (i)

[[Page 141]]

You may not, without a license or License Exception, export, reexport or 
export from abroad any foreign-made commodity, software, or technology 
incorporating U.S.-origin commodities, software, or technology 
respectively that is controlled to the country of ultimate destination 
if the foreign-made item meets all three of the following conditions:
    (A) It incorporates more than the de minimis amount of controlled 
U.S. content, as defined in Sec. 734.4 of the EAR concerning the scope 
of the EAR;
    (B) It is controlled for a reason indicated in the applicable ECCN; 
and
    (C) Its export to the country of destination requires a license for 
that control reason as indicated on the Country Chart. (The scope of 
this prohibition is determined by the correct classification of your 
foreign-made item and the ultimate destination, as that combination is 
reflected on the Country Chart.)
    (ii) Each License Exception described in part 740 of the EAR 
supersedes General Prohibition Two if all terms and conditions of a 
given License Exception are met by the exporter or reexporter.
    (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). (i) Country scope of 
prohibition. You may not export, reexport, or export from abroad items 
subject to the scope of this General Prohibition Three to Cuba, North 
Korea, Libya, or a destination in Country Group D:1 (See Supplement No. 
1 to part 740 of the EAR).
    (ii) Product scope of foreign-made items subject to prohibition. 
This General Prohibition 3 applies if an 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)(ii)(A) of 
this section:
    (A) Conditions defining direct product of technology. Foreign-made 
items are subject to this General Prohibition 3 if they meet both of the 
following conditions:
    (1) They are the direct product of technology or software that 
requires a written assurance as a supporting document for a license or 
as a precondition for the use of License Exception TSR in Sec. 740.6 of 
the EAR, and
    (2) They are subject to national security controls 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. Foreign-made 
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 
requires a written assurance as a supporting document for a license or 
as a precondition for the use of License Exception TSR in Sec. 740.6 of 
the EAR, and
    (2) Such foreign-made direct products of the plant or component are 
subject to national security controls as designated on the applicable 
ECCN of the Commerce Control List at part 774 of the EAR.
    (iii) License Exceptions. Each License Exception described at part 
740 of the EAR supersedes this General Prohibition Three if all terms 
and conditions of a given exception are met by the exporter or 
reexporter.
    (4) General Prohibition Four (Denial Orders)--Engaging in actions 
prohibited by a denial order. (i) You may not take any action that is 
prohibited by a denial order issued under part 766 of the EAR, 
Administrative Enforcement Proceedings. These orders prohibit many 
actions in addition to direct exports by the person denied export 
privileges, including some transfers within a single country either in 
the United States or abroad by other persons. You are responsible for 
ensuring that any of your transactions in which a person who is denied 
export privileges is involved do not violate the terms of the order. The 
names of persons denied export privileges are published in the Federal 
Register and are also included on the Denied Persons List, which is 
referenced in Supplement No. 2 to part 764 of the EAR, Enforcement. The 
terms of the standard denial order are set forth in Supplement No. 1 to 
part 764. You should note that some denial orders differ from the 
standard denial order. BXA may, on an exceptional basis, authorize 
activity otherwise prohibited

[[Page 142]]

by a denial order. See Sec. 764.3(a)(3) of the EAR.
    (ii) There are no License Exceptions described in part 740 of the 
EAR that authorize conduct prohibited by this General Prohibition Four.
    (5) General Prohibition Five--Export or reexport to prohibited end-
uses or end-users (End-Use End-User). You may not, without a license, 
knowingly export or reexport any item subject to the EAR to an end-user 
of end-use that is prohibited by part 744 of the EAR.
    (6) General Prohibition Six--Export or reexport to embargoed 
destinations (Embargo). (i) You may not, without a license or License 
Exception authorized under part 746, export or reexport any item subject 
to the EAR to a country that is embargoed by the United States or 
otherwise made subject to controls as both are described at part 746 of 
the EAR.
    (ii) License Exceptions to General Prohibition Six are described in 
part 746 of the EAR, on Embargoes and Other Special Controls. Unless a 
License Exception or other authorization is authorized in part 746 of 
the EAR, the License Exceptions described in part 740 of the EAR are not 
available to overcome this general prohibition.
    (7) General Prohibition Seven--Support of Certain Activities by U.S. 
persons--(i) Support of Proliferation Activities (U.S. Person 
Proliferation Activity). If you are a U.S. Person as that term is 
defined in Sec. 744.6(c) of the EAR, you may not engage in any 
activities prohibited by Sec. 744.6 (a) or (b) of the EAR which 
prohibits the performance, without a license from BXA, of certain 
financing, contracting, service, support, transportation, freight 
forwarding, or employment that you know will assist in certain 
proliferation activities described further in part 744 of the EAR. There 
are no License Exceptions to this General Prohibition Seven in part 740 
of the EAR unless specifically authorized in that part.
    (ii) You may not, without a license from BXA, provide certain 
technical assistance to foreign persons with respect to encryption 
items, as described in Sec. 744.9 of the EAR.
    (8) General Prohibition Eight--In transit shipments and items to be 
unladen from vessels or aircraft (Intransit).
    (i) Unlading and shipping in transit. You may not export or reexport 
an item through or transit through a country listed in paragraph 
(b)(8)(ii) of this section unless a License Exception or license 
authorizes such an export or reexport directly to such a country of 
transit.
    (ii) Country scope. This General Prohibition Eight applies to 
Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Cambodia, Cuba, 
Estonia, Georgia, Kazakhstan, Kyrgyzstan, Laos, Latvia, Lithuania, 
Mongolia, North Korea, Russia, Tajikistan, Turkmenistan, Ukraine, 
Uzbekistan, Vietnam.
    (9) General Prohibition Nine--Violation of any order, terms, and 
conditions (Orders, Terms, and Conditions). You may not violate terms or 
conditions of a license or of a License Exception issued under or made a 
part of the EAR, and you may not violate any order issued under or made 
a part of the EAR. There are no License Exceptions to this General 
Prohibition Nine in part 740 of the EAR. Supplements Nos. 1 and 2 to 
this part provide for certain General Orders and Administrative Orders.
    (10) General Prohibition Ten--Proceeding with transactions with 
knowledge that a violation has occurred or is about to occur (Knowledge 
Violation to Occur). You may not sell, transfer, export, reexport, 
finance, order, buy, remove, conceal, store, use, loan, dispose of, 
transfer, transport, forward, or otherwise service, in whole or in part, 
any item subject to the EAR and exported or to be exported with 
knowledge that a violation of the Export Administration Regulations, the 
Export Administration Act or any order, license, License Exception, or 
other authorization issued thereunder has occurred, is about to occur, 
or is intended to occur in connection with the item. Nor may you rely 
upon any license or License Exception after notice to you of the 
suspension or revocation of that license or exception. There are no 
License Exceptions to this General Prohibition Ten in part 740 of the 
EAR.

[61 FR 12754, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 61 
FR 68579, Dec. 30, 1996; 62 FR 25456, May 9, 1997]

[[Page 143]]

              Supplement No. 1 to Part 736--General Orders

    General Order No. 1 of September 16, 1998; Establishing a 24-month 
validity period on reexport authorizations issued without a validity 
period and revoking those exceeding that period.
    (a) Reexport authorizations issued within 24-months of the General 
Order. All reexport authorizations issued with no validity period within 
the 24-months preceding September 16, 1998 shall be deemed to have an 
expiration date which shall be the date 24-months from the date of 
issuance of the reexport authorization or November 16, 1998, whichever 
is longer.
    (b) Reexport authorizations issued before the 24-month period 
preceding the General Order. For reexport authorizations issued with no 
validity period before the 24-month period preceding September 16, 1998:
    (1) Effective September 16, 1998, all such outstanding reexport 
authorizations for terrorist-supporting countries (see parts 742 and 746 
of the EAR) are revoked.
    (2) Effective November 16, 1998, all other such outstanding reexport 
authorizations are revoked.
    (c) Extensions. If necessary, you may request extensions of such 
authorizations according to procedures set forth in Sec. 750.7(g) of the 
EAR.
    (d) Specific Notice from BXA. If you have received, or should you 
receive, specific notice from BXA with regard to a reexport 
authorization covered by this General Order, informing you of a 
revocation, suspension, or revision (including validity period) of any 
such reexport authorization, then the terms of that specific notice will 
be controlling.
    (e) Definition of ``authorization''. The term ``authorization'' as 
used in this General Order encompasses the range of reexport 
authorizations granted by BXA, which includes licenses, individual 
letters, and other types of notifications.

[63 FR 49426, Sept. 16, 1998]

           Supplement No. 2 to Part 736--Administrative Orders

    Administrative Order One: Disclosure of License Issuance and Other 
Information. Consistent with section 12(c) of the Export Administration 
Act of 1979, as amended, information obtained by the U.S. Department of 
Commerce for the purpose of consideration of or concerning license 
applications, as well as related information, will not be publicly 
disclosed without the approval of the Secretary of Commerce. Shipper's 
Export Declarations also are exempt from public disclosure, except with 
the approval of the Secretary of Commerce, in accordance with 
Sec. 301(g) of Title 13, United States Code.
    Administrative Order Two: Conduct of Business and Practice in 
Connection with Export Control Matters.
    (a) Conduct of business and practice in connection with export 
control matters.
    (1) Exclusion of persons guilty of unethical conduct or not 
possessing required integrity and ethical standards.
    (i) Who may be excluded. Any person, whether acting on his own 
behalf or on behalf of another, who shall be found guilty of engaging in 
any unethical activity or who shall be demonstrated not to possess the 
required integrity and ethical standards, may be excluded from (denied) 
export privileges on his own behalf, or may be excluded from practice 
before BXA on behalf of another, in connection with any export control 
matter, or both, as provided in part 764 of the EAR.
    (ii) Grounds for exclusion. Among the grounds for exclusion are the 
following:
    (A) Inducing or attempting to induce by gifts, promises, bribes, or 
otherwise, any officer or employee of BXA or any customs or post office 
official, to take any action with respect to the issuance of licenses or 
any other aspects of the administration of the Export Administration 
Act, whether or not in violation of any regulation;
    (B) Offering or making gifts or promises thereof to any such officer 
or employee for any other reason;
    (C) Soliciting by advertisement or otherwise the handling of 
business before BXA on the representation, express or implied, that such 
person, through personal acquaintance or otherwise, possesses special 
influence over any officer or employee of BXA;
    (D) Charging, or proposing to charge, for any service performed in 
connection with the issuance of any license, any fee wholly contingent 
upon the granting of such license and the amount or value thereof. This 
provision will not be construed to prohibit the charge of any fee agreed 
to by the parties; provided that the out-of-pocket expenditures and the 
reasonable value of the services performed, whether or not the license 
is issued and regardless of the amount thereof, are fairly compensated; 
and
    (E) Knowingly violating or participating in the violation of, or an 
attempt to violate, any regulation with respect to the export of 
commodities or technical data, including the making of or inducing 
another to make any false representations to facilitate any export in 
violation of the Export Administration Act or any order or regulation 
issued thereunder.
    (iii) Definition. As used in this Administration Order, the terms 
``practice before BXA'' and ``appear before BXA'' include:
    (A) The submission on behalf of another of applications for export 
licenses or other documents required to be filed with BXA, or the 
execution of the same;

[[Page 144]]

    (B) Conferences or other communications on behalf of another with 
officers or employees of BXA for the purpose of soliciting or expediting 
approval by BXA of applications for export licenses or other documents, 
or with respect to quotas, allocations, requirements or other export 
control actions, pertaining to matters within the jurisdiction of BXA;
    (C) Participating on behalf of another in any proceeding pending 
before BXA; and
    (D) Submission to a customs official on behalf of another of a 
license or Shipper's Export Declaration or other export control 
document.
    (iv) Proceedings. All proceedings under this Administrative Order 
shall be conducted in the same manner as provided in part 766 of the 
EAR.
    (2) Employees and former employees. Persons who are or at any time 
have been employed on a full-time or part-time, compensated or 
uncompensated, basis by the U.S. Government are subject to the 
provisions of 18 U.S.C. 203, 205, and 207 (Pub. L. 87-849, 87th 
Congress) in connection with representing a private party or interest 
before the U.S. Department of Commerce in connection with any export 
control matter.



PART 738--COMMERCE CONTROL LIST OVERVIEW AND THE COUNTRY CHART--Table of Contents




Sec.
738.1  Introduction.
738.2  Commerce Control List (CCL) structure.
738.3  Commerce Country Chart structure.
738.4  Determining whether a license is required.

Supplement No. 1 to Part 738--Commerce Country Chart

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 10 
U.S.C. 7420, 7430(e); 18 U.S.C. 2510 et seq.; 22 U.S.C. 287c, 3201 et 
seq., 6004; 42 U.S.C. 2139a, 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; 
50 U.S.C. app. 5; Sec. 201, Pub. L. 104-58, 109 Stat. 557 (30 U.S.C. 
185(s), 185(u)); E.O. 12924, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 3 
CFR, 1996 Comp., p. 228; Notice of August 13, 1997 (62 FR 43629, August 
15, 1997).

    Source: 61 FR 12756, Mar. 25, 1996, unless otherwise noted.



Sec. 738.1  Introduction.

    (a) Commerce Control List scope. (1) In this part, references to the 
EAR are references to 15 CFR chapter VII, subchapter C. The Bureau of 
Export Administration (BXA) maintains the Commerce Control List (CCL) 
within the Export Administration Regulations (EAR), which includes items 
(i.e., commodities, software, and technology) subject to the export 
licensing authority of BXA. The CCL does not include those items 
exclusively controlled for export or reexport by another department or 
agency of the U.S. Government. In instances where agencies other than 
the Department of Commerce administer controls over related items, 
entries in the CCL contain a reference to these controls.
    (2) The CCL is contained in Supplement No. 1 to part 774 of the EAR. 
Supplement No. 2 to part 774 of the EAR contains the General Technology 
and Software Notes relevant to entries contained in the CCL.
    (b) Commerce Country Chart scope. BXA also maintains the Commerce 
Country Chart. The Commerce Country Chart, located in Supplement No. 1 
to part 738, contains licensing requirements based on destination and 
Reason for Control. In combination with the CCL, the Commerce Country 
Chart allows you to determine whether a license is required for items on 
the CCL to any country in the world.



Sec. 738.2  Commerce Control List (CCL) structure.

    (a) Categories. The CCL is divided into 10 categories, numbered as 
follows:

0--Nuclear Materials, Facilities and Equipment and Miscellaneous
1--Materials, Chemicals, ``Microorganisms,'' and Toxins
2--Materials Processing
3--Electronics
4--Computers
5--Telecommunications and Information Security
6--Lasers and Sensors
7--Navigation and Avionics
8--Marine
9--Propulsion Systems, Space Vehicles and Related Equipment

    (b) Groups. Within each category, items are arranged by group. Each 
category contains the same five groups. Each Group is identified by the 
letters A through E, as follows:

A--Equipment, Assemblies and Components
B--Test, Inspection and Production Equipment
C--Materials
D--Software
E--Technology


[[Page 145]]


    (c) Order of review. In order to classify your item against the CCL, 
you should begin with a review of the general characteristics of your 
item. This will usually guide you to the appropriate category on the 
CCL. Once the appropriate category is identified, you should match the 
particular characteristics and functions of your item to a specific 
ECCN. If the ECCN contains a list under the ``Items'' heading, you 
should review the list to determine within which subparagraph(s) your 
items are identified.
    (d) Entries. (1) Composition of an entry. Within each group, 
individual items are identified by an Export Control Classification 
Number (ECCN). Each number consists of a set of digits and a letter. The 
first digit identifies the general category within which the entry falls 
(e.g., 3A001). The letter immediately following this first digit 
identifies under which of the five groups the item is listed (e.g., 3 
A001). The second digit differentiates individual entries by identifying 
the type of controls associated with the items contained in the entry 
(e.g., 3A001). Listed below are the Reasons for Control associated with 
this second digit.

0: National Security reasons (including Dual Use and International 
          Munitions List) and Items on the NSG Dual Use Annex and 
          Trigger List
1: Missile Technology reasons
2: Nuclear Nonproliferation reasons
3: Chemical & Biological Weapons reasons
9: Anti-terrorism, Crime Control, Regional Stability, Short Supply, UN 
          Sanctions, etc.

    (i) Since Reasons for Control are not mutually exclusive, numbers 
are assigned in order of precedence. As an example, if an item is 
controlled for both National Security and Missile Technology reasons, 
the entry's third digit will be a ``0''. If the item is controlled only 
for Missile Technology the third digit will be ``1''.
    (ii) The numbers in either the second or third digit (e.g., 3A001) 
serve to differentiate between multilateral and unilateral entries. An 
entry with the number ``9'' as the second digit, identifies the entire 
entry as controlled for a unilateral concern (e.g., 2B991 for anti-
terrorism reasons). If the number ``9'' appears as the third digit, the 
item is controlled for unilateral purposes based on a proliferation 
concern (e.g., 2A292 is controlled for unilateral purposes based on 
nuclear nonproliferation concerns).
    (iii) The last digit within each entry (e.g., 3A001) is used for the 
sequential numbering of ECCNs to differentiate between entries on the 
CCL.
    (2) Reading an ECCN. A brief description is provided next to each 
ECCN. Following this description is the actual entry containing 
``License Requirements,'' ``License Exceptions,'' and ``List of Items 
Controlled'' sections. A brief description of each section and its use 
follows:
    (i) License Requirements. This section contains a separate line 
identifying all possible Reasons for Control in order of precedence, and 
two columns entitled ``Control(s)'' and ``Country Chart''.
    (A) The ``Controls'' header identifies all applicable Reasons for 
Control, in order of restrictiveness, and to what extent each applies 
(e.g., to the entire entry or only to certain subparagraphs). Those 
requiring licenses for a larger number of countries and/or items are 
listed first. As you read down the list the number of countries and/or 
items requiring a license declines. Since Reasons for Control are not 
mutually exclusive, items controlled within a particular ECCN may be 
controlled for more than one reason. The following is a list of all 
possible Reasons for Control:

AT  Anti-Terrorism
CB  Chemical & Biological Weapons
CC  Crime Control
EI  Encryption Items
MT  Missile Technology
NS  National Security
NP  Nuclear Nonproliferation
RS  Regional Stability
SS  Short Supply
XP  Computers
SI  Significant Items

    (B) The ``Country Chart'' header identifies, for each applicable 
Reason for Control, a column name and number (e.g., CB Column 1). These 
column identifiers are used to direct you from the CCL to the 
appropriate column identifying the countries requiring a license. 
Consult part 742 of the EAR for an indepth discussion of the licensing 
requirements and policies applicable to each Country Chart column.

[[Page 146]]

    (ii) License Exceptions. This section provides a brief eligibility 
statement for each ECCN-driven License Exception that may be applicable 
to your transaction, and should be consulted only AFTER you have 
determined a license is required based on an analysis of the entry and 
the Country Chart. The brief eligibility statement in this section is 
provided to assist you in deciding which ECCN-driven License Exception 
related to your particular item and destination you should explore prior 
to submitting an application. The term ``Yes'' (followed in some 
instances by the scope of Yes) appears next to each available ECCN-
driven License Exception. The term ``N/A'' will be noted for License 
Exceptions that are not available within a particular entry. If one or 
more License Exceptions appear to apply to your transaction, you must 
consult part 740 of the EAR to review the conditions and restrictions 
applicable to each available License Exception. The list of License 
Exceptions contained within each ECCN is not an all-exclusive list. 
Other License Exceptions, not based on particular ECCNs, may be 
available. Consult part 740 of the EAR to determine eligibility for non-
ECCN-driven License Exceptions.
    (iii) List of Items Controlled--(A) Units. The unit of measure 
applicable to each entry is identified in the ``Units'' header. Most 
measurements used in the CCL are expressed in metric units with an inch-
pound conversion where appropriate. Note that in some ECCNs the inch-
pound unit will be listed first. In instances where other units are in 
general usage or specified by law, these will be used instead of metric. 
Generally, when there is a difference between the metric and inch-pound 
figures, the metric standard will be used for classification and 
licensing purposes.
    (B) Related definitions. This header identifies, where appropriate, 
definitions or parameters that apply to all items controlled by the 
entry. The information provided in this section is unique to the entry, 
and hence not listed in the definitions contained in part 772 of the 
EAR.
    (C) Related controls. If another U.S. government agency or 
department has export licensing authority over items related to those 
controlled by an entry, a statement is included identifying the agency 
or department along with the applicable regulatory cite. An additional 
cross-reference may be included in instances where the scope of controls 
differs between a CCL entry and its corresponding entry on list 
maintained by the European Union. This information is provided to assist 
readers who use both lists.
    (D) Items. This header contains a positive list of all items 
controlled by a particular entry and must be reviewed to determine 
whether your item is controlled by that entry. In some entries, the list 
is contained within the entry heading. In these entries a note is 
included to direct you to the entry heading.

[61 FR 112756, Mar. 25, 1996, as amended at 61 FR 68579, Dec. 30, 1996; 
62 FR 25456, May 9, 1997]



Sec. 738.3  Commerce Country Chart structure.

    (a) Scope. The Commerce Country Chart (Country Chart) allows you to 
determine, based on the Reason(s) for Control associated with your item, 
if you need a license to export or reexport your item to a particular 
destination. There are only two instances where the chart cannot be used 
for this purpose:
    (1) Items controlled for short supply reasons. Due to the unique 
nature of these controls, entries controlled for Short Supply reasons 
will send you directly to part 754 of the EAR. Part 754 of the EAR is 
self-contained and includes information on licensing requirements, 
licensing policies, and all available License Exceptions, for items 
controlled for Short Supply reasons.
    (2) Unique entries. The following are unique entries where you do 
not need to consult the Country Chart to determine whether a license is 
required.
    (i) ECCNs 0A983 and 5A980. A license is required for all 
destinations of items controlled under these entries. No License 
Exceptions apply. If your item is controlled by 0A983 or 5A980 you 
should proceed directly to part 748 of the EAR for license application 
instructions and

[[Page 147]]

Sec. 742.11 or Sec. 742.13 of the EAR for information on the licensing 
policy relevant to these types of applications.
    (ii) ECCNs 0A986, 0A988, 0B986, 1A005, 2A994, 2D994, and 2E994. A 
license is required for items controlled under these entries only to the 
specific countries identified within each entry.
    (b) Countries. The first column of the Country Chart lists all 
countries in alphabetical order. There are a number of destinations that 
are not listed in the Country Chart contained in Supplement No. 1 to 
part 738. If your destination is not listed on the Country Chart and 
such destination is a territory, possession, or department of a country 
included on the Country Chart, the EAR accords your destination the same 
licensing treatment as the country of which it is a territory, 
possession, or department. For example, if your destination is the 
Cayman Islands, a dependent territory of the United Kingdom, consult the 
United Kingdom on the Country Chart for licensing requirements.
    (c) Columns. Stretching out to the right are horizontal headers 
identifying the various Reasons for Control. Under each Reason for 
Control header are diagonal column identifiers capping individual 
columns. Each column identifier consists of the two letter Reason for 
Control and a column number. (e.g., CB Column 1). The column identifiers 
correspond to those listed in the ``Country Chart'' header within the 
``License Requirements'' section of each ECCN.
    (d) Cells. The symbol ``X'' is used to denote licensing requirements 
on the Country Chart. If an ``X'' appears in a particular cell, 
transactions subject to that particular Reason for Control/Destination 
combination require a license. There is a direct correlation between the 
number of ``X''s applicable to your transaction and the number of 
licensing reviews your application will undergo.

[61 FR 12756, Mar. 25, 1996, as amended at 63 FR 42228, Aug. 7, 1998]



Sec. 738.4  Determining whether a license is required.

    (a) Using the CCL and the Country Chart--(1) Overview. Once you have 
determined that your item is controlled by a specific ECCN, you must use 
information contained in the ``License Requirements'' section of that 
ECCN in combination with the Country Chart to decide whether a license 
is required.
    (2) License decision making process. The following decision making 
process must be followed in order to determine whether a license is 
required to export or reexport a particular item to a specific 
destination:
    (i) Examine the appropriate ECCN in the CCL. Is the item you intend 
to export or reexport controlled for a single Reason for Control?
    (A) If yes, identify the single Reason for Control and the relevant 
Country Chart column identifier (e.g., CB Column 1).
    (B) If no, identify the Country Chart column identifier for each 
applicable Reason for Control (e.g., NS Column 1, NP Column 1, etc.).
    (ii) Review the Country Chart. With each of the applicable Country 
Chart Column identifiers noted, turn to the Country Chart (Supplement 
No. 1 to part 738). Locate the correct Country Chart column identifier 
on the diagonal headings, and determine whether an ``X'' is marked in 
the cell next to the country in question for each Country Chart column 
identified in the applicable ECCN. If your item is subject to more than 
one reason for control, repeat this step using each unique Country Chart 
column identifier.
    (A) If yes, a license application must be submitted based on the 
particular reason for control and destination, unless a License 
Exception applies. If ``Yes'' is noted next to any of the listed License 
Exceptions, you should consult part 740 of the EAR to determine whether 
you can use any of the available ECCN-drvien License Exceptions to 
effect your shipment, rather than applying for a license. Each 
affirmative license requirement must be overcome by a License Exception. 
If you are unable to qualify for a License Exception based on each 
license requirement noted on the Country Chart, you must apply for a 
license. Note that other License Exceptions, not related to the CCL, may 
also apply to your transaction (See part 740 of the EAR).

[[Page 148]]

    (B) If no, a license is not required based on the particular reason 
for control and destination. Provided General Prohibitions Four through 
Ten do not apply to your proposed transaction, you may effect your 
shipment using the symbol ``NLR''. Proceed to parts 758 and 762 of the 
EAR for information on export clearance procedures and recordkeeping 
requirements. Note that although you may stop after determining a 
license is required based on the first Reason for Control, it is best to 
work through each applicable Reason for Control. A full analysis of 
every possible licensing requirement based on each applicable Reason for 
Control is required to determine the most advantageous License Exception 
available for your particular transaction and, if a license is required, 
ascertain the scope of review conducted by BXA on your license 
application.
    (b) Sample analysis using the CCL and Country Chart--(1) Scope. The 
following sample entry and related analysis is provided to illustrate 
the type of thought process you must complete in order to determine 
whether a license is required to export or reexport a particular item to 
a specific destination using the CCL in combination with the Country 
Chart.
    (2) Sample CCL entry.

2A000:  Entry heading.

License Requirements

Reason for Control: NS, NP, AT

------------------------------------------------------------------------
                 Control(s)                         Country Chart
------------------------------------------------------------------------
NS applies to entire entry.................  NS Column 2
NP applies to 2A000.b......................  NP Column 1
AT applies to entire entry.................  AT Column 1
------------------------------------------------------------------------

License Exceptions

LVS: $5,000
GBS: Yes
CIV: N/A

List of Items Controlled

Unit: Number
Related Definition: N/A
Related Controls: N/A
Items:

    a. Having x.
    b. Having z.

    (3) Sample analysis. After consulting the CCL, I determine my item, 
valued at $10,000, is classified under ECCN 2A000.a. I read that the 
entire entry is controlled for national security, and anti-terrorism 
reasons. Since my item is classified under paragraph .a, and not .b, I 
understand that though nuclear nonproliferation controls apply to a 
portion the entry, they do not apply to my item. I note that the 
appropriate Country Chart column identifiers are NS Column 2 and AT 
Column 1. Turning to the Country Chart, I locate my specific 
destination, India, and see that an ``X'' appears in the NS Column 2 
cell for India, but not in the AT Column 1 cell. I understand that a 
license is required, unless my transaction qualifies for a License 
Exception or Special Comprehensive License. From the License Exception 
LVS value listed in the entry, I know immediately that my proposed 
transaction exceeds the value limitation associated with LVS. Noting 
that License Exception GBS is ``Yes'' for this entry, I turn to part 740 
of the EAR to review the provisions related to use of GBS.

[[Page 149]]


                                                                                     Commerce Country Chart
                                                                                       Reason for Control
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Chemical & biological        Nuclear non-      National security   Missile  Regional stability          Crime control           Anti- terrorism
                                                       weapons               proliferation   --------------------   tech   ---------------------------------------------------------------------
                 Countries                 --------------------------------------------------                    ----------
                                               CB        CB        CB        NP        NP        NS        NS        MT        RS        RS        CC        CC        CC        AT        AT
                                             column    column    column    column    column    column    column    column    column    column    column    column    column    column    column
                                                  1         2         3         1         2         1         2         1         1         2         1         2         3         1         2
�������������������������������������������
Afghanistan...............................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Albania...................................        X         X   ........        X   ........        X         X         X         X         X         X         X   ........  ........  ........
Algeria...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Andorra...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Angola \1\................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Antigua & Barbuda.........................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Argentina.................................        X   ........  ........  ........  ........        X         X         X         X         X         X   ........        X   ........  ........
Armenia...................................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........
Australia.................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Austria...................................        X   ........  ........  ........  ........        X   ........        X         X         X         X   ........        X   ........  ........
Azerbaijan................................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........
Bahamas, The..............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Bahrain...................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Bangladesh................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Barbados..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Belarus...................................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........
Belgium...................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Belize....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Benin.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Bhutan....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Bolivia...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Bosnia & Herzegovina......................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Botswana..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Brazil....................................        X         X   ........  ........  ........        X         X         X         X         X         X   ........        X   ........  ........
Brunei....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Bulgaria..................................        X         X         X   ........  ........        X         X         X         X         X         X         X   ........  ........  ........
Burkina Faso..............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Burma.....................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Burundi...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Cambodia..................................        X         X   ........        X   ........        X         X         X         X         X         X         X   ........  ........  ........
Cameroon..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Canada....................................  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
Cape Verde................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........

[[Page 150]]

 
Central African Republic..................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Chad......................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Chile.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
China.....................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Colombia..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Comoros...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Congo.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Costa Rica................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Cote d'Ivoire.............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Croatia...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Cuba......................................                 See part 746 of the EAR to determine whether a license is required in order to export or reexport to this destination.
Cyprus....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Czech Republic............................        X   ........  ........  ........  ........        X         X         X         X         X         X   ........        X   ........  ........
Denmark...................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Djibouti..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Dominica..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Dominican Republic........................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Ecuador...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Egypt.....................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
El Salvador...............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Equatorial Guinea.........................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Eritrea...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Estonia...................................        X         X   ........        X   ........        X         X         X         X         X         X         X   ........  ........  ........
Ethiopia..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Fiji......................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Finland...................................        X   ........  ........  ........  ........        X   ........        X         X         X         X   ........        X   ........  ........
France....................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Gabon.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Gambia, The...............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Georgia...................................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........
Germany...................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Ghana.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Greece....................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........

[[Page 151]]

 
Grenada...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Guatemala.................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Guinea....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Guinea-Bissau.............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Guyana....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Haiti.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Honduras..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Hong Kong.................................        X         X   ........        X   ........        X     X \2\         X         X         X         X   ........        X   ........  ........
Hungary...................................        X   ........  ........  ........  ........        X         X         X         X         X         X   ........        X   ........  ........
Iceland...................................        X   ........  ........        X   ........        X         X         X         X   ........  ........  ........  ........  ........  ........
India.....................................        X         X         X         X         X         X         X         X         X         X         X   ........        X   ........  ........
Indonesia.................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Iran......................................                 See part 746 of the EAR to determine whether a license is required in order to export or reexport to this destination.
Iraq \1\..................................                 See part 746 of the EAR to determine whether a license is required in order to export or reexport to this destination.
Ireland...................................        X   ........  ........  ........  ........        X   ........        X         X         X         X   ........        X   ........
Israel....................................        X         X         X         X         X         X         X         X         X         X         X   ........        X   ........  ........
Italy.....................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Jamaica...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Japan.....................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Jordan....................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Kazakhstan................................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........
Kenya.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Kiribati..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Korea, North..............................                 See part 746 of the EAR to determine whether a license is required in order to export or reexport to this destination.
Korea, South..............................        X   ........  ........  ........  ........        X     X \2\         X         X         X         X   ........        X   ........  ........
Kuwait....................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Kyrgyzstan................................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........
Laos......................................        X         X   ........        X   ........        X         X         X         X         X         X         X   ........  ........  ........
Latvia....................................        X         X   ........        X   ........        X         X         X         X         X         X         X   ........  ........  ........
Lebanon...................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Lesotho...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Liberia...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Libya.....................................                 See part 746 of the EAR to determine whether a license is required in order to export or reexport to this destination.
Liechtenstein.............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Lithuania.................................        X         X   ........        X   ........        X         X         X         X         X         X         X   ........  ........  ........
Luxembourg................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
FYROM (Macedonia).........................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Madagascar................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Malawi....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Malaysia..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Maldives..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Mali......................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Malta.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Marshall Islands..........................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........

[[Page 152]]

 
Mauritania................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Mauritius.................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Mexico....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Micronesia................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Moldova...................................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........
Monaco....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Mongolia..................................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........
Morocco...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Mozambique................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Namibia...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Nauru.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Nepal.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Netherlands...............................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
New Zealand...............................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Nicaragua.................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Niger.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Nigeria...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Norway....................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Oman......................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Pakistan..................................        X         X         X         X         X         X         X         X         X         X         X   ........        X   ........  ........
Palau.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Panama....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Papua New Guinea..........................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Paraguay..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Peru......................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Philippines...............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Poland....................................        X   ........  ........  ........  ........        X         X         X         X         X         X   ........        X   ........  ........
Portugal..................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Qatar.....................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Romania...................................        X   ........  ........  ........  ........        X         X         X         X         X         X         X   ........  ........  ........
Russia....................................        X         X         X   ........  ........        X         X         X         X         X         X         X   ........  ........  ........
Rwanda \1\................................        X         X   ........        X   ........        X         X         X         X         X         X         X         X   ........  ........
St. Kitts & Nevis.........................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........

[[Page 153]]

 
St. Lucia.................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
St. Vincent & Grenadines..................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
San Marino................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Sao Tome & Principe.......................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Saudi Arabia..............................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Senegal...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Serbia & Montenegro.......................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Seychelles................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Sierra Leone..............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Singapore.................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Slovakia..................................        X   ........  ........  ........  ........        X         X         X         X         X         X   ........        X   ........  ........
Slovenia..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Solomon Islands...........................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Somalia...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
South Africa..............................        X         X   ........  ........  ........        X         X         X         X         X         X   ........        X   ........  ........
Spain.....................................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Sri Lanka.................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Sudan.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X         X         X
Surinam...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Swaziland.................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Sweden....................................        X   ........  ........  ........  ........        X   ........        X         X         X         X   ........        X   ........  ........
Switzerland...............................        X   ........  ........  ........  ........        X   ........        X         X         X         X   ........        X   ........  ........
Syria.....................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X         X   ........
Taiwan....................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Tajikistan................................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........
Tanzania..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Thailand..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Togo......................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Tonga.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Trinidad & Tobago.........................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Tunisia...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Turkey....................................        X         X   ........        X   ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Turkmenistan..............................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........
Tuvalu....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Uganda....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Ukraine...................................        X         X         X   ........  ........        X         X         X         X         X         X         X   ........  ........  ........
United Arab Emirates......................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
United Kingdom............................        X   ........  ........  ........  ........        X   ........        X         X   ........  ........  ........  ........  ........  ........
Uruguay...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Uzbekistan................................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........
Vanuatu...................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Vatican City..............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Venezuela.................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Vietnam...................................        X         X         X         X   ........        X         X         X         X         X         X         X   ........  ........  ........

[[Page 154]]

 
Western Sahara............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Western Samoa.............................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Yemen.....................................        X         X         X         X   ........        X         X         X         X         X         X   ........        X   ........  ........
Zaire.....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........  ........
Zambia....................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........
Zimbabwe..................................        X         X   ........        X   ........        X         X         X         X         X         X   ........        X   ........
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This country is subject to United Nations Sanctions. See part 746 of the EAR for additional OFAC licensing requirements that may apply to your proposed transaction.
\2\ A license is required only for computers controlled by 4A001, 4A002, & 4A003 if the CTP is greater than 10,000 Mtops. A license is NOT required for any other items subject to NS Column 2.

[62 FR 6683, Feb. 12, 1997; 62 FR 31473, June 9, 1997, as amended at 62 
FR 42048, Aug. 5, 1997]

[[Page 155]]



PART 740--LICENSE EXCEPTIONS--Table of Contents




Sec.
740.1  Introduction.
740.2  Restrictions on all License Exceptions.
740.3  Shipments of limited value (LVS).
740.4  Shipments to Country Group B countries (GBS).
740.5  Civil end-users (CIV).
740.6  Technology and software under restriction (TSR).
740.7  Computers (CTP).
740.8  Key management infrastructure (KMI).
740.9  Temporary imports, exports, and reexports (TMP).
740.10  Servicing and replacement of parts and equipment (RPL).
740.11  Governments and international organizations (GOV).
740.12  Gift parcels and humanitarian donations (GFT).
740.13  Technology and software--unrestricted (TSU).
740.14  Baggage (BAG).
740.15  Aircraft and vessels (AVS).
740.16  Additional permissive reexports (APR).
740.17  Encryption commodities and software (ENC).

Supplement No. 1 to Part 740--Country Groups
Supplement No. 2 to Part 740--Items That May Be Donated to Meet Basic 
          Human Needs Under the Humanitarian License Exception
Supplement No. 3 to Part 740-- Countries Eligible To Receive General 
          Purpose Encryption Commodities and Software

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O. 
12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917 (1995); E.O. 13026, 61 FR 
58767, 3 CFR, 1996 Comp., p. 228 (1997); Notice of August 15, 1995, 3 
CFR, 1995 Comp. 501 (1996); Notice of August 14, 1996, 61 FR 42527, 3 
CFR, 1996 Comp., p. 298 (1997); Notice of August 13, 1997, 62 FR 43629, 
3 CFR, 1997 Comp., p.306 (1998); Notice of August 13, 1998 (63 FR 44121, 
August 17, 1998); and P.L. 105-85, 111 Stat. 1629.

    Source: 61 FR 12768, Mar. 25, 1996, unless otherwise noted.



Sec. 740.1  Introduction.

    In this part, references to the EAR are references to 15 CFR chapter 
VII, subchapter C.
    (a) Scope. A ``License Exception'' is an authorization contained in 
this part that allows you to export or reexport under stated conditions, 
items subject to the Export Administration Regulations (EAR) that would 
otherwise require a license under General Prohibition One, Two, or 
Three, as indicated under one or more of the Export Control 
Classification Numbers (ECCNs) in the Commerce Control List (CCL) in 
Supplement No. 1 to part 774 of the EAR. If your export or reexport is 
subject to General Prohibitions Six for embargoed destinations, refer to 
part 746 of the EAR to determine the availability of any License 
Exceptions. Special commodity controls apply to short supply items. 
License Exceptions for items listed on the CCL as controlled for Short 
Supply reasons are found in part 754 of the EAR. If your export or 
reexport is subject to General Prohibition Five, consult part 744 of the 
EAR. If your export or reexport is subject to General Prohibitions Four, 
Seven, Eight, Nine, or Ten, then no License Exceptions apply.
    (b) Certification. By using any of the License Exceptions you are 
certifying that the terms, provisions, and conditions for the use of the 
License Exception described in the EAR have been met. Please refer to 
part 758 of the EAR for clearance of shipments and documenting the use 
of License Exceptions.
    (c) License Exception symbols. Each License Exception bears a three 
letter symbol that will be used for export clearance purposes (see 
paragraph (d) of this section).
    (d) Shipper's Export Declaration--(1) Clearing exports under License 
Exceptions. You must enter on any required Shipper's Export Declaration 
(SED) the letter code (e.g., LVS, TMP) of the License Exception(s) under 
which you are exporting. In the case of License Exceptions LVS, GBS, and 
CIV, the ECCN of the item being exported must also be entered. Please 
refer to Sec. 758.3 of the EAR for the use of SEDs.
    (2) Clearing exports when no license is required (NLR). Certain 
items are listed on the CCL but do not require a license to certain 
destinations under General Prohibitions One, (Exports and Reexports in 
the Form Received), Two (Parts and Components Reexports), or Three 
(Foreign Produced Direct Product Reexports) (Sec. 736.2 (b)(1), (b)(2), 
or (b)(3) of the EAR). (You will have determined this by consulting the 
Country Chart and finding no ``X'' in the

[[Page 156]]

box(es) at the intersection(s) of your country of destination and the 
column headings assigned to your item by the CCL.) If General 
Prohibitions Four through Ten (Sec. 736.2 (b)(4) through (b)(10) of the 
EAR) also do not apply, you must clear exports of such items by entering 
the symbol ``NLR'' in the appropriate place on the Shippers Export 
Declaration. The term ``NLR'' represents exports of listed items when no 
license is required. Such exports do not require that you qualify for a 
License Exception.
    (e) Destination Control Statement. You may be required to enter an 
appropriate Destination Control Statement on commercial documents in 
accordance with Destination Control Statement requirements of Sec. 758.5 
and Sec. 758.6 of the EAR.
    (f) Recordkeeping. Records of transactions involving exports under 
any of the License Exceptions must be maintained in accordance with the 
recordkeeping requirements of part 762 of the EAR.

[61 FR 12768, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 62 
FR 25457, May 9, 1997]



Sec. 740.2  Restrictions on all License Exceptions.

    (a) You may not use any License Exception if any one or more of the 
following apply:
    (1) Your authorization to use a License Exception has been suspended 
or revoked, or your intended export does not qualify for a License 
Exception.
    (2) The export or reexport is subject to one of the ten General 
Prohibitions, is not eligible for a License Exception, and has not been 
authorized by BXA.
    (3) The item is for surreptitious interception of wire or oral 
communications, controlled under ECCN 5A980, unless you are a U.S. 
Government agency (see Sec. 740.11(b)(2)(ii) of this part, Governments 
(GOV)).
    (4) The commodity you are shipping is a specially designed crime 
control and detection instrument or equipment described in Sec. 742.7 of 
the EAR and you are not shipping to Iceland, New Zealand, or countries 
listed in Country Group A:1 (see Supplement No. 1 to part 740), unless 
the shipment is authorized under License Exception BAG, Sec. 740.14(e) 
of this part (shotguns and shotgun shells).
    (5) The item is controlled for missile technology (MT) reasons, 
except that the items described in ECCNs 6A008, 7A001, 7A002, 7A004, 
7A101, 7A102, 7A103, 7A104, 7B001, 7D001, 7D002, 7D003, 7D101, 7D102, 
7E003, or 7E101, may be exported as part of a manned aircraft, 
satellite, land vehicle or marine vehicle or in quantities appropriate 
for replacement parts for such applications under Sec. 740.9(a)(2)(ii) 
(License Exception TMP for kits consisting of replacement parts), 
Sec. 740.10 (License Exception RPL), Sec. 740.13 (License Exception 
TSU), or Sec. 740.15(c) (License Exception AVS for equipment and spare 
parts for permanent use on a vessel or aircraft).
    (b) All License Exceptions are subject to revision, suspension, or 
revocation, in whole or in part, without notice. It may be necessary for 
BXA to stop a shipment or an export transaction at any stage of its 
progress, e.g., in order to prevent an unauthorized export or reexport. 
If a shipment is already en route, it may be further necessary to order 
the return or unloading of the shipment at any port of call.
    (c) BXA may by informing the exporter, suspend or revoke any License 
Exception in order to comply with U.S. Wassenaar obligations. In 
addition, BXA may inform an exporter, that before using any License 
Exception, a notice be submitted with BXA concerning the proposed 
export.

[61 FR 12768, Mar. 25, 1996, as amended at 61 FR 64274, Dec. 4, 1996; 62 
FR 25457, May 9, 1997; 63 FR 2456, Jan. 15, 1998]



Sec. 740.3  Shipments of limited value (LVS).

    (a) Scope. License Exception LVS authorizes the export and reexport 
in a single shipment of eligible commodities as identified by ``LVS - 
$(value limit)'' on the CCL.
    (b) Eligible Destinations. This License Exception is available for 
all destinations in Country Group B (see Supplement No. 1 to part 740), 
provided that the net value of the commodities included in the same 
order and controlled under the same ECCN entry on the CCL does not 
exceed the amount specified in the LVS paragraph for that entry.

[[Page 157]]

    (c) Definitions--(1) Order. The term order as used in this 
Sec. 740.3 means a communication from a person in a foreign country, or 
that person's representative, expressing an intent to import commodities 
from the exporter. Although all of the details of the order need not be 
finally determined at the time of export, terms relating to the kinds 
and quantities of the commodities to be exported, as well as the selling 
prices of these commodities, must be finalized before the goods can be 
exported under License Exception LVS.
    (2) Net value: for LVS shipments. The actual selling price of the 
commodities that are included in the same order and are controlled under 
the same entry on the CCL, less shipping charges, or the current market 
price of the commodities to the same type of purchaser in the United 
States, whichever is the larger. In determining the actual selling price 
or the current market price of the commodity, the value of containers in 
which the commodity is being exported may be excluded. The value for LVS 
purposes is that of the controlled commodity that is being exported, and 
may not be reduced by subtracting the value of any content that would 
not, if shipped separately, be subject to licensing. Where the total 
value of the containers and their contents must be shown on Shipper's 
Export Declarations under one Schedule B Number, the exporter, in 
effecting a shipment under this License Exception, must indicate the 
``net value'' of the contained commodity immediately below the 
description of the commodity.
    (3) Single shipment. All commodities moving at the same time from 
one exporter to one consignee or intermediate consignee on the same 
exporting carrier even though these commodities will be forwarded to one 
or more ultimate consignees. Commodities being transported in this 
manner will be treated as a single shipment even if the commodities 
represent more than one order or are in separate containers.
    (d) Additional eligibility requirements and restrictions--(1) 
Eligible orders. To be eligible for this License Exception, orders must 
meet the following criteria:
    (i) Orders must not exceed the applicable ``LVS'' dollar value 
limits. An order is eligible for shipment under LVS when the ``net 
value'' of the commodities controlled under the same entry on the CCL 
does not exceed the amount specified in the ``LVS'' paragraph for that 
entry. An LVS shipment may include more than one eligible order.
    (ii) Orders may not be split to meet the applicable LVS dollar 
limits. An order that exceeds the applicable LVS dollar value limit may 
not be misrepresented as two or more orders, or split among two or more 
shipments, to give the appearance of meeting the applicable LVS dollar 
value limit. However an order that meets all the LVS eligibility 
requirements, including the applicable LVS dollar value limit, may be 
split among two or more shipments.
    (iii) Orders must be legitimate. Exporters and consignees may not, 
either collectively or individually, structure or adjust orders to meet 
the applicable LVS dollar value limits.
    (2) Restriction on annual value of LVS orders. The total value of 
exports per calendar year to the same ultimate or intermediate consignee 
of commodities classified under a single ECCN may not exceed 12 times 
the LVS value limit for that ECCN; however, there is no restriction on 
the number of shipments provided that value is not exceeded. This annual 
value limit applies to shipments to the same ultimate consignee even 
though the shipments are made through more than one intermediate 
consignee. There is no restriction on the number of orders that may be 
included in a shipment, except that the annual value limit per ECCN must 
not be exceeded.
    (3) Orders where two or more LVS dollar value limits apply. An order 
may include commodities that are controlled under more than one entry on 
the CCL. In this case, the net value of the entire order may exceed the 
LVS dollar value for any single entry on the CCL. However, the net value 
of the commodities controlled under each ECCN entry shall not exceed the 
LVS dollar value limit specified for that entry.

    Example to paragraph (d)(3): An order includes commodities valued at 
$8,000. The order consists of commodities controlled under two ECCN 
entries, each having an LVS value limit of $5000. Commodities in the 
order controlled under one ECCN are valued at $3,500 while those 
controlled under the other ECCN are valued at $4,500. Since the

[[Page 158]]

net value of the commodities controlled under each entry falls within 
the LVS dollar value limits applicable to that entry, the order may be 
shipped under this License Exception.

    (4) Prohibition against evasion of license requirements. Any 
activity involving the use of this License Exception to evade license 
requirements is prohibited. Such devices include, but are not limited 
to, the splitting or structuring of orders to meet applicable LVS dollar 
value limits, as prohibited by paragraphs (d)(1) (ii) and (iii) of this 
section.
    (5) Exports of encryption items. For components or spare parts 
controlled for ``EI'' reasons under ECCN 5A002, exports under this 
License Exception must be destined to support an item previously 
authorized for export.
    (e) Reexports. Commodities may be reexported under this License 
Exception, provided that they could be exported from the United States 
to the new country of destination under LVS.
    (f) Reporting requirements. See Sec. 743.1 of the EAR for reporting 
requirements for exports of certain commodities under License Exception 
LVS.

[61 FR 64274, Dec. 4, 1996, as amended at 63 FR 2456, Jan. 15, 1998; 63 
FR 50520, Sept. 22, 1998]



Sec. 740.4  Shipments to Country Group B countries (GBS).

    License Exception GBS authorizes exports and reexports to Country 
Group B (see Supplement No. 1 to part 740) of those commodities 
controlled to the ultimate destination for national security reasons 
only and identified by ``GBS--Yes'' on the CCL. See Sec. 743.1 of the 
EAR for reporting requirements for exports of certain commodities under 
License Exception GBS.

[63 FR 2456, Jan. 15, 1998]



Sec. 740.5  Civil end-users (CIV).

    License Exception CIV authorizes exports and reexports controlled to 
the ultimate destination for national security reasons only and 
identified by ``CIV--Yes'' on the CCL, provided the items are destined 
to civil end-users for civil end-uses in Country Group D:1. (See 
Supplement No. 1 to part 740.) CIV may not be used for exports and 
reexports to military end-users or to known military uses. Such exports 
and reexports will continue to require a license. In addition to 
conventional military activities, military uses include any 
proliferation activities described and prohibited by part 744 of the 
EAR. A license is also required for transfer to military end-users or 
end-uses in eligible countries of items exported under CIV. See 
Sec. 743.1 of the EAR for reporting requirements for exports of certain 
commodities under License Exception CIV.

[61 FR 64275, Dec. 4, 1996, as amended at 63 FR 2456, Jan. 15, 1998]



Sec. 740.6  Technology and software under restriction (TSR).

    (a) Scope. License Exception TSR permits exports and reexports of 
technology and software controlled to the ultimate destination for 
national security reasons only and identified by ``TSR--Yes'' in entries 
on the CCL, provided the software or technology is destined to Country 
Group B. (See Supplement No. 1 to part 740.) A written assurance is 
required from the consignee before exporting or reexporting under this 
License Exception.
    (1) Required assurance for export of technology. You may not export 
or reexport technology under this License Exception until you have 
received from the importer a written assurance that, without a BXA 
license or License Exception, the importer will not:
    (i) Reexport or release the technology to a national of a country in 
Country Groups D:1 or E:2; or
    (ii) Export to Country Groups D:1 or E:2 the direct product of the 
technology, if such foreign produced direct product is subject to 
national security controls as identified on the CCL (See General 
Prohibition Three, Sec. 736.2(b)(3) of the EAR); or
    (iii) If the direct product of the technology is a complete plant or 
any major component of a plant, export to Country Groups D:1 or E:2 the 
direct product of the plant or major component thereof, if such foreign 
produced direct product is subject to national security controls as 
identified on the CCL or is subject to State Department controls under 
the U.S. Munitions List (22 CFR part 121).

[[Page 159]]

    (2) Required assurance for export of software. You may not export or 
reexport software under this License Exception until you have received 
from the importer a written assurance that, without a BXA license or 
License Exception, the importer will neither:
    (i) Reexport or release the software or the source code for the 
software to a national of a country in Country Groups D:1 or E:2; nor
    (ii) Export to Country Groups D:1 or E:2 the direct product of the 
software, if such foreign produced direct product is subject to national 
security controls as identified on the CCL. (See General Prohibition 
Three, Sec. 736.2(b)(3) of the EAR).
    (3) Form of written assurance. The required assurance may be made in 
the form of a letter or any other written communication from the 
importer, including communications via facsimile, or the assurance may 
be incorporated into a licensing agreement that specifically includes 
the assurances. An assurance included in a licensing agreement is 
acceptable only if the agreement specifies that the assurance will be 
honored even after the expiration date of the licensing agreement. If 
such a written assurance is not received, License Exception TSR is not 
applicable and a license is required. The license application must 
include a statement explaining why assurances could not be obtained.
    (4) Other License Exceptions. The requirements in this License 
Exception do not apply to the export of technology or software under 
other License Exceptions, or to the export of technology or software 
included in an application for the foreign filing of a patent, provided 
the filing is in accordance with the regulations of the U.S. Patent 
Office.
    (b) Reporting requirements. See Sec. 743.1 of the EAR for reporting 
requirements for exports of certain items under License Exception TSR. 
Note that reports are not required for release of technology or source 
code subject to the EAR to foreign nationals in the U.S. under the 
provisions of License Exception TSR.

[61 FR 64275, Dec. 4, 1996, as amended at 63 FR 50520, Sept. 22, 1998; 
63 FR 55019, Oct. 14, 1998]



Sec. 740.7  Computers (CTP).

    (a) Scope. License Exception CTP authorizes exports and reexports of 
digital computers and specially designed components therefor, exported 
or reexported separately or as part of a system for consumption in 
Computer Tier countries as provided by this section. (Related equipment 
controlled under 4A003.d, .f, and .g is authorized under this License 
Exception, only when exported or reexported with these computers as part 
of a system.) You may not use this License Exception to export or 
reexport items that you know will be used to enhance the CTP beyond the 
eligibility limit allowed to your country of destination. When 
evaluating your computer to determine License Exception CTP eligibility, 
use the CTP parameter to the exclusion of other technical parameters for 
computers classified under ECCN 4A003.a, .b and .c, except for 
parameters specified as Missile Technology (MT) concerns or 4A003.e 
(equipment performing analog-to-digital conversions exceeding the limits 
in ECCN 3A001.a.5.a). This License Exception does not authorize the 
export or reexport of graphic accelerators or coprocessors, or computers 
controlled for MT reasons.
    (b) Computer Tier 1--(1) Eligible countries. The countries that are 
eligible to receive exports and reexports under this License Exception 
are Australia, Austria, Belgium, Denmark, Finland, France, Germany, 
Greece, the Holy See, Iceland, Ireland, Italy, Japan, Liechtenstein, 
Luxembourg, Mexico, Monaco, Netherlands, New Zealand, Norway, Portugal, 
San Marino, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.
    (2) Eligible computers. The computers eligible for License Exception 
CTP to Tier 1 destinations are those with a CTP greater than 2,000 
Mtops.
    (c) Computer Tier 2--(1) Eligible countries. The countries that are 
eligible to receive exports under this License Exception include Antigua 
and Barbuda, Argentina, Bahamas, Barbados, Bangladesh, Belize, Benin, 
Bhutan, Bolivia, Botswana, Brazil, Brunei, Burkina Faso, Burma, Burundi, 
Cameroon, Cape Verde, Central Africa, Chad, Chile, Colombia, Congo, 
Costa Rica, Cote

[[Page 160]]

d'Ivoire, Cyprus, Czech Republic, Dominica, Dominican Republic, Ecuador, 
El Salvador, Equatorial Guinea, Eritrea, Ethiopia, Fiji, Gabon, Gambia 
(The), Ghana, Grenada, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti, 
Honduras, Hong Kong, Hungary, Indonesia, Jamaica, Kenya, Kiribati, Korea 
(Republic of), Lesotho, Liberia, Madagascar, Malawi, Malaysia, Maldives, 
Mali, Malta, Marshall Islands, Mauritius, Micronesia (Federated States 
of), Mozambique, Namibia, Nauru, Nepal, Nicaragua, Niger, Nigeria, 
Palau, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland, 
Rwanda, St. Kitts & Nevis, St. Lucia, St. Vincent and Grenadines, Sao 
Tome & Principe, Senegal, Seychelles, Sierra Leone, Singapore, Slovak 
Republic, Slovenia, Solomon Islands, Somalia, South Africa, Sri Lanka, 
Surinam, Swaziland, Taiwan, Tanzania, Togo, Tonga, Thailand, Trinidad 
and Tobago, Tuvalu, Uganda, Uruguay, Venezuela, Western Sahara, Western 
Samoa, Zaire, Zambia, and Zimbabwe.
    (2) Eligible computers. The computers eligible for License Exception 
CTP to Tier 2 destinations are those having a Composite Theoretical 
Performance (CTP) greater than 2000, but equal to or less than 10,000 
Millions of Theoretical Operations Per Second (Mtops).
    (d) Computer Tier 3--(1) Eligible countries. The countries that are 
eligible to receive exports and reexports under this License Exception 
are Afghanistan, Albania, Algeria, Andorra, Angola, Armenia, Azerbaijan, 
Bahrain, Belarus, Bosnia & Herzegovina, Bulgaria, Cambodia, China 
(People's Republic of), Comoros, Croatia, Djibouti, Egypt, Estonia, 
Georgia, India, Israel, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Laos, 
Latvia, Lebanon, Lithuania, Macedonia (The Former Yugoslav Republic of), 
Mauritania, Moldova, Mongolia, Morocco, Oman, Pakistan, Qatar, Romania, 
Russia, Saudi Arabia, Serbia & Montenegro, Tajikistan, Tunisia, 
Turkmenistan, Ukraine, United Arab Emirates, Uzbekistan, Vanuatu, 
Vietnam, and Yemen.
    (2) Eligible computers. The computers eligible for License Exception 
CTP to Tier 3 destinations are those having a Composite Theoretical 
Performance (CTP) greater than 2,000 Millions of Theoretical Operations 
Per Second (Mtops), but less than or equal to 7,000 Mtops.
    (3) Eligible exports. Only exports and reexports to permitted end-
users and end-uses located in countries in Computer Tier 3. License 
Exception CTP does not authorize exports and reexports to Computer Tier 
3 for military end-users and end-uses and nuclear, chemical, biological, 
or missile end-users and end-uses defined in part 744 of the EAR. 
Exports and reexports under this License Exception may not be made to 
known military end-users or to known military end-uses or known 
proliferation end-uses or end-users defined in part 744 of the EAR. Such 
exports and reexports will continue to require a license and will be 
considered on a case-by-case basis. Retransfers to military end-users or 
end-uses and defined proliferation end-users and end-uses in eligible 
countries are strictly prohibited without prior authorization.
    (4) NDAA notification--(i) General requirement. The National Defense 
Authorization Act (NDAA) of FY98 enacted on November 18, 1997 requires 
advance notification of all exports and reexports of computers with CTPs 
between 2,000 and 7,000 MTOPS to Computer Tier 3 countries. For each 
transaction destined to Computer Tier 3, prior to using License 
Exception CTP, you must first notify BXA by submitting a completed 
Multipurpose Application Form (BXA-748P). The Multipurpose Application 
Form should be completed including all information required for a 
license application according to the instructions described in 
Supplement No. 1 to part 748 of the EAR, with two exceptions. You (the 
applicant as listed in Block 14) shall in Block 5 (Type of Application) 
mark the box ``Other.'' This designator will permit BXA to route the 
NDAA notice into a special processing procedure. (Blocks 6 and 7, 
regarding support documentation, may be left blank.) You must also 
provide a notice using this procedure prior to exporting or reexporting 
items that you know will be used to enhance beyond 2,000 MTOPS

[[Page 161]]

the CTP of a previously exported or reexported computer. BXA will not 
initiate the registration of an NDAA notice unless all information on 
the Multipurpose Application form is complete.
    (ii) Action by BXA. Within 24 hours of the registration of the NDAA 
notice, BXA will refer the notice for interagency review. Registration 
is defined as the point at which the notice is entered into BXA's 
electronic system.
    (iii) Review by other departments or agencies. The Departments of 
Defense, Energy, State, and the Arms Control and Disarmament Agency 
(ACDA) have the authority to review the NDAA notice. Objections by any 
department or agency must be received by the Secretary of Commerce 
within nine days of the referral. Unlike the provisions described in 
Sec. 750.4(b) of the EAR, there are no provisions for stopping the 
processing time of the NDAA notice. If, within 10 days after the date of 
registration, any reviewing agency provides a written objection to the 
export or reexport of a computer, License Exception CTP may not be used. 
In such cases, you will be notified that a license is required for the 
export or reexport. The NDAA notice will then be processed by BXA as a 
license application in accordance to the provisions described in 
Sec. 750.4 of the EAR, and the licensing policies set forth in the 
Export Administration Regulations. Its NDAA notice number will be 
changed to a license application number. BXA may at this time request 
additional information to properly review the license application. If 
BXA confirms that no objection has been raised within the 10-day period 
(as described in paragraph (d)(4)(iv) of this section), you may proceed 
with the transaction on the eleventh day following date of registration. 
(Note that the fact that you have been advised to proceed with the 
transaction does not exempt you from other licensing requirements under 
the EAR, such as those based on knowledge of a prohibited end-use or 
end-user as referenced in general prohibition five (part 736 of the EAR) 
and set forth in part 744 of the EAR.)
    (iv) Status of pending advance notification requests. You must 
contact BXA's System for Tracking Export License Applications 
(``STELA'') at (202) 482-2752. (See Sec. 750.5 of the EAR for procedures 
to access information on STELA.) STELA will provide the date of 
registration of the NDAA notice. If no departments or agencies raise 
objections within the 10-day period, STELA will provide you on the 
eleventh day following date of registration with confirmation that no 
objections have been raised and you may proceed with the transaction. 
BXA will subsequently issue written confirmation to you. If a license is 
required, STELA will notify you that an objection has been raised and a 
license is required. The NDAA notice will be processed as a license 
application. In addition, BXA may provide notice of an objection by 
telephone, fax, courier service, or other means.
    (v) Post-shipment verification. This section outlines special post-
shipment reporting requirements for exporters of computers with a CTP 
between 2,000 and 7,000 MTOPS to destinations in Computer Tier 3 under 
the NDAA. These reporting requirements also apply when you know that the 
items being exported will be used to enhance beyond 2,000 MTOPS the CTP 
of a previously exported or reexported computer. Such reports must be 
submitted in accordance with the provisions of this paragraph (d)(4)(v), 
and records of such exports subject to the post-shipment reporting 
requirements of this section, must be kept in accordance with part 762 
of the EAR.
    (A) Information that must be included in each post-shipment report. 
No later than the last day of the month following the month in which the 
export takes place, the exporter must submit the following information 
to BXA at the address listed in paragraph (d)(4)(v)(B) of this section:
    (1) Exporter name, address, and telephone number;
    (2) NDAA notification number;
    (3) Date of export;
    (4) End-user name, point of contact, address, telephone number;
    (5) Carrier;
    (6) Air waybill or bill of lading number;
    (7) Commodity description, quantities--listed by model numbers, 
serial numbers, and CTP level in MTOPS; and

[[Page 162]]

    (8) Certification line for exporters to sign and date. The exporter 
must certify that the information contained in the report is accurate to 
the best of his or her knowledge.
    (B) Mailing address. A copy of the post-shipment report[s] required 
under paragraph (d)(4)(v)(A) of this section shall be delivered to one 
of the following addresses. Note that BXA will not accept reports sent 
C.O.D.
    (1) For deliveries by U.S. postal service:

Bureau of Export Administration, U.S. Department of Commerce, P.O. Box 
273, Washington, D.C. 20044, Attn: HPC Team.

    (2) For courier deliveries:

U.S. Department of Commerce, Office of the Assistant Secretary, For 
Export Enforcement, Room H3721, 14th Street and Constitution Ave. NW, 
Washington, DC 20230, Attn: HPC Team
    (e) Restrictions. (1) Computers eligible for License Exception CTP 
may not be accessed either physically or computationally by nationals of 
Cuba, Iran, Iraq, Libya, North Korea, Sudan or Syria, except commercial 
consignees described in Supplement No. 3 to part 742 of the EAR are 
prohibited only from giving such nationals user-accessible 
programmability.
    (2) Computers eligible for License Exception CTP may not be 
reexported/retransferred without prior authorization from BXA i.e., a 
license, a permissive reexport, another License Exception, or ``No 
License Required''. This restriction must be conveyed to the consignee, 
via the Destination Control Statement, see Sec. 758.6(a)(ii) of the EAR. 
Additionally, the end-use and end-user restrictions in paragraph (d)(3) 
of this section must be conveyed to any consignee in Computer Tier 3.
    (f) Reporting requirements. In addition to the reporting 
requirements set forth in paragraph (d) of this section, see Sec. 743.1 
of the EAR for additional reporting requirements of certain items under 
License Exception CTP.

[61 FR 64276, Dec. 4, 1996, as amended at 61 FR 67449, Dec. 23, 1996; 63 
FR 5450, Feb. 3, 1998; 63 FR 63142, Nov. 12, 1998]



Sec. 740.8  Key management infrastructure (KMI).

    (a) Scope. License Exception KMI authorizes the export and reexport 
of certain encryption software and equipment.
    (b) Eligible commodities and software. (1) Recovery encryption 
commodities and software of any key length controlled under ECCNs 5A002 
and 5D002 that have been classified after a technical review through a 
classification request. Key escrow and key recovery commodities and 
software must meet the criteria identified in Supplement No. 4 to part 
742 of the EAR.
    (2) For such classification requests, indicate ``License Exception 
KMI'' in block 9 on Form BXA-748P. Submit the original request to BXA in 
accordance with Sec. 748.3 of the EAR and send a copy of the request to:

Attn: KMI Encryption Request Coordinator, P.O. Box 246, Annapolis 
Junction, MD 20701-0246
    (c) Eligible destinations. License Exception KMI is available for 
all destinations, except Cuba, Libya, North Korea, Iraq, Iran, Syria, 
and Sudan.
    (d) Reporting requirements. (1) You must provide semiannual reports 
to BXA identifying:
    (i) Ultimate consignee; specific end-user name and address, if 
available; and country of ultimate destination; and
    (ii) Quantities of each encryption item shipped.
    (2) You must submit reports no later than February 1 and no later 
than August 1 of any given year.

[61 FR 68579, Dec. 30, 1996, as amended at 63 FR 50520, Sept. 22, 1998; 
63 FR 72159, Dec. 31, 1998]



Sec. 740.9  Temporary imports, exports, and reexports (TMP).

    This License Exception authorizes various temporary exports and 
reexports; exports and reexports of items temporarily in the United 
States; and exports and reexports of beta test software.
    (a) Temporary exports and reexports--(1) Scope. You may export and 
reexport commodities and software for temporary use abroad (including 
use in

[[Page 163]]

international waters) subject to the conditions and exclusions described 
in paragraph (a)(4) of this section. Commodities and software shipped as 
temporary exports or reexports under the provisions of this paragraph 
(a) must be returned to the country from which they were exported as 
soon as practicable but, except in circumstances described in this 
section, no later than one year from the date of export. This 
requirement does not apply if the commodities and software are consumed 
or destroyed in the normal course of authorized temporary use abroad or 
an extension or other disposition is permitted by the EAR or in writing 
by BXA.
    (2) Eligible commodities and software. The following commodities and 
software are eligible to be shipped under this paragraph (a):
    (i) Tools of trade. Usual and reasonable kinds and quantities of 
tools of trade (commodities and software) for use by the exporter or 
employees of the exporter in a lawful enterprise or undertaking of the 
exporter. Eligible tools of trade may include, but are not limited to, 
such equipment and software as is necessary to commission or service 
goods, provided that the equipment or software is appropriate for this 
purpose and that all goods to be commissioned or serviced are of foreign 
origin, or if subject to the EAR, have been legally exported or 
reexported. The tools of trade must remain under the effective control 
of the exporter or the exporter's employee (see part 772 of the EAR for 
a definition of ``effective control''). The shipment of 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. No tools of the 
trade may be taken to Country Group E:2 (see Supplement No. 1 to part 
740) or Sudan. For exports under this License Exception of laptop 
computers loaded with encryption software, refer to item interpretation 
13 in Sec. 770.2 of the EAR.
    (ii) Kits consisting of replacement parts. Kits consisting of 
replacement parts may be exported or reexported to all destinations, 
except Country Group E:2 (see Supplement No. 1 to part 740), provided 
that:
    (A) The parts would qualify for shipment under paragraph 
(a)(2)(ii)(C) of this section if exported as one-for-one replacements;
    (B) The kits remain under effective control of the exporter or an 
employee of the exporter; and
    (C) 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).
    (iii) Exhibition and demonstration in Country Group B. Commodities 
and software for exhibition or demonstration in Country Group B (see 
Supplement No. 1 to part 740) may be exported or reexported under this 
provision 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 for their intended purpose while abroad, except to 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 BXA. 
However, before or after an exhibition or demonstration, pending 
movement to another site, return to the United States or the foreign 
reexporter, or BXA 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 U.S. exporter as ultimate consignee, in care of the person who 
will have control over the commodities and software abroad.
    (iv) Inspection and calibration. Commodities to be inspected, 
tested, calibrated or repaired abroad may be exported or reexported to 
all destinations under this section, except Country Group E:2, Sudan or 
Syria.

[[Page 164]]

    (v) Containers. Containers for which another License Exception is 
not available and that are necessary for export of commodities. However, 
this ``containers'' provision 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.
    (vi) Broadcast material. (A) Video tape containing program material 
recorded in the country of export to be publicly broadcast in another 
country.
    (B) Blank video tape (raw stock) for use in recording program 
material abroad.
    (vii) Assembly in Mexico. Commodities to 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-bond 
industrialization program (Maquiladora), provided that all resulting 
end-products (or the commodities themselves) are returned to the United 
States.
    (viii) News media. (A) Commodities necessary for news-gathering 
purposes (and software necessary to use such commodities) may accompany 
``accredited'' news media personnel (i.e., persons with credentials from 
a news gathering or reporting firm) to Country Groups D:1 or E:2, or 
Sudan (see Supplement No. 1 to part 740) if the commodities:
    (1) Are retained under ``effective control'' of the exporting news 
gathering firm;
    (2) Remain in the physical possession of the news media personnel. 
The term physical possession for purposes of this paragraph 
(a)(2)(viii), news media, is defined as maintaining effective measures 
to prevent unauthorized access (e.g., securing equipment in locked 
facilities or hiring security guards to protect the equipment); and
    (3) Are removed with the news media personnel at the end of the 
trip.
    (B) When exporting under this paragraph (a)(2)(viii) from the United 
States, the exporter must send a copy of the packing list or similar 
identification of the exported commodities, to: U.S. Department of 
Commerce, Bureau of Export Administration, Office of Enforcement 
Support, Room H4069, 14th Street and Constitution Avenue, N.W., 
Washington, DC 20230, or any of its field offices, specifying the 
destination and estimated dates of departure and return. The Office of 
Export Enforcement (OEE) may spot check returns to assure that the 
temporary exports and reexports provisions of this License Exception are 
being used properly.
    (C) 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)(2)(i), 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)(2)(i), tools of trade and (a)(2)(viii), news media, of 
this section do not preclude independent ``accredited'' contract 
personnel, who are under control of news gathering firms while on 
assignment, from utilizing these provisions, provided that the news 
gathering firm designate an employee of the contract firm to be 
responsible for the equipment.)
    (ix) Temporary exports to a U.S. subsidiary, affiliate or facility 
in Country Group B. (A) Components, parts, tools or test equipment 
exported by a U.S. person to its subsidiary, affiliate or facility in a 
country listed in Country Group B (see Supplement No. 1 to this part) 
that is owned or controlled by the U.S. person, if the components, part, 
tool or test equipment is to be used for manufacture, assembly, testing, 
production or modification, provided that no components, parts, tools or 
test equipment or the direct product of such components, parts, tools or 
test equipment are transferred or reexported to a country other than the 
United States from such subsidiary, affiliate or facility without prior 
authorization by BXA.
    (B) For purposes of this paragraph (a)(2)(ix), 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

[[Page 165]]

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).
    (3) Special restrictions--(i) Destinations. (A) No commodity or 
software may be exported to Country Group E:2 (see Supplement No. 1 to 
part 740) except as permitted by paragraph (a)(2)(viii), news media, of 
this section;
    (B) No commodity or software may be exported to Country Group D:1 
(see Supplement No. 1 to part 740) except:
    (1) Commodities and software exported under paragraph (a)(2)(viii), 
news media, of this section;
    (2) Commodities and software exported under paragraph (a)(2)(i), 
tools of trade, of this section; and
    (3) Commodities exported as kits of replacement parts, consistent 
with the requirements of paragraph (a)(2)(ii) of this section.
    (C) These 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 in Country Group D:1 or E:2, or any 
national thereof. (See Supplement No. 1 to part 740.)
    (ii) Ineligible commodities or software. Commodities or software 
that will be used outside of Country Group A:1 (see Supplement No. 1 to 
part 740), Iceland, or New Zealand, either directly or indirectly in any 
sensitive nuclear activity as described in Sec. 744.2 of the EAR may not 
be exported or reexported to any destination under the temporary exports 
and reexports provisions of this License Exception.
    (iii) Use or disposition. No commodity or software may be exported 
or reexported under this paragraph (a) if:
    (A) An order to acquire the commodity or software has been received 
before shipment;
    (B) The exporter has prior knowledge that the commodity or software 
will stay abroad beyond the terms described in this paragraph (a); or
    (C) The commodity or software is for lease or rental abroad.
    (4) Return or disposal of commodities and software. All commodities 
and software exported or reexported 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, to the United States or other country from 
which the commodities and software were so exported, or shall be 
disposed of or retained in one of the following ways:
    (i) Permanent export or reexport. If the exporter or the reexporter 
wishes to sell or otherwise dispose of the commodities or software 
abroad, except as permitted by this or other applicable License 
Exception, the exporter must request authorization by submitting a 
license application to BXA at the address listed in part 748 of the EAR. 
(See part 748 of the EAR for more information on license applications.) 
The request should comply with all applicable provisions of the EAR 
covering export directly from the United States to the proposed 
destination. The request must also be supported by any documents that 
would be required in support of an application for export license for 
shipment of the same commodities or software directly from the United 
States to the proposed destination. BXA will advise the exporter of its 
decision.
    (ii) Use of a license. An outstanding license may also be used to 
dispose of commodities or software covered by the provisions of this 
paragraph (a), provided that the outstanding license authorizes direct 
shipment of the same commodity or software to the same new ultimate 
consignee in the new country of destination.
    (iii) Authorization to retain abroad beyond one year. If the 
exporter wishes to retain a commodity or software abroad beyond the 12 
months authorized by paragraph (a) of this section, the exporter must 
request authorization by submitting Form BXA-748P, Multipurpose 
Application, 90 days prior to the expiration of the 12 month period. The 
request must be sent to BXA at the address listed in part 748 of the EAR 
and should include the name and address of the exporter, the date the 
commodities or software were exported, a brief product description, and 
the justification for the extension. If BXA approves the

[[Page 166]]

extension request, the exporter will receive authorization for a one-
time extension not to exceed six months. BXA normally will not allow an 
extension for commodities or software that have been abroad more than 12 
months, nor will a second six month extension be authorized. Any request 
for retaining the commodities or software abroad for a period exceeding 
18 months must be made in accordance with the requirements of paragraph 
(a)(4)(i) of this section.
    (5) Reexports. Commodities and software legally exported from the 
United States may be reexported to a new country(ies) of destination 
under this paragraph (a) provided its terms and conditions are met and 
the commodities and software are returned to the country from which the 
reexport occurred.
    (b) Exports of items temporarily in the United States: Scope. The 
provisions of this paragraph (b) describe the conditions for exporting 
foreign-origin items temporarily in the United States. The provisions 
include the export of items moving in transit through the United States, 
imported for display at a U.S. exhibition or trade fair, returned 
because unwanted, or returned because refused entry.
    Note  1 to paragraph (b) of this section:
    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) of this section: 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.)
    (1) Items moving in transit through the United States. Subject to 
the following conditions, the provisions of paragraph (b)(1) of this 
section 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 
Office.
    (i) Items controlled for national security, nuclear proliferation, 
missile technology, or chemical and biological weapons reasons may not 
be exported to Country Group D:1, 2, 3, or 4 (see Supplement No. 1 to 
part 740), respectively, under this paragraph (b)(1).
    (ii) Items may not be exported to Country Group E:2 or Sudan under 
this section.
    (iii) The following may not be exported in transit from the United 
States under this paragraph (b)(1):
    (A) Commodities shipped to the United States under an International 
Import Certificate, Form BXA-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 provisions of paragraph (b)(1) 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. For such shipments the customs office at the U.S. port of 
export will require a copy of Form B-13, Canadian Customs Entry, 
certified or stamped by Canadian customs authorities, except where the 
shipment is valued at less than $50.00. (In transit shipments 
originating in Canada that are exempt from U.S. licensing, or made under 
a U.S. license or other applicable U.S. License Exception do not require 
this form.) The commodity or software description, quantity, ultimate 
consignee, country of ultimate destination, and all other pertinent 
details of the shipment must be the same on a required Form B-13, as on 
Commerce Form 7513, or when Form 7513 is not required, must be the same 
as on Customs Form 7512. When there is a material difference, a 
corrected Form B-13 authorizing the shipment is required.
    (2) Items imported 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 display at an exhibition or trade fair and were either

[[Page 167]]

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 or North 
Korea 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:2 or Sudan (see Supplement No. 1 to 
part 740); or
    (C) Exports to Country Group D:1, 2, 3, or 4 (see Supplement No. 1 
to part 740) of items controlled for national security, missile 
technology, chemical and biological weapons reasons, or nuclear 
proliferation, respectively.
    (3) Return of unwanted shipments. A foreign-origin item may be 
returned to the country from which it was imported if its 
characteristics and capabilities have not been enhanced while in the 
United States. No foreign-origin items may be returned to Cuba, Libya, 
or North Korea.
    (4) Return of shipments refused entry. Shipments of items refused 
entry by the U.S. Customs Service, 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, Libya, or North Korea; 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 part 
500).
    (c) Exports of beta test software--(1) Scope. The provisions of 
paragraph (c) authorize exports and reexports to eligible countries of 
beta test software intended for distribution to the general public.
    (2) Eligible countries. The countries that are eligible to receive 
exports and reexports are all countries except those in Country Group 
E:2.
    (3) Exports of beta test software. All software that is controlled 
by the Commerce Control List (Supplement No. 1 to part 774 of the EAR), 
and under Commerce licensing jurisdiction, is eligible for export and 
reexport, subject to the restrictions of this paragraph, except 
encryption software controlled for EI reasons under ECCN 5D002. Certain 
encryption software may become eligible after a one-time BXA review 
(refer to Sec. 742.15(b)(1) of the EAR).
    (4) Conditions for use. Any beta test software program may be 
exported or reexported to eligible countries if all of the conditions 
under this section are met:
    (i) The software producer intends to market the software to the 
general public after completion of the beta testing, as described in the 
General Software Note found in Supplement No. 2 to part 774 of the EAR;
    (ii) The software producer provides the software to the testing 
consignee free-of-charge or at a price that does not exceed the cost of 
reproduction and distribution; and
    (iii) The software is designed for installation by the end-user 
without further substantial support from the supplier.
    (5) Importer Statement. Prior to shipping any eligible software, the 
exporter or reexporter must obtain the following statement from the 
testing consignee, which may be included in a contract, non-disclosure 
agreement, or other document that identifies the importer, the software 
to be exported, the country of destination, and the testing consignee.

    We certify that this beta test software will only be used for beta 
testing purposes, and will not be rented, leased, sold, sublicensed, 
assigned, or otherwise transferred. Further, we certify that we will not 
transfer or export any product, process, or service that is the direct 
product of the beta test software.

    (6) Use limitations. Only testing consignees that provide the 
importer statement required by paragraph (c)(5) of this section may 
execute any software received.

[[Page 168]]

    (7) Return or disposal of software. All beta test software exported 
must be destroyed abroad or returned to the exporter within 30 days of 
the end of the beta test period as defined by the software producer or, 
if the software producer does not define a test period, within 30 days 
of completion of the consignee's role in the test. Among other methods, 
this requirement may be satisfied by a software module that will destroy 
the software and all its copies at or before the end of the beta test 
period.

[61 FR 64277, Dec. 4, 1996. Redesignated at 61 FR 68579, Dec. 30, 1996, 
as amended at 61 FR 68580, Dec. 30, 1996; 62 FR 25457, May 9, 1997; 63 
FR 50521, Sept. 22, 1998]



Sec. 740.10  Servicing and replacement of parts and equipment (RPL).

    This License Exception authorizes exports and reexports associated 
with one-for-one replacement of parts or servicing and replacement of 
equipment.
    (a) Parts--(1) Scope. The provisions of this paragraph (a) authorize 
the export and reexport of one-for-one replacement parts for previously 
exported equipment.
    (2) One-for-one replacement of parts. (i) The term replacement parts 
as used in this section means parts needed for the immediate repair of 
equipment, including replacement of defective or worn parts. (It 
includes subassemblies but does not include test instruments or 
operating supplies). (The term subassembly means a number of components 
assembled to perform a specific function or functions within a 
commodity. One example would be printed circuit boards with components 
mounted thereon. This definition does not include major subsystems such 
as those composed of a number of subassemblies.) Items that improve or 
change the basic design characteristics, e.g., as to accuracy, 
capability, performance or productivity, of the equipment upon which 
they are installed, are not deemed to be replacement parts. For kits 
consisting of replacement parts, consult Sec. 740.9(a)(2)(ii) of this 
part.
    (ii) Parts may be exported only to replace, on a one-for-one basis, 
parts contained in commodities that were: legally exported from the 
United States; legally reexported; or made in a foreign country 
incorporating authorized U.S.-origin parts. The conditions of the 
original U.S. authorization must not have been violated. Accordingly, 
the export of replacement parts may be made only by the party who 
originally exported or reexported the commodity to be repaired, or by a 
party that has confirmed the appropriate authority for the original 
transaction.
    (iii) The parts to be replaced must either be destroyed abroad or 
returned promptly to the person who supplied the replacement parts, or 
to a foreign firm that is under the effective control of that person.
    (3) Exclusions. (i) No replacement parts may be exported to repair a 
commodity exported under a license if that license included a condition 
that any subsequent replacement parts must be exported only under a 
license.
    (ii) No parts may be exported to be held abroad as spare parts or 
equipment for future use. Replacement parts may be exported to replace 
spare parts that were authorized to accompany the export of equipment, 
as those spare parts are utilized in the repair of the equipment. This 
will allow maintenance of the stock of spares at a consistent level as 
parts are used.
    (iii) No parts may be exported to any destination except Iceland, 
New Zealand, or the countries listed in Country Group A:1 (see 
Supplement No. 1 to part 740) if the item is to be incorporated into or 
used in nuclear weapons, nuclear explosive devices, nuclear testing 
related to activities described in Sec. 744.2(a) of the EAR, the 
chemical processing of irradiated special nuclear or source material, 
the production of heavy water, the separation of isotopes of source and 
special nuclear materials, or the fabrication of nuclear reactor fuel 
containing plutonium, as described in Sec. 744.2(a) of the EAR.
    (iv) No replacement parts may be exported to Cuba, Iran, Iraq, 
Sudan, Syria, Libya, or North Korea (countries designated by the 
Secretary of State as supporting acts of international terrorism) if the 
commodity to be repaired is an ``aircraft'' (as defined in part 772 of 
the EAR) or national security controlled commodity.

[[Page 169]]

    (v) The conditions described in this paragraph (a)(3) relating to 
replacement of parts do not apply to reexports to a foreign country of 
parts as replacements in foreign-origin products, if at the time the 
replacements are furnished, the foreign-origin product is eligible for 
export to such country under any of the License Exceptions in this part 
or the exceptions in Sec. 734.4 of the EAR.
    (4) Reexports. Parts exported from the United States may be 
reexported to a new country of destination, provided that the 
restrictions described in paragraphs (a)(2) and (3) of this section are 
met. A party reexporting U.S.-origin one-for-one replacement parts shall 
ensure that the commodities being repaired were shipped to their present 
location in accordance with U.S. law and continue to be legally used, 
and that either before or promptly after reexport of the replacement 
parts, the replaced parts are either destroyed or returned to the United 
States, or to the foreign firm in Country Group B (see Supplement No. 1 
to part 740) that shipped the replacement parts.
    (b) Servicing and replacement--(1) Scope. The provisions of this 
paragraph (b) authorize the export and reexport of items that were 
returned to the United States for servicing and the replacement of 
defective or unacceptable U.S.-origin commodities and software.
    (2) Commodities and software sent to a United States or foreign 
party for servicing.
    (i) Definition. Servicing as used in this section means inspection, 
testing, calibration or repair, including overhaul and reconditioning. 
The servicing shall not have improved or changed the basic 
characteristics, e.g., as to accuracy, capability, performance, or 
productivity of the commodity or software as originally authorized for 
export or reexport.
    (ii) Return of serviced commodities and software. When the serviced 
commodity or software is returned, it may include any replacement or 
rebuilt parts necessary to its repair and may be accompanied by any 
spare part, tool, accessory, or other item that was sent with it for 
servicing.
    (iii) Commodities and software imported from Country Group D:1 
except the PRC. Commodities and software legally exported or reexported 
to a consignee in Country Group D:1 (except the People's Republic of 
China (PRC)) (see Supplement No. 1 to part 740) that are sent to the 
United States or a foreign party for servicing may be returned to the 
country from which it was sent, provided that both of the following 
conditions are met:
    (A) The exporter making the shipment is the same person or firm to 
whom the original license was issued; and
    (B) The end-use and the end-user of the serviced commodities or 
software and other particulars of the transaction, as set forth in the 
application and supporting documentation that formed the basis for 
issuance of the license have not changed.
    (iv) Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria. No 
repaired commodity or software may be exported or reexported to Cuba, 
Iran, Iraq, Libya, North Korea, Sudan, or Syria.
    (3) Replacements for defective or unacceptable U.S.-origin 
equipment. (i) Subject to the following conditions, commodities or 
software may be exported or reexported to replace defective or otherwise 
unusable (e.g., erroneously supplied) items.
    (A) The commodity or software to be replaced must have been 
previously exported or reexported in its present form under a license or 
authorization granted by BXA.
    (B) No commodity or software may be exported or reexported to 
replace equipment that is worn out from normal use, nor may any 
commodity or software be exported to be held in stock abroad as spare 
equipment for future use.
    (C) The replacement item may not improve the basic characteristic, 
e.g., as to accuracy, capability, performance, or productivity, of the 
equipment as originally approved for export or reexport under a license 
issued by BXA.
    (D) No shipment may be made to Cuba, Iran, Iraq, Libya, North Korea, 
Sudan, or Syria, or to any other destination to replace defective or 
otherwise unusable equipment owned or controlled by, or leased or 
chartered to, a national of any of those countries.

[[Page 170]]

    (ii) Special conditions applicable to exports to Country Group B and 
Country Group D:1. (See Supplement No. 1 to part 740.) In addition to 
the general conditions in paragraph (b)(3)(i) of this section, the 
following conditions apply to exports or reexports of replacements for 
defective or unacceptable U.S.-origin commodities or software to a 
destination in Country Group B or Country Group D:1:
    (A) By making such an export or reexport, the exporter represents 
that all the requirements of this paragraph (b) have been met and 
undertakes to destroy or return the replaced parts as provided in 
paragraph (b)(3)(ii)(C) of this section.
    (B) The defective or otherwise unusable equipment must be replaced 
free of charge, except for transportation and labor charges. If 
exporting to the countries listed in Country Group D:1 (except the PRC), 
the exporter shall replace the commodity or software within the warranty 
period or within 12 months of its shipment to the ultimate consignee in 
the country of destination, whichever is shorter.
    (C) The commodity or software to be replaced must either be 
destroyed abroad or returned to the United States, or to a foreign firm 
in Country Group B that is under the effective control of the U.S. 
exporter, or to the foreign firm that is providing the replacement part 
or equipment. The destruction or return must be effected before, or 
promptly after, the replacement item is exported from the United States.
    (D) A party reexporting replacements for defective or unacceptable 
U.S.-origin equipment must ensure that the commodities or software being 
replaced were shipped to their present location in accordance with U.S. 
law and continue to be legally used.

[61 FR 64279, Dec. 4, 1996. Redesignated at 61 FR 68579, Dec. 30, 1996, 
and amended at 63 FR 50522, Sept. 22, 1998]



Sec. 740.11  Governments and international organizations (GOV).

    This Licenses Exception authorizes exports and reexports for 
international nuclear safeguards; U.S. government agencies or personnel, 
and agencies of cooperating governments.
    (a) International safeguards--(1) Scope. You may export and reexport 
commodities or software to the International Atomic Energy Agency (IAEA) 
and the European Atomic Energy Community (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 field offices in Toronto, Ontario, 
Canada or Tokyo, Japan for official international safeguards use. The 
IAEA is an international organization that 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.
    (ii) Commodities or software consigned to the Euratom Safeguards 
Directorate in Luxembourg, Luxembourg for official international 
safeguards use. 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.
    (iii) Commodities 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 and returns the commodities 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 commercial 
companies 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

[[Page 171]]

Euratom are no longer in IAEA or Euratom official safeguards use, such 
commodities may only be disposed of in accordance with the regulations 
in the EAR.
    (2) The following items controlled for national security (NS) 
reasons under Export Control Classification Numbers (ECCNs) identified 
on the Commerce Control List may not be exported or reexported under 
this License Exception to destinations other than Austria, Belgium, 
Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, 
Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United 
Kingdom: 1C001, 1C012, 5A001.b.9, 6A001.a.2.a.1, 6A001.a.2.a.2, 
6A001.a.2.a.7, 6A001.a.2.b, 6A001.a.2.e.1, 6A001.a.2.e.2, 6A002.a.1.c, 
6A008.l.3., 6B008, 8A001.b., 8A001.d., 8A002.o.3.b., 9A011; and
    (i) ``Composite'' structures or laminates controlled by 1A002.a., 
having an organic ``matrix'' and made from materials listed under 
1C010.c. or 1C010.d.; and
    (ii) ``Digital'' computers controlled by 4A003.b. and having a CTP 
exceeding 10,000 MTOPS; and
    (iii) ``Electronic assemblies'' controlled by 4A003.c. and capable 
of enhancing performance by aggregation of ``computing elements'' so 
that the CTP of the aggregation exceeds 10,000 MTOPS; and
    (iv) Processing equipment controlled by 6A001.a.2.c. and specially 
designed for real time application with towed acoustic hydrophone 
arrays; and
    (v) Bottom or bay cable systems controlled by 6A001.a.2.e.3 and 
having processing equipment specially designed for real time application 
with bottom or bay cable systems; and
    (vi) ``Software'', as follows:
    (A) Controlled by 4D001, specially designed for the ``development'' 
or ``production'' for items controlled by 4A003.b or .c, as defined by 
paragraphs (a)(2)(ii) and (iii) of this section; and
    (B) Controlled by 5D001.a, specially designed for items controlled 
by 5A001.b.9; and
    (C) Controlled by 6D001 for items controlled by 6A008.l.3 or 6B008; 
and
    (D) Controlled by 6D003.a; and
    (E) Controlled by 7D003.a or 7D003.b; and
    (F) Controlled by 8D001, specially designed for the ``development'' 
or ``production'' of equipment controlled by 8A001.b, 8A001.d, or 
8A002.o.3.b; and
    (G) Controlled by 9D001, specially designed for the ``development'' 
of equipment or ``technology'' controlled by 9A011, 9E003.a.1, or by 
9E003.a.3, for items controlled by 1A002.a, as described in paragraph 
(a)(2)(i) of this section; and
    (H) Controlled by 9D002 for ``software'' specially designed for the 
``production'' of equipment controlled by 9A011; and
    (I) Controlled by 9D004.a or .c.
    (3) No encryption items controlled for EI reasons under ECCNs 5A002, 
5D002, or 5E002 may be exported under the provisions of this paragraph 
(a).
    (b) Governments--(1) Scope. The provisions of paragraph (b) 
authorize exports and reexports of the items listed in paragraph (b)(2) 
of this section to personnel and agencies of the U.S. Government or 
agencies of cooperating governments.
    (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 servants. Items for personal use 
include household effects, food, beverages, and other daily necessities.
    (ii) Items for official use by personnel and agencies of the U.S. 
Government. This provision is available for items consigned to and for 
the official use of any agency of the U.S. Government.
    (iii) (A) 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 described in paragraph (a) to Supplement No. 1 
of this section:
    (B) Reporting requirements. See Sec. 743.1 of the EAR for reporting 
requirements for exports of certain items under this paragraph 
(b)(2)(iii).

[[Page 172]]

    (iv) (A) 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 described in paragraph (b) 
of Supplement No. 1 of this section.
    (B) Reporting requirements. See Sec. 743.1 of the EAR for reporting 
requirements for exports of certain items under this paragraph 
(b)(2)(iv).
    (3) Definitions. (i) 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.
    (ii) Agency of a cooperating government includes all civilian and 
military departments, branches, missions, and other governmental 
agencies of a cooperating national 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.

   Supplement No. 1 to Sec. 740.11--Additional Restrictions on Use of 
                          License Exception GOV

    (a) Items for official use within the national territory by agencies 
of cooperating governments. License Exception GOV 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:
    (1) Items identified on the Commerce Control List as controlled for 
national security (NS) reasons under Export Control Classification 
Numbers (ECCNs) as follows for export or reexport to destinations other 
than Austria, Belgium, Canada, Denmark, Finland, France, Germany, 
Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, 
Sweden, or the United Kingdom: 1C001, 1C012, 5A001.b.9, 6A001.a.2.a.1, 
6A001.a.2.a.2, 6A001.a.2.a.7, 6A001.a.2.b, 6A001.a.2.e.1, 6A001.a.2.e.2, 
6A002.a.1.c, 6A008.l.3., 6B008, 8A001.b., 8A001.d., 8A002.o.3.b., 9A011; 
and
    (i) ``Composite'' structures or laminates controlled by 1A002.a., 
having an organic ``matrix'' and made from materials listed under 
1C010.c. or 1C010.d.; and
    (ii) ``Digital'' computers controlled by 4A003.b. and having a CTP 
exceeding 10,000 MTOPS; and
    (iii) ``Electronic assemblies'' controlled by 4A003.c. and capable 
of enhancing performance by aggregation of ``computing elements'' so 
that the CTP of the aggregation exceeds 10,000 MTOPS; and
    (iv) Processing equipment controlled by 6A001.a.2.c. and specially 
designed for real time application with towed acoustic hydrophone 
arrays; and
    (v) Bottom or bay cable systems controlled by 6A001.a.2.e.3 and 
having processing equipment specially designed for real time application 
with bottom or bay cable systems;
    (vi) ``Software'', as follows:
    (A) Controlled by 4D001, specially designed for the ``development'' 
or ``production'' for items controlled by 4A003.b or .c, as defined by 
paragraphs (a)(1)(ii) and (iii) of this Supplement; and
    (B) Controlled by 5D001.a, specially designed for items controlled 
by 5A001.b.9; and
    (C) Controlled by 6D001 for items controlled by 6A008.l.3 or 6B008; 
and
    (D) Controlled by 6D003.a; and
    (E) Controlled by 7D003.a or 7D003.b; and
    (F) Controlled by 8D001, specially designed for the ``development'' 
or ``production'' of equipment controlled by 8A001.b, 8A001.d, or 
8A002.o.3.b; and
    (G) Controlled by 9D001, specially designed for the ``development'' 
of equipment or ``technology'' controlled by 9A011, 9E003.a.1, or by 
9E003.a.3, for

[[Page 173]]

items controlled by 1A002.a, as described in paragraph (a)(1)(i) of this 
Supplement; and
    (H) Controlled by 9D002 for ``software'' specially designed for the 
``production'' of equipment controlled by 9A011; and
    (I) Controlled by 9D004.a or .c.
    (vii) ``Technology'', as follows:
    (A) Controlled by 5E001.a for items controlled by 5A001.b.9 or 
5D001.a; and
    (B) Controlled by 1E001 for items controlled by 1A002.a, 1C001, or 
1C102 as described by paragraph (a)(1)(i) of this Supplement; and
    (C) Controlled by 6E001 for the ``development'' of equipment or 
``software'' in 6A001.a.2.a.1, 6A001.a.2.a.2, 6A001.a.2.a.7, 
6A001.a.2.b, 6A001.a.2.c, 6A001.a.2.3, 6A002.a.1.c, 6A008.l.3, or 6B008, 
as described in paragraph (a)(1) of this Supplement; and
    (D) Controlled by 6E002 for the ``production'' of equipment 
controlled by 6A001.a.2.a.1, 6A001.a.2.a.2, 6A001.a.2.a.7, 6A001.a.2.b, 
6A001.a.2.c, 6A001.a.2.3, 6A002.a.1.c, 6A008.l.3, or 6B008, as described 
in paragraph (a)(1) of this Supplement; and
    (E) Controlled by 8E001 for items controlled by 8A001.b, 
8A002.o.3.b, or 8A001.d; and
    (F) Controlled by 9E001 for items controlled by 9A011, 9D001, or 
9D002; and
    (G) Controlled by 9E002 for items controlled by 9A011; and
    (H) Controlled by 9E003.a.1; and
    (I) Controlled by 9E003.a.3 for items controlled by 1A002.a as 
described in paragraph (a)(1) of this Supplement.
    (2) Items identified on the Commerce Control List as controlled for 
missile technology (MT), chemical and biological warfare (CB), or 
nuclear nonproliferation (NP) reasons;
    (3) Regional stability items controlled under Export Control 
Classification Numbers (ECCNs) 6A002, 6A003, 6E001, 6E002, 7D001, 7E001, 
7E002, 7E101, 9A018, 9D018 and 9E018 as described in 742.6(a) of the 
EAR; or
    (4) Encryption items controlled for EI reasons as described in the 
Commerce Control List.
    (b) Diplomatic and consular missions of a cooperating government. 
License Exception GOV 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:
    (1) Items identified on the Commerce Control List as controlled for 
national security (NS) reasons under Export Control Classification 
Numbers (ECCNs) as follows for export or reexport to destinations other 
than Austria, Belgium, Canada, Denmark, Finland, France, Germany, 
Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, 
Sweden, or the United Kingdom: 1C001, 1C012, 5A001.b.9, 6A001.a.2.a.1, 
6A001.a.2.a.2, 6A001.a.2.a.7, 6A001.a.2.b, 6A001.a.2.e.1, 6A001.a.2.e.2, 
6A002.a.1.c, 6A008.l.3., 6B008, 8A001.b., 8A001.d., 8A002.o.3.b., 9A011; 
and
    (i) ``Composite'' structures or laminates controlled by 1A002.a., 
having an organic ``matrix'' and made from materials listed under 
1C010.c. or 1C010.d.; and
    (ii) ``Digital'' computers controlled by 4A003.b. and having a CTP 
exceeding 10,000 MTOPS; and
    (iii) ``Electronic assemblies'' controlled by 4A003.c. and capable 
of enhancing performance by aggregation of ``computing elements'' so 
that the CTP of the aggregation exceeds 10,000 MTOPS; and
    (iv) Processing equipment controlled by 6A001.a.2.c. and specially 
designed for real time application with towed acoustic hydrophone 
arrays; and
    (v) Bottom or bay cable systems controlled by 6A001.a.2.e.3 and 
having processing equipment specially designed for real time application 
with bottom or bay cable systems;
    (vi) ``Software'', as follows:
    (A) Controlled by 4D001, specially designed for the ``development'' 
or ``production'' for items controlled by 4A003 .b or .c, as defined by 
paragraphs (b)(1) (ii) or (iii) of this Supplement; and
    (B) Controlled by 5D001.a, specially designed for items controlled 
by 5A001.b.9; and
    (C) Controlled by 6D001 for items controlled by 6A008.l.3 or 6B008; 
and
    (D) Controlled by 6D003.a; and
    (E) Controlled by 7D003.a or 7D003.b; and

[[Page 174]]

    (F) Controlled by 8D001, specially designed for the ``development'' 
or ``production'' of equipment controlled by 8A001.b, 8A001.d, or 
8A002.o.3.b; and
    (G) Controlled by 9D001, specially designed for the ``development'' 
of equipment or ``technology'' controlled by 9A011, 9E003.a.1, or by 
9E003.a.3, for items controlled by 1A002.a, as described in paragraph 
(b)(1)(i) of this Supplement; and
    (H) Controlled by 9D002 for ``software'' specially designed for the 
``production'' of equipment controlled by 9A011; and
    (I) Controlled by 9D004 .a or .c.
    (vii) ``Technology'', as follows:
    (A) Controlled by 5E001.a for items controlled by 5A001.b.9 or 
5D001.a; and
    (B) Controlled by 1E001 for items controlled by 1A002.a, 1C001, or 
1C102 as described by paragraph (b)(1) of this Supplement; and
    (C) Controlled by 6E001 for the ``development'' of equipment or 
``software'' in 6A001.a.2.a.1, 6A001.a.2.a.2, 6A001.a.2.a.7, 
6A001.a.2.b, 6A001.a.2.c, 6A001.a.2.3, 6A002.a.1.c, 6A008.l.3, or 6B008, 
as described in paragraph (b)(1) of this Supplement; and
    (D) Controlled by 6E002 for the ``production'' of equipment 
controlled by 6A001.a.2.a.1, 6A001.a.2.a.2, 6A001.a.2.a.7, 6A001.a.2.b, 
6A001.a.2.c, 6A001.a.2.3, 6A002.a.1.c, 6A008.l.3, or 6B008, as described 
in paragraph (b)(1) of this Supplement; and
    (E) Controlled by 8E001 for items controlled by 8A001.b, 
8A002.o.3.b, or 8A001.d; and
    (F) Controlled by 9E001 for items controlled by 9A011, 9D001, or 
9D002; and
    (G) Controlled by 9E002 for items controlled by 9A011; and
    (H) Controlled by 9E003.a.1; and
    (I) Controlled by 9E003.a.3 for items controlled by 1A002.a as 
described in paragraph (b)(1)(i) of this Supplement.
    (2) Items identified on the Commerce Control List as controlled for 
missile technology (MT), chemical and biological warfare (CB), or 
nuclear nonproliferation (NP) reasons;
    (3) Regional stability items controlled under Export Control 
Classification Numbers (ECCNs) 6A002, 6A003, 6E001, 6E002, 7D001, 7E001, 
7E002, 7E101, 9A018, 9D018 and 9E018 as described in 742.6(a) of the 
EAR; or
    (4) Encryption items controlled for EI reasons as described in the 
Commerce Control List.

[61 FR 64281, Dec. 4, 1996. Redesignated at 61 FR 68579, Dec. 30, 1996, 
as amended at 61 FR 68580, Dec. 30, 1996; 62 FR 25457, May 9, 1997; 63 
FR 2456, Jan. 15, 1998; 63 FR 42228, Aug. 7, 1998; 63 FR 50522, Sept. 
22, 1998; 63 FR 55019, Oct. 14, 1998]



Sec. 740.12  Gift parcels and humanitarian donations (GFT).

    (a) Gift parcels--(1) Scope. The provisions of paragraph (a) 
authorize exports and reexports of gift parcels by an individual (donor) 
addressed to an individual, or a religious, charitable or educational 
organization (donee) located in any destination for the use of the donee 
or the donee's immediate family (and not for resale). The gift parcel 
must be provided free of charge to the donee. However, payment by the 
donee of any handling charges or of any fees levied by the importing 
country (e.g., import duties, taxes, etc.) is not considered to be a 
cost to the donee for purposes of this definition of ``gift parcel.''
    Note to paragraph (a) of this section:
    A gift parcel, within the context of this paragraph (a), does not 
include multiple parcels exported in a single shipment for delivery to 
individuals residing in a foreign country. Such multiple gift parcels, 
if subject to the General Prohibitions described in Sec. 734.2(b) of the 
EAR, must be licensed by BXA. (See Supplement No. 2 to part 748 of the 
EAR for licensing of multiple gift parcels).
    (2) Commodity, value and other limitations--(i) Eligible 
commodities. The eligible commodities are as follows:
    (A) The commodity must not be controlled for chemical and biological 
weapons (CB), missile technology (MT), national security (NS), or 
nuclear proliferation (NP) (see Commerce Control List, part 774 of the 
EAR); and
    (B) The commodity must be of a type and in quantities normally given 
as gifts between individuals.
    (1) For Cuba, the only commodities that may be included in a gift 
parcel are the following items: food, vitamins, seeds, medicines, 
medical supplies and devices, hospital supplies and equipment, equipment 
for the handicapped, clothing, personal hygiene items, veterinary 
medicines and supplies, fishing equipment and supplies, soap-making

[[Page 175]]

equipment, and in addition receive-only radio equipment for reception of 
commercial/civil AM/FM and short wave publicly available frequency 
bands, and batteries for such equipment.
    (2) For all other destinations, eligible commodities include all 
items described in paragraph (a)(2)(i)(B)(1) of this section as well as 
all other items normally sent as gifts. Gold bullion, gold taels, and 
gold bars are prohibited as are items intended for resale or reexport.

    Example to paragraph (a) of this section. A watch or piece of 
jewelry is normally sent as a gift. However, multiple watches, either in 
one package or in subsequent shipments, would not quality for such gift 
parcels because the quantity exceeds that normally given between 
individuals. Similarly, a sewing machine or bicycle, within the dollar 
limits of this License Exception, may be an appropriate gift. However, 
subsequent shipments of the same item to the same donee would not be a 
gift normally given between individuals.

    (3) For purposes of paragraph (a)(2)(i)(B) of this section, clothing 
is appropriate, except that export of military wearing apparel to 
Country Group D:1 or E:2 under this License Exception is specifically 
prohibited, regardless of whether all distinctive U.S. military 
insignia, buttons, and other markings are removed.
    (ii) Import requirements. The commodities must be acceptable in type 
and quantity by the recipient country for import as gifts. Commodities 
exceeding the import limits may not be included in gift parcels.
    (iii) Frequency. Except for gift parcels of food to Cuba, not more 
than one gift parcel may be sent from the same donor to the same donee 
in any one calendar month. Parties seeking authorization to exceed this 
limit due to compelling humanitarian concerns (e.g., gifts of medicine 
to relatives) should submit a license application (BXA-748P) with 
complete justification.
    (iv) Value. The combined total domestic retail value of all 
commodities included in a gift parcel may not exceed $400, except for 
gift parcels to Cuba where the value of non-food items may not exceed 
$200. There is no dollar value limit on food contained in a gift parcel 
to Cuba.
    (3) How to export gift parcels. (i) A gift parcel must be sent 
directly to the donee by the individual donor, or for such donor by a 
commercial or other gift-forwarding service or organization. Each gift 
parcel must show, on the outside wrapper, the name and address of the 
donor, as well as the name and address of the donee, regardless of 
whether sent by the donor or by a forwarding service.
    (ii) Each parcel must have the notation ``GIFT--Export License Not 
Required'' written on the addressee side of the package and the symbol 
``GFT'' written on any required customs declaration.
    (b) Humanitarian donations--(1) Scope. The provisions of paragraph 
(b) authorize exports or reexports by groups or organizations of 
donations to meet basic human needs when those groups or organizations 
have experience in maintaining a verifiable system of distribution that 
ensures delivery to the intended beneficiaries.
    (2) Basic human needs. Basic human needs are defined as those 
requirements essential to individual well-being: health, food, clothing, 
shelter, and education. These needs are considered to extend beyond 
those of an emergency nature and those that meet direct needs for mere 
subsistence.
    (3) Eligible donors. Eligible donors are U.S. charitable 
organizations that have an established record of involvement in donative 
programs and experience in maintaining and verifying a system of 
distribution to ensure delivery of commodities and software to the 
intended beneficiaries. Eligible distribution arrangements may consist 
of any one or more of the following:
    (i) A permanent staff maintained in the recipient country to monitor 
the receipt and distribution of the donations to the intended 
beneficiaries;
    (ii) Periodic spot-checks in the recipient country by members of the 
exporter's staff; or
    (iii) An agreement to utilize the services of a charitable 
organization that has a monitoring system in place.
    (4) Donations. To qualify for export under the provisions of this 
paragraph (b), the items must be provided free of

[[Page 176]]

charge to the beneficiary. The payment by the beneficiary, however, of 
normal handling charges or fees levied by the importing country (e.g., 
import duties, taxes, etc.) is not considered to be a cost to the 
beneficiary for purposes of this paragraph (b).
    (5) Ineligible commodities and software. The following commodities 
and software are not eligible:
    (i) Commodities and software controlled for national security, 
chemical or biological weapons, and nuclear nonproliferation, missile 
technology or crime control reasons (see Supplement No. 1 to part 774 of 
the EAR);
    (ii) Exports for large-scale projects of the kind associated with 
comprehensive economic growth, such as dams and hydroelectric plants; or
    (iii) Exports to Cuba of medical items excluded by Sec. 746.2(a)(3) 
of the EAR.
    (6) Eligible items. Eligible commodities and software are those 
listed in Supplement No. 2 to part 740.
    (7) Additional recordkeeping requirements. In addition to the 
recordkeeping requirements in part 762 of the EAR, donors must keep 
records containing the following information:
    (i) The donor organization's identity and past experience as an 
exporter of goods to meet basic human needs;
    (ii) Past and current countries to which the donative programs have 
been and are being directed, with particular reference to donative 
programs in embargoed destinations;
    (iii) Types of projects and commodities involved in the donative 
programs;
    (iv) Specific class(es) of beneficiaries of particular donated goods 
intended to be exported under this License Exception; and
    (v) Information concerning the source of funding for the donative 
programs and the projected annual value of exports of humanitarian 
donations.

[61 FR 64282, Dec. 4, 1996. Redesignated at 61 FR 68579, Dec. 30, 1996; 
62 FR 25458, May 9, 1997]



Sec. 740.13  Technology and software--unrestricted (TSU).

    This License Exception authorizes exports and reexports of operation 
technology and software; sales technology and software; software updates 
(bug fixes); and ``mass market'' software subject to the General 
Software Note.
    (a) Operation technology and software--(1) Scope. The provisions of 
paragraph (a) permit exports and reexports of operation technology and 
software. ``Operation technology'' is the minimum technology necessary 
for the installation, operation, maintenance (checking), and repair of 
those products that are lawfully exported or reexported under a license, 
a License Exception, or NLR. The ``minimum necessary'' operation 
technology does not include technology for development or production and 
includes use technology only to the extent required to ensure safe and 
efficient use of the product. Individual entries in the software and 
technology subcategories of the CCL may further restrict the export or 
reexport of operation technology.
    (2) Provisions and destinations--(i) Provisions. Operation software 
may be exported or reexported provided that both of the following 
conditions are met:
    (A) The operation software is the minimum necessary to operate 
equipment authorized for export or reexport; and
    (B) The operation software is in object code.
    (ii) Destinations. Operation software and technology may be exported 
or reexported to any destination to which the equipment for which it is 
required has been or is being legally exported or reexported.
    (b) Sales technology--(1) Scope. The provisions of paragraph (b) 
authorize exports and reexports of sales technology. ``Sales 
technology'' is data supporting a prospective or actual quotation, bid, 
or offer to sell, lease, or otherwise supply any item.
    (2) Provisions and destinations--(i) Provisions. Sales technology 
may be exported or reexported provided that:
    (A) The technology is a type customarily transmitted with a 
prospective or actual quotation, bid, or offer in accordance with 
established business practice; and
    (B) Neither the export nor the reexport will disclose the detailed 
design, production, or manufacture technology, or the means of 
reconstruction,

[[Page 177]]

of either the quoted item or its product. The purpose of this limitation 
is to prevent disclosure of technology so detailed that the consignee 
could reduce the technology to production.
    (ii) Destinations. Sales technology may be exported or reexported to 
any destination.
    Note: Neither this section nor its use means that the U.S. 
Government intends, or is committed, to approve a license application 
for any commodity, plant, software, or technology that may be the 
subject of the transaction to which such quotation, bid, or offer 
relates. Exporters are advised to include in any quotations, bids, or 
offers, and in any contracts entered into pursuant to such quotations, 
bids, or offers, a provision relieving themselves of liability in the 
event that a license (when required) is not approved by the Bureau of 
Export Administration.
    (c) Software updates. The provisions of paragraph (c) authorize 
exports and reexports of software updates that are intended for and are 
limited to correction of errors (``fixes'' to ``bugs'') in software 
lawfully exported or reexported (original software). Such software 
updates may be exported or reexported only to the same consignee to whom 
the original software was exported or reexported, and such software 
updates may not enhance the functional capacities of the original 
software. Such software updates may be exported or reexported to any 
destination to which the software for which they are required has been 
legally exported or reexported.
    (d) General Software Note: ``mass market'' software--(1) Scope. The 
provisions of paragraph (d) authorize exports and reexports of ``mass 
market'' software subject to the General Software Note (see Supplement 
No. 2 to part 774 of the EAR; also referenced in this section).
    (2) Software not eligible for this License Exception. This License 
Exception is not available for encryption software controlled for ``EI'' 
reasons under ECCN 5D002. (Refer to Secs. 742.15(b)(1) and 748.3(b) of 
the EAR for information on item classifications regarding a one-time BXA 
review for release from EI controls.)
    (3) Provisions and destinations--
    (i) Destinations. ``Mass market'' software is available to all 
destinations except Cuba, Iran, Iraq, Libya, North Korea, Sudan, and 
Syria.
    (ii) Provisions. ``Mass market'' treatment is available for software 
that is generally available to the public by being:
    (A) Sold from stock at retail selling points, without restriction, 
by means of:
    (1) Over the counter transactions;
    (2) Mail order transactions; or
    (3) Telephone call transactions; and
    (B) Designed for installation by the user without further 
substantial support by the supplier.

[61 FR 64283, Dec. 4, 1996, as amended at 61 FR 65464, Dec. 13, 1996. 
Redesignated at 61 FR 68579, Dec. 30, 1996, as amended at 61 FR 68580, 
Dec. 30, 1996; 62 FR 25458, May 9, 1997]



Sec. 740.14  Baggage (BAG).

    (a) Scope. This License Exception authorizes individuals leaving the 
United States either temporarily (i.e., traveling) or longer-term (i.e., 
moving) and crew members of exporting or reexporting carriers to take to 
any destination, as personal baggage, the classes of commodities and 
software described in this section.
    (b) Eligibility. Individuals leaving the United States may export or 
reexport any of the following commodities or software for personal use 
of the individuals or members of their immediate families traveling with 
them to any destination or series of destinations. Individuals leaving 
the United States temporarily (i.e., traveling) must bring back items 
exported and reexported under this License Exception unless they consume 
the items abroad or are otherwise authorized to dispose of them under 
the EAR. Crew members may export or reexport only commodities and 
software described in paragraphs (b)(1) and (b)(2) of this section to 
any destination.
    (1) Personal effects. Usual and reasonable kinds and quantities for 
personal use of wearing apparel, articles of personal adornment, toilet 
articles, medicinal supplies, food, souvenirs, games, and similar 
personal effects, and their containers.
    (2) Household effects. Usual and reasonable kinds and quantities for 
personal use of furniture, household effects, household furnishings, and 
their containers.

[[Page 178]]

    (3) Vehicles. Usual and reasonable kinds and quantities of vehicles, 
such as passenger cars, station wagons, trucks, trailers, motorcycles, 
bicycles, tricycles, perambulators, and their containers.
    (4) Tools of trade. Usual and reasonable kinds and quantities of 
tools, instruments, or equipment and their containers for use in the 
trade, occupation, employment, vocation, or hobby of the traveler or 
members of the household being moved. For special provisions regarding 
encryption items subject to EI controls, see paragraph (f) of this 
section.
    (c) Limits on eligibility. The export of any commodity or software 
is limited or prohibited, if the kind or quantity is in excess of the 
limits described in this section. In addition, the commodities or 
software must be:
    (1) Owned by the individuals (or by members of their immediate 
families) or by crew members of exporting carriers on the dates they 
depart from the United States;
    (2) Intended for and necessary and appropriate for the use of the 
individuals or members of their immediate families traveling with them, 
or by the crew members of exporting carriers;
    (3) Not intended for sale or other disposal; and
    (4) Not exported under a bill of lading as cargo if exported by crew 
members.
    (d) Special provision: unaccompanied baggage. Individuals departing 
the United States may ship unaccompanied baggage, which is baggage sent 
from the United States on a carrier other than that on which an 
individual departs. Crew members of exporting carriers may not ship 
unaccompanied baggage. Unaccompanied shipments under this License 
Exception shall be clearly marked ``BAGGAGE.'' Shipments of 
unaccompanied baggage may be made at the time of, or within a reasonable 
time before or after departure of the consignee or owner from the United 
States. Personal baggage controlled for chemical and biological weapons 
(CB), missile technology (MT), national security (NS) or nuclear 
nonproliferation (NP) must be shipped within 3 months before or after 
the month in which the consignee or owner departs the United States. 
However, commodities controlled for CB, MT, NS, or NP may not be 
exported under this License Exception to Country Groups D:1, D:2, D:3, 
D:4, E:2, or Sudan. (See Supplement No. 1 to part 740.) No items 
controlled for EI reasons may be exported or reexported as unaccompanied 
baggage.
    (e) Special provisions: shotguns and shotgun shells. (1) A United 
States citizen or a permanent resident alien leaving the United States 
may export or reexport shotguns with a barrel length of 18 inches or 
over and shotgun shells under this License Exception, subject to the 
following limitations:
    (i) Not more than three shotguns may be taken on any one trip.
    (ii) The shotguns and shotgun shells must be with the person's 
baggage but they may not be mailed.
    (iii) The shotguns and shotgun shells must be for the person's 
exclusive use for legitimate hunting or lawful sporting purposes, 
scientific purposes, or personal protection, and not for resale or other 
transfer of ownership or control. Accordingly, except as provided in 
(e)(2) of this section, shotguns may not be exported permanently under 
this License Exception. All shotguns and unused shotgun shells must be 
returned to the United States.
    (2) A nonresident alien leaving the United States may export or 
reexport under this License Exception only such shotguns and shotgun 
shells as he or she brought into the United States under the provisions 
of Department of Treasury Regulations (27 CFR 178.115(d)).
    (f) Special provisions: encryption software subject to EI controls. 
(1) Only a U.S. citizen or permanent resident as defined by 8 U.S.C. 
1101(a)(20) may permanently export or reexport encryption items 
controlled for EI reasons under this License Exception.
    (2) The U.S. citizen or permanent resident must maintain effective 
control of the encryption items controlled for EI reasons.
    (3) The encryption items controlled for EI reasons may not be 
exported or reexported to Country Group E:2, Iran, Iraq, Sudan, or 
Syria.

[61 FR 12768, Mar. 25, 1996. Redesignated at 61 FR 64274, Dec. 4, 1996. 
Redesignated at 61 FR 68579, Dec. 30, 1996, and amended at 62 FR 25458, 
May 9, 1997; 63 FR 50522, Sept. 22, 1998]

[[Page 179]]



Sec. 740.15  Aircraft and vessels (AVS).

    This License Exception authorizes departure from the United States 
of foreign registry civil aircraft on temporary sojourn in the United 
States and of U.S. civil aircraft for temporary sojourn abroad; the 
export of equipment and spare parts for permanent use on a vessel or 
aircraft; and exports to vessels or planes of U.S. or Canadian registry 
and U.S. or Canadian Airlines' installations or agents. Generally, no 
License Exception symbol is necessary for export clearance purposes; 
however, when necessary, the symbol ``AVS'' may be used.
    (a) Aircraft on temporary sojourn--(1) Foreign registered aircraft. 
An operating civil aircraft of foreign registry that has been in the 
United States on a temporary sojourn may depart from the United States 
under its own power for any destination, provided that:
    (i) No sale or transfer of operational control of the aircraft to 
nationals of Cuba, Iran, Iraq, Libya, North Korea, Sudan, or Syria has 
occurred while in the United States;
    (ii) The aircraft is not departing for the purpose of sale or 
transfer of operational control to nationals of Cuba, Iran, Iraq, Libya, 
North Korea, Sudan, or Syria; and
    (iii) It does not carry from the United States any item for which an 
export license is required and has not been granted by the U.S. 
Government.
    (2) U.S. registered aircraft. (i) A civil aircraft of U.S. registry 
operating under an Air Carrier Operating Certificate, Commercial 
Operating Certificate, or Air Taxi Operating Certificate issued by the 
Federal Aviation Administration or conducting flights under operating 
specifications approved by the Federal Aviation Administration pursuant 
to 14 CFR part 129 of the regulations of the Federal Aviation 
Administration, may depart from the United States under its own power 
for any destination, provided that:
    (A) The aircraft does not depart for the purpose of sale, lease or 
other disposition of operational control of the aircraft, or its 
equipment, parts, accessories, or components to a foreign country or any 
national thereof;
    (B) The aircraft's U.S. registration will not be changed while 
abroad;
    (C) The aircraft is not to be used in any foreign military activity 
while abroad; and
    (D) The aircraft does not carry from the United States any item for 
which a license is required and has not been granted by the U.S. 
Government.
    (ii) Any other operating civil aircraft of U.S. registry may depart 
from the United States under its own power for any destination, except 
to Cuba, Iran, Iraq, Sudan, Syria, Libya, and North Korea (flights to 
these destinations require a license), provided that:
    (A) The aircraft does not depart for the purpose of sale, lease or 
other disposition of operational control of the aircraft, or its 
equipment, parts, accessories, or components to a foreign country or any 
national thereof;
    (B) The aircraft's U.S. registration will not be changed while 
abroad;
    (C) The aircraft is not to be used in any foreign military activity 
while abroad;
    (D) The aircraft does not carry from the United States any item for 
which an export license is required and has not been granted by the U.S. 
Government; and
    (E) The aircraft will be operated while abroad by a U.S. licensed 
pilot, except that during domestic flights within a foreign country, the 
aircraft may be operated by a pilot currently licensed by that foreign 
country.
    (3) Criteria. The following nine criteria each must be met if the 
flight is to qualify as a temporary sojourn. To be considered a 
temporary sojourn, the flight must not be for the purpose of sale or 
transfer of operational control. An export is for the transfer of 
operational control unless the exporter retains each of the following 
indicia of control:
    (i) Hiring of cockpit crew. Right to hire and fire the cockpit crew.
    (ii) Dispatch of aircraft. Right to dispatch the aircraft.
    (iii) Selection of routes. Right to determine the aircraft's routes 
(except for contractual commitments entered into by the exporter for 
specifically designated routes).
    (iv) Place of maintenance. Right to perform or obtain the principal 
maintenance on the aircraft, which principal maintenance is conducted 
outside

[[Page 180]]

Cuba, Iran, Iraq, Libya, North Korea, Sudan, or Syria, under the control 
of a party who is not a national of any of these countries. (The minimum 
necessary in-transit maintenance may be performed in any country).
    (v) Location of spares. Spares are not located in Cuba, Iran, Iraq, 
Libya, North Korea, Sudan, or Syria.
    (vi) Place of registration. The place of registration is not changed 
to Cuba, Iran, Iraq, Libya, North Korea, Sudan, or Syria.
    (vii) No transfer of technology. No technology is transferred to a 
national of Cuba, Iran, Iraq, Libya, North Korea, Sudan, or Syria, 
except the minimum necessary in transit maintenance to perform flight 
line servicing required to depart safely.
    (viii) Color and logos. The aircraft does not bear the livery, 
colors, or logos of a national of Cuba, Iran, Iraq, Libya, North Korea, 
Sudan, or Syria.
    (ix) Flight number. The aircraft does not fly under a flight number 
issued to a national of Cuba, Iran, Iraq, Libya, North Korea, Sudan, or 
Syria as such a number appears in the Official Airline Guide.
    (4) Reexports. Civil aircraft legally exported from the United 
States may be reexported under this section, provided the restrictions 
described in this paragraph (a) are met.
    (b) Equipment and spare parts for permanent use on a vessel or 
aircraft, and ship and plane stores--(1) Vessel. Equipment and spare 
parts for permanent use on a vessel, when necessary for the proper 
operation of such vessel, may be exported or reexported for use on board 
a vessel of any registry, except a vessel registered in Country Group 
D:1 (see Supplement No. 1 to part 740), Cuba, or North Korea, or owned 
or controlled by, or under charter or lease to any of these countries or 
their nationals. In addition, other equipment and services for necessary 
repair to fishing and fishery support vessels of Country Group D:1 or 
North Korea may be exported for use on board such vessels when admitted 
into the United States under governing international fishery agreements.
    (2) Aircraft. Equipment and spare parts for permanent use on an 
aircraft, when necessary for the proper operation of such aircraft, may 
be exported or reexported for use on board an aircraft of any registry, 
except an aircraft registered in, owned or controlled by, or under 
charter or lease to a country included in Country Group D:1, Cuba, 
Libya, or North Korea, or a national of any of these countries.
    (3) Ship and plane stores. Usual and reasonable kinds and quantities 
of the following commodities may be exported for use or consumption on 
board an aircraft or vessel of any registry during the outgoing and 
immediate return flight or voyage. (Note that fuel and related 
commodities that qualify as ship or plane stores as described in this 
License Exception must be exported under the short supply License 
Exception SPR (see Sec. 754.2(h) of the EAR.)
    (i) Deck, engine, and steward department stores, provisions, and 
supplies for both port and voyage requirements;
    (ii) Medical and surgical supplies;
    (iii) Food stores;
    (iv) Slop chest articles;
    (v) Saloon stores or supplies.
    (c) Shipments to U.S. or Canadian vessels, planes and airline 
installations or agents--(1) Exports to vessels or planes of U.S. or 
Canadian registry. Export may be made of the commodities set forth in 
paragraph (c)(3) of this section, for use by or on a specific vessel or 
plane of U.S. or Canadian registry located at any seaport or airport 
outside the United States or Canada except a port in Cuba, North Korea 
or Country Group D:1 (excluding the PRC and Romania), (see Supplement 
No. 1 to part 740) provided that such commodities are all of the 
following: 6
---------------------------------------------------------------------------

    \6\  Where a validated license is required, see Secs. 748.2 and 
748.4(g) of the EAR.
---------------------------------------------------------------------------

    (i) Ordered by the person in command or the owner or agent of the 
vessel or plane to which they are consigned;
    (ii) Intended to be used or consumed on board such vessel or plane 
and necessary for its proper operation;
    (iii) In usual and reasonable kinds and quantities during times of 
extreme need; and
    (iv) Shipped as cargo for which a Shipper's Export Declaration (SED) 
is filed with the carrier, except that an SED is not required when any 
of the

[[Page 181]]

commodities, other than fuel, is exported by U.S. airlines to their own 
aircraft abroad for their use.
    (2) Exports to U.S. or Canadian airline's installation or agent. 
Exports of the commodities set forth in paragraph (c)(3) of this 
section, except fuel, may be made to a U.S. or Canadian airline's 
7 installation or agent in any foreign destination except 
Cuba, North Korea, or Country Group D:1 (excluding the PRC and Romania), 
(see Supplement No. 1 to part 740) provided such commodities are all of 
the following:
---------------------------------------------------------------------------

    \7\  See Part 772 of the EAR for definitions of United States and 
Canadian airlines.
---------------------------------------------------------------------------

    (i) Ordered by a U.S. or Canadian airline and consigned to its own 
installation or agent abroad;
    (ii) Intended for maintenance, repair, or operation of aircraft 
registered in either the United States or Canada, and necessary for the 
aircraft's proper operation, except where such aircraft is located in, 
or owned, operated or controlled by, or leased or chartered to, Cuba, 
North Korea or Country Group D:1 (excluding the PRC) (see Supplement No. 
1 to part 740) or a national of such country;
    (iii) In usual and reasonable kinds and quantities; and
    (iv) Shipped as cargo for which a Shipper's Export Declaration (SED) 
is filed with the carrier, except that an SED is not required when any 
of these commodities is exported by U.S. airlines to their own 
installations and agents abroad for use in their aircraft operations.
    (3) Applicable commodities. This paragraph (c) applies to the 
following commodities, subject to the provisions in paragraph (c)(1) and 
(c)(2) of this section:
    Note to paragraph (c)(3) of this section: Fuel and related 
commodities for shipment to vessels or planes of U.S. or Canadian 
registry as described in this License Exception must be shipped under 
the short supply License Exception SPR (see Sec. 754.2(h) of the EAR);
    (i) Deck, engine, and steward department stores, provisions, and 
supplies for both port and voyage requirements;
    (ii) Medical and surgical supplies;
    (iii) Food stores;
    (iv) Slop chest articles;
    (v) Saloon stores or supplies; and
    (vi) Equipment and spare parts.

[61 FR 12678, Mar. 25, 1996. Redesignated and amended at 61 FR 64274, 
64283, Dec. 4, 1996. Redesignated at 61 FR 68579, Dec. 30, 1996]



Sec. 740.16  Additional permissive reexports (APR).

    This License Exception allows the following reexports:
    (a) Reexports from Country Group A:1 and cooperating countries. 
Reexports may be made from Country Group A:1 or from cooperating 
countries, provided that:
    (1) The reexport is made in accordance with the conditions of an 
export authorization from the government of the reexporting country;
    (2) The commodities being reexported are not controlled for NP, CB, 
MT, SI, or CC reasons; and
    (3) The reexport is destined to either:
    (i) A country in Country Group B that is not also included in 
Country Group D:2, D:3, or D:4; Cambodia; or Laos; and the commodity 
being reexported is both controlled for national security reasons and 
not controlled for export to Country Group A:1; or
    (ii) A country in Country Group D:1 (National Security) (see 
Supplement No. 1 to part 740), other than Cambodia or Laos, and the 
commodity being reexported is controlled for national security reasons.
    (b) Reexports to and among Country Group A:1 and cooperating 
countries. Reexports may be made to and among Country Group A:1 and 
cooperating countries, provided that eligible commodities are for use or 
consumption within a Country Group A:1 (see Supplement No. 1 to part 
740) or cooperating country, or for reexport from such country in 
accordance with other provisions of the EAR. All commodities except the 
following are eligible for reexport to and among Country Group A:1 and 
cooperating countries:
    (1) Computers with a CTP greater than 10,000 MTOPS to Hong Kong and 
South Korea;
    (2) Commodities controlled for nuclear nonproliferation or missile 
technology reasons.
    (c) Reexports to a destination to which direct shipment from the 
United States is authorized under an unused outstanding license may be 
made under

[[Page 182]]

the terms of that license. Such reexports shall be recorded in the same 
manner as exports are recorded, regardless of whether the license is 
partially or wholly used for reexport purposes. (See part 762 of the EAR 
for recordkeeping requirements.)
    (d) Reexports of any item from Canada that, at the time of reexport, 
may be exported directly from the United States to the new country of 
destination under any License Exception.
    (e) Reexports (return) to the United States of any item. If the 
reexporting party requests written authorization because the government 
of the country from which the reexport will take place requires formal 
U.S. Government approval, such authorization will generally be given.
    (f) Reexports from a foreign destination to Canada of any item if 
the item could be exported to Canada without a license.
    (g) Reexports between Switzerland and Liechtenstein.
    (h) Shipments of foreign-made products that incorporate U.S.-origin 
components may be accompanied by U.S.-origin controlled spare parts, 
provided that they do not exceed 10 percent of the value of the foreign-
made product, subject to the restrictions in Sec. 734.4 of the EAR.
    (i) Reexports to Sudan of items controlled by ECCNs 2A994; 3A992.a; 
5A991.f; 5A992; 6A991; 6A998; 7A994; 8A992.d, .e, .f, and .g; 9A990.a 
and .b; and 9A991.d and .e. In addition, items in these ECCNs are not 
counted as controlled U.S. content for purposes of determining license 
requirements for U.S. parts, components, and materials incorporated in 
foreign-made products. However, the export from the United States to any 
destination with knowledge that they will be reexported directly or 
indirectly, in whole or in part to Sudan is prohibited without a 
license.
    (j) Reexports of items controlled by NP Column 1 (see Supplement No. 
1 to part 774 of the EAR) to, among, and from countries described in 
Country Group A:4 (see Supplement No. 1 to part 740), except:
    (1) Reexports from countries that are not identified in Country 
Group A:1 of items that are controlled for NS reasons to destinations in 
Country Group D:1; and
    (2) Reexports to destinations in Country Group E:2 and Country Group 
D:2.

[61 FR 12768, Mar. 25, 1996. Redesignated at 61 FR 64274, Dec. 4, 1996. 
Redesignated at 61 FR 68579, Dec. 30, 1996, and amended at 62 FR 25458, 
May 9, 1997; 63 FR 42228, Aug. 7, 1998]



Sec. 740.17  Encryption commodities and software (ENC).

    (a) Exports and reexports of encryption commodities and software to 
all destinations except Cuba, Iran, Iraq, Libya, North Korea, Sudan and 
Syria.
    (1) Financial-specific encryption commodities and software of any 
key length.
    (i) Scope. You may export and reexport financial-specific encryption 
commodities and software (which are not eligible under the provisions of 
License Exception TSU for mass market software such as SET or similar 
protocols) of any key length that are restricted by design (e.g., highly 
field-formatted with validation procedures, and not easily diverted to 
other end-uses) for financial applications to secure financial 
communications/transactions for end-uses such as financial transfers, or 
electronic commerce.
    (ii) Eligible commodities and software. Encryption commodities and 
software of any key length classified under ECCNs 5A002 and 5D002 after 
a technical review (see paragraph (c) of this section). These 
commodities and software must be specifically designed and limited for 
use in the processing of electronic financial (commerce) transactions, 
which implements cryptography in specifically delineated fields such as 
merchant's identification, the customer's identification and address, 
the merchandise purchased and the payment mechanism. It does not allow 
for encryption of data, text or other media except as directly related 
to these elements of the electronic transaction to support financial 
communications/transactions. Notwithstanding the provisions of paragraph 
(c)(2) of this section, financial-specific commodities and software that 
were made eligible for License Exception KMI

[[Page 183]]

after a technical review prior to December 31, 1998, are now eligible 
for export and reexport under License Exception ENC under the provisions 
of this paragraph (a)(1).
    (iii) Eligible destinations. Upon approval of your classification 
request, you may export and reexport under License Exception ENC 
financial-specific encryption commodities and software, as defined in 
this paragraph (a)(1), of any key length to all destinations except 
Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria.
    (iv) Reporting requirements. There are no reporting requirements.
    (2) Encryption commodities and software of any key length for U.S. 
subsidiaries. (i) Scope. You may export and reexport encryption 
commodities and software of any key length under License Exception ENC 
to U.S. subsidiaries (as defined in part 772 of the EAR) subject to the 
conditions of this paragraph (a)(2). Note that distributors, resellers 
or other entities that are not manufacturers of the encryption 
commodities and software are permitted to use License Exception ENC for 
U.S. subsidiaries only in instances where the export or reexport meets 
the terms and conditions of this paragraph (a)(2).
    (ii) Eligible commodities and software. Encryption commodities, 
software and technology of any key length classified under ECCNs 5A002, 
5D002 and 5E002 after a technical review (see paragraph (c) of this 
section). This includes encryption chips, integrated circuits, toolkits, 
executable or linkable modules, source code and technology to U.S. 
subsidiaries for internal company proprietary use, including the 
development of new products.
    (iii) Eligible destinations; retransfers. You may export and 
reexport under License Exception ENC encryption commodities, software 
and technology of any key length to U.S. subsidiaries for internal 
company proprietary use, including the development of new products, in 
all destinations except Cuba, Iran, Iraq, Libya, North Korea, Sudan and 
Syria. All items developed using U.S. encryption commodities, software 
and technology are subject to the EAR. For exports and reexports to 
strategic partners of U.S. companies (as defined in part 772) see 
Sec. 742.15(b)(8) of the EAR. Retransfers to other end-users or end-uses 
are prohibited without prior authorization.
    (iv) Reporting requirements. There are no reporting requirements.
    (3) Encryption commodities, including mass market and non-mass 
market, and non-mass market encryption software incorporating symmetric 
algorithms with key lengths up to and including 56-bits, such as DES or 
equivalent. (i) Scope. You may export and reexport encryption 
commodities, including mass market and non-mass market commodities, and 
non-mass market software with key lengths up to and including 56-bits, 
such as DES or equivalent, under License Exception ENC subject to the 
conditions of this paragraph (a)(3). For information concerning the 
technical review of encryption mass market commodities and mass market 
software refer to Sec. 742.15(b)(1) of the EAR. Note that encryption 
mass market software remains eligible under License Exception TSU.
    (ii) Eligible commodities and software. (A) Mass market and non-mass 
market encryption commodities and non-mass market software having 
symmetric algorithms with key lengths up to and including 56-bits, such 
as DES or equivalent (such as RC2, RC4, RC5, and CAST) which are 
classified as a result of a technical review (see paragraph (c) of this 
section). The commodity or software must not allow the alteration of the 
cryptographic functionality by the user or any other program. Encryption 
chips, integrated circuits, toolkits and executable or linkable modules 
are not authorized for export under the provisions of paragraph (a)(3).
    (B)(1) For mass market and non-mass market encryption commodities 
and non-mass market encryption software, exporters of 40-bit or less 
encryption commodities and software which have been made eligible for 
License Exception KMI or License Exception TSU or have been licensed for 
export under an Encryption Licensing Arrangement or a license prior to 
December 31, 1998, will be permitted to export and reexport these 
commodities and software

[[Page 184]]

under license exception ENC with increased key lengths up to and 
including 56-bits for the confidentiality algorithm, with key exchange 
mechanisms including symmetric algorithms with the same or double key 
length authorized for the confidentiality algorithm, and asymmetric 
algorithms for key exchange with key space of 512, 768 or up to and 
including 1024 bits without an additional technical review, provided 
that there is no other change in cryptographic functionality. Exporters 
must certify to BXA that the only change to the encryption is the 
increase in the key length for the confidentiality algorithm, the 
asymmetric or symmetric key exchange algorithms and that there is no 
other change in cryptographic functionality. Such certifications must be 
in the form of a letter from senior corporate management and include the 
original authorization number issued by BXA, the date of issuance and 
the information identified in paragraphs (a)(2) (iii) throught (v) of 
Supplement No. 6 to part 742 of the EAR. (If this information was 
submitted previously, then only identify the modifications.) BXA must 
receive such certification by March 31, 1999, and prior to any export of 
such upgraded product.
    (2) The certification should be sent to:

Office of Strategic Trade and Foreign Policy Controls, Bureau of Export 
Administration, Department of Commerce, 14th Street and Pennsylvania 
Ave., NW., Room 2705, Washington, DC 20230, Attn: Encryption Upgrade

    (3) A copy of the certification should be sent to:

Attn: ENC Encryption Request Coordinator, P.O. Box 246, Annapolis 
Junction, MD 20701-0246

    (C) After March 31, 1999, any increase (upgrade) in the 
confidentiality algorithm and the key exchange algorithm must be 
reviewed by BXA through a classification request (see Sec. 748.3 of the 
EAR). In Block 9 of form BXA-748P, indicate ``Key Length Upgrade.''
    (iii) Eligible destinations. License Exception ENC is available for 
exports and reexports of encryption commodities and software with key 
length up to and including 56-bits, such as DES or equivalent to all 
destinations except Cuba, Iran, Iraq, Libya, North Korea, Sudan and 
Syria.
    (iv) Reporting requirements. See paragraph (d) of this section for 
reporting requirements.
    (b) Exports and reexports of certain encryption commodities and 
software to countries listed in Supplement No. 3 to part 740 of the EAR. 
(1) General purpose encryption commodities and software of any key 
length for use by banks/financial institutions. (i) Scope. You may 
export and reexport general purpose, non-voice encryption commodities 
and software of any key length to banks and financial institutions (as 
defined in part 772 of the EAR) in specified destinations, subject to 
the conditions of this paragraph (b)(1). Note that distributors, 
resellers or other entities who are not manufacturers of the encryption 
commodities and software are permitted to use License Exception ENC for 
banks and financial institutions only in instances where the export or 
reexport meets the terms and conditions of this paragraph (b)(1).
    (ii) Eligible commodities and software. General purpose, non-voice 
encryption commodities and software of any key length classified under 
ECCNs 5A002 and 5D002 after a technical review (see paragraph (c) of 
this section). Note that software and commodities that have already been 
approved under an Encryption Licensing Arrangement to banks and 
financial institutions in specified countries may now be exported or 
reexported to other banks and financial institutions in those countries 
under the same Encryption Licensing Arrangement.
    (iii) Eligible destinations; retransfers. Upon approval of your 
classification request, you may export and reexport under License 
Exception ENC general purpose, non-voice encryption commodities and 
software, as defined in this paragraph (b)(1), of any key length to 
banks and financial institutions in all destinations listed in 
Supplement No. 3 to this part and to branches of such banks and 
financial institutions wherever established, except Cuba, Iran, Iraq, 
Libya, North Korea, Sudan and Syria. End-use is limited to secure 
business financial communications or

[[Page 185]]

transactions and financial communications/transactions between the bank 
and/or financial institution and its customers. No customer to customer 
communications or transactions are allowed. Retransfers to other end-
users or end-uses are prohibited without prior authorization.
    (iv) Reporting requirements. There are no reporting requirements.
    (2) Health and medical end-users. (i) Scope. You may export and 
reexport encryption commodities and software of any key length under 
License Exception ENC to health and medical end-users (as defined in 
part 772 of the EAR) in specified destinations, subject to the 
conditions of this paragraph (b)(2). Note that distributors, resellers 
or other entities who are not manufacturers of the encryption 
commodities and software are permitted to use License Exception ENC for 
health and medical end-users only in instances where the export or 
reexport meets the terms and conditions of this paragraph (b)(2).
    (ii) Eligible commodities and software. Encryption commodities and 
software of any key length classified under ECCNs 5A002 and 5D002 after 
a technical review (see paragraph (c) of this section).
    (iii) Eligible destinations; retransfers. You may export and 
reexport under License Exception ENC encryption commodities and software 
of any key length to health and medical end-users in all destinations 
listed in Supplement No. 3 to this part. Non-U.S. biochemical and 
pharmaceutical manufacturers, and non-U.S. military health and medical 
entities are not eligible to receive encryption commodities and software 
under License Exception ENC (see Sec. 742.15 of the EAR for licensing 
information on these end-users, as well as additional countries). End-
use is limited to securing health and medical transactions to health and 
medical end-users. No customer to customer communications or 
transactions are allowed. Retransfers to other end-users or end-uses are 
prohibited without prior authorization.
    (iv) Reporting requirements. See paragraph (d) of this section for 
reporting requirements for exports under this License Exception.
    (3) Encryption commodities and software of any key length for on-
line merchants. (i) Scope. You may export and reexport encryption 
commodities and software of any key length under License Exception ENC 
to on-line merchants (as defined in part 772 of the EAR) in specified 
destinations, subject to the conditions of this paragraph (b)(3). End-
use is limited to: the purchase or sale of goods and software; and 
services connected with the purchase or sale of goods and software 
including interactions between purchasers and sellers necessary for 
ordering, payment and delivery of goods and software. No other end-uses 
or customer to customer communications or transactions are allowed. 
Foreign on-line merchants or their separate business units (as defined 
in part 772 of the EAR) who are engaged in the manufacturing and 
distribution of items or services controlled on the U.S. Munitions List 
are excluded. Foreign government end-users are also excluded from this 
License Exception. Note that distributors, resellers or other entities 
who are not manufacturers of the encryption commodities and software are 
permitted to use License Exception ENC for on-line merchants only in 
instances where the export or reexport meets the terms and conditions of 
this paragraph (b)(3).
    (ii) Eligible commodities and software. Encryption commodities and 
software of any key length classified under ECCNs 5A002 and 5D002 after 
a technical review (see paragraph (c) of this section). Such commodities 
and software must be limited to client-server applications (e.g. Secure 
Socket Layer (SSL) based applications) or applications specially 
designed for on-line transactions for the purchase or sale of goods and 
software; and services connected with the purchase or sale of goods and 
software, including interactions between purchasers and sellers 
necessary for ordering, payment and delivery of goods and software. 
Notwithstanding the provisions of paragraph (c)(2) of this section, 
commodities and software that were eligible for export to on-line 
merchants under an Encryption Licensing Arrangement or license prior to 
December 31, 1998, are now eligible for export and reexport

[[Page 186]]

under License Exception ENC under the provisions of this paragraph 
(b)(3).
    (iii) Eligible destinations; retransfers. You may export and 
reexport encryption commodities and software under License Exception ENC 
to on-line merchants in all destinations listed in Supplement No. 3 to 
this part, except to foreign on-line merchants or their separate 
business units who are engaged in the manufacturing and distribution of 
items or services controlled on the U.S. Munitions List. Retransfers to 
other end-users or end-uses are prohibited without prior authorization.
    (iv) Reporting requirements. See paragraph (d) of this section for 
reporting requirements for exports under this License Exception.
    (c) Technical review to determine eligibility for License Exception 
ENC. (1) You may initiate a technical review required by paragraph (a) 
or (b) of this section by submitting a classification request for your 
product in accordance with the provisions of Sec. 748.3(b) of the EAR. 
Indicate ``License Exception ENC'' in Block 9: Special purpose, on form 
BXA-748P. Submit the original request to BXA in accordance with 
Sec. 748.3 of the EAR and send a copy of the request to:

Attn: ENC Encryption Request Coordinator, P.O. Box 246, Annapolis 
Junction, MD 20701-0246

    (2) Commodities and software that have been made eligible for 
License Exception TSU or KMI or which have been approved for export 
under an Encryption Licensing Arrangement or a license prior to December 
31, 1998 are eligible for export and reexport under all paragraphs of 
License Exception ENC, except paragraphs (a)(1) and (b)(3) of this 
section, without an additional technical review, provided that the 
export or reexport meets all the terms and conditions of this License 
Exception. For all other commodities and software, a technical review 
will determine eligibility for License Exception ENC by reviewing the 
confidentiality algorithm, key space, and key exchange mechanism.
    (3) For export and reexport of encryption commodities and software 
under paragraph (a)(3) of this section, examples of eligible key 
exchange mechanisms include, but are not limited to, symmetric 
algorithms with the same or double the key length authorized for the 
confidentiality algorithm, asymmetric algorithms with key space of 512, 
768 or up to and including 1024 bits, proprietary key exchange 
mechanisms, or others.
    (4) For export and reexport of encryption commodities and software 
under paragraph (b)(3) of the License Exception ENC, exporters, in order 
to expedite review of the classification, should submit, as applicable, 
the following types of information to support the classification 
request:
    (i) Information describing how the product is limited to a client-
server application or application specially designed or tailored to the 
conditions outlined in the License Exception;
    (ii) Information describing the end-user environment to which the 
application will be limited;
    (iii) Information explaining how the product will not permit 
customer-to-customer communications or transactions above 56-bits;
    (iv) Information on the process by which the merchant(s) or 
application will limit access to authorized users; or
    (v) Details of the encryption system, including how it is limited to 
the application or cannot be diverted to other end-uses.
    (d) Reporting requirements. (1) You must provide to BXA the names 
and addresses for exports to the following end-users:
    (i) All military and government end-users for non-mass market 
commodities and non-mass market software exports authorized under 
paragraph (a)(3) of this section;
    (ii) All health and medical end-users for exports authorized under 
paragraph (b)(2) of this section, and
    (iii) All foreign on-line merchants for exports authorized under 
paragraph (b)(3) of this section.
    (2) You must submit reports no later than February 1 and no later 
than August 1 of any given year. Specifically, the report must identify 
the end-user name and address and country of ultimate destination, as 
well as the classification or other authorization number. Send the 
report to the following address:


[[Page 187]]


Office of Strategic Trade and Foreign Policy Controls, Bureau of Export 
Administration, Department of Commerce, 14th Street and Pennsylvania 
Ave., N.W., Room 2705, Washington, D.C. 20230, Attn: Encryption Reports

[63 FR 72159, Dec. 31, 1998]


                      Supplement No. 1 to Part 740

                                                 Country Group A
----------------------------------------------------------------------------------------------------------------
                                                                           Missile
                                                                         technology     Australia      Nuclear
                         Country                                           control        group       suppliers
                                                                           regime                       group
                                                                [A:1]         [A:2]         [A:3]         [A:4]
���������������������������������������������������������
Argentina...............................................  ............            X             X             X
Australia...............................................            X             X             X             X
Austria \1\.............................................  ............            X             X             X
Belgium.................................................            X             X             X             X
Brazil..................................................  ............            X   ............  ............
Bulgaria................................................  ............  ............  ............            X
Canada..................................................            X             X             X             X
Czech Republic..........................................  ............  ............            X             X
Denmark.................................................            X             X             X             X
Finland \1\.............................................  ............            X             X             X
France..................................................            X             X             X             X
Germany.................................................            X             X             X             X
Greece..................................................            X             X             X             X
Hong Kong \1\...........................................  ............  ............  ............  ............
Hungary.................................................  ............            X             X             X
Iceland.................................................  ............            X             X   ............
Ireland \1\.............................................  ............            X             X             X
Italy...................................................            X             X             X             X
Japan...................................................            X             X             X             X
Korea, South \1\........................................  ............  ............            X             X
Luxembourg..............................................            X             X             X             X
Netherlands.............................................            X             X             X             X
New Zealand \1\.........................................  ............            X             X             X
Norway..................................................            X             X             X             X
Poland..................................................  ............  ............            X             X
Portugal................................................            X             X             X             X
Romania.................................................  ............  ............            X             X
Russia..................................................  ............            X   ............            X
Slovakia................................................  ............  ............            X             X
South Africa............................................  ............            X   ............            X
Spain...................................................            X             X             X             X
Sweden \1\..............................................  ............            X             X             X
Switzerland \1\.........................................  ............            X             X             X
Turkey..................................................            X   ............  ............  ............
United Kingdom..........................................            X             X             X             X
United States...........................................            X             X             X             X
----------------------------------------------------------------------------------------------------------------
\1\ Cooperating Countries.


[[Page 188]]

[GRAPHIC] [TIFF OMITTED] TR25MR96.009


[[Page 189]]

[GRAPHIC] [TIFF OMITTED] TR25MR96.010


                                             Country Group D
----------------------------------------------------------------------------------------------------------------
                                       [D: 1] National                      [D: 3] Chemical &    [D: 4] Missile
               Country                     Security      [D: 2] Nuclear         Biological         Technology
----------------------------------------------------------------------------------------------------------------
Afghanistan.........................                                                       X
Albania.............................                 X
Algeria.............................
Andorra.............................
Angola..............................
Armenia.............................                 X                                     X
Azerbaijan..........................                 X                                     X
Bahrain.............................                                                       X                  X
Belarus.............................                 X                                     X
Bulgaria............................                 X                                     X
Burma...............................                                                       X
Cambodia............................                 X
China (PRC).........................                 X                                     X               X\1\
Comoros.............................
Cuba................................                                    X                  X
Djibouti............................
Egypt...............................                                                       X                  X
Estonia.............................                 X
Georgia.............................                 X                                     X
India...............................                                    X                  X               X\1\
Iran................................                                    X                  X               X\1\
Iraq................................                                    X                  X                  X
Israel..............................                                    X                  X                  X
Jordan..............................                                                       X                  X
Kazakhstan..........................                 X                                     X
Korea, North........................                                    X                  X               X\1\
Kuwait..............................                                                       X                  X
Kyrgyzstan..........................                 X                                     X
Laos................................                 X
Latvia..............................                 X
Lebanon.............................                                                       X                  X
Libya...............................                                    X                  X                  X
Lithuania...........................                 X
Micronesia, Federated States of.....
Moldova.............................                 X                                     X
Mongolia............................                 X                                     X
Oman................................                                                       X                  X
Pakistan............................                                    X                  X               X\1\
Qatar...............................                                                       X                  X
Romania.............................                 X
Russia..............................                 X                                     X
Saudi Arabia........................                                                       X                  X
Syria...............................                                                       X                  X
Taiwan..............................                                                       X
Tajikstan...........................                 X                                     X
Turkmenistan........................                 X                                     X
Ukraine.............................                 X                                     X
United Arab Emirates................                                                       X                  X
Uzbekistan..........................                 X                                     X
Vanuatu.............................
Vietnam.............................                 X                                     X
Yemen...............................                                                       X                  X
----------------------------------------------------------------------------------------------------------------
\1\ Certain Missile Technology projects have been identified in the following countries:
  China--M Series Missiles CSS-2.
  India--Agni, Prithvi, SLV-3 Satellite Launch Vehicle, Augmented Satellite Launch Vehicle (ASLV), Polar
  Satellite Launch Vehicle (PSLV), Geostationary Satellite Launch Vehicle (GSLV).

[[Page 190]]

 
  Iran--Surface-to-Surface Missile Project, Scud Development Project.
  Korea, North--No Dong I, Scud Development Project.
  Pakistan--Half Series Missiles.

                             Country Group E

------------------------------------------------------------------------
                                                                 [E-2]
                     Country                       [E:1] UN   unilateral
                                                    embargo     embargo
------------------------------------------------------------------------
Angola..........................................          X   ..........
Cuba............................................  ..........          X
Iraq............................................          X   ..........
Korea, North....................................  ..........          X
Libya...........................................          X           X
Rwanda..........................................          X   ..........
Serbia & Montenegro.............................          X   ..........
------------------------------------------------------------------------


[61 FR 12768, Mar. 25, 1996, as amended at 62 FR 6686, Feb. 12, 1997; 62 
FR 25458, May 9, 1997; 62 FR 42048, Aug. 5, 1997; 63 FR 37769, July 14, 
1998]

 Supplement No. 2 to Part 740--Items That May Be Donated To Meet Basic 
          Human Needs Under the Humanitarian License Exception

    (a) Health
Equipment for the Handicapped
Hospital Supplies and Equipment
Laboratory Supplies and Equipment
Medical Supplies and Devices
Medicine-Processing Equipment
Medicines
Vitamins
Water Resources Equipment
Food
Agricultural Materials and Machinery Suited to Small-Scale Farming 
Operations
Agricultural Research and Testing Equipment
Fertilizers
Fishing Equipment and Supplies Suited to Small-Scale Fishing Operations
    (b) Food
Insecticides
Pesticides
Seeds
Small-Scale Irrigation Equipment
Veterinary Medicines and Supplies
    (c) Clothes and Household Goods
Bedding
Clothes
Cooking Utensils
Fabric
Personal Hygiene Items
Soap-Making Equipment
Weaving and Sewing Equipment
    (d) Shelter
Building Materials
Hand Tools
    (e) Education
Books
Individual School Supplies
School Furniture
Special Education Supplies and Equipment for the Handicapped
    (f) Basic Support Equipment and Supplies Necessary To Operate and 
Administer the Donative Program
Audio-Visual Aids for Training
Generators
Office Supplies and Equipment

  Supplement No. 3 to Part 740--Countries Eligible To Receive General 
               Purpose Encryption Commodities and Software

Anguilla*
Antigua*
Argentina*
Aruba*
Austria**
Australia**
Bahamas*
Barbados*
Belgium**
Brazil*
Canada**
Croatia
Czech Republic*
Denmark**
Dominica*
Ecuador*
Finland**
France **
Germany**
Greece*
Hong Kong
Hungary*
Iceland**
Ireland**
Italy**
Japan**
Kenya*
Luxembourg**
Monaco*
The Netherlands**
New Zealand**
Norway**
Poland*
Portugal**
St. Kitts & Nevis*
St. Vincent/Grenadines*
Seychelles*
Singapore
Spain**
Sweden**
Switzerland**
Trinidad & Tobago*
Turkey*
Uruguay*
United Kingdom**
United States**
    *Commercial entities and their branches located in these countries 
or any country listed in this Supplement and designated with one or two 
asterisks are eligible to receive ``recoverable'' encryption commodities 
and software of any key length for internal company proprietary use. See 
Sec. 742.15(b)(7) of the EAR.
    **Commercial entities headquartered in these countries and their 
branches wherever located (except Cuba, Iran, Iraq, Libya, North Korea, 
Sudan and Syria) are eligible to receive ``recoverable'' encryption 
commodities and software of any key length for internal company 
proprietary use. See Sec. 742.15(b)(7) of the EAR.

[63 FR 72162, Dec. 31, 1998]



PART 742--CONTROL POLICY--CCL BASED CONTROLS--Table of Contents




Sec.
742.1  Introduction.

[[Page 191]]

742.2  Proliferation of chemical and biological weapons.
742.3  Nuclear nonproliferation.
742.4  National security.
742.5  Missile technology.
742.6  Regional stability.
742.7  Crime control.
742.8  Anti-terrorism: Iran.
742.9  Anti-terrorism: Syria.
742.10  Anti-terrorism: Sudan.
742.11  Specially designed implements of torture.
742.12  High performance computers.
742.13  Communications intercepting devices.
742.14  Significant items: commercial communications satellites; hot 
          section technology for the development, production or overhaul 
          of commercial aircraft engines, components, and systems.
742.15  Encryption items.
742.16  India and Pakistan sanctions.

Supplement No. 1 to Part 742--Nonproliferation of Chemical and 
          Biological Weapons
Supplement No. 2 to Part 742--Anti-Terrorism Controls; Iran, Syria, and 
          Sudan Contract Sanctity Dates and Related Policies
Supplement No. 3 to Part 742--High Performance Computers; Safeguard 
          Conditions and Related Information
Supplement No. 4 to Part 742--Key Escrow or Key Recoverable Products 
          Criteria
Supplement No. 5 to Part 742 [Reserved]
Supplement No. 6 to Part 742--Guidelines for Submitting a Classification 
          Request for Mass Market Encryption Commodities and Software
Supplement No. 7 to Part 742 [Reserved]

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 18 
U.S.C. 2510 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; E.O. 
12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179 (1979); E.O. 12851, 58 FR 
33181, 3 CFR 1993 Comp., p. 608 (1994); E.O. 12924, 59 FR 43437, 3 CFR, 
1994 Comp., p. 917 (1995); E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., 
p. 950 (1995); E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228 
(1997); Notice of August 15, 1995, 3 CFR, 1995 Comp. 501 (1996); Notice 
of August 14, 1996, 61 FR 42527, 3 CFR 1996 Comp., p. 298 (1997); Notice 
of August 13, 1997 62 FR 43629, 3 CFR, 1997 Comp., p. 306 (1998); Notice 
of August 13, 1998 (63 FR 44121, August 17, 1998); and P.L. 105-85, 111 
Stat. 1629.

    Source: 61 FR 12786, Mar. 25, 1996, unless otherwise noted.



Sec. 742.1  Introduction.

    In this part, references to the Export Administration Regulations 
(EAR) are references to 15 CFR chapter VII, subchapter C.
    (a) Scope. This part describes all the reasons for control reflected 
in the Country Chart in Supplement No. 1 to part 738 of the EAR. In 
addition, it includes licensing requirements and licensing policies for 
the following items that are not reflected on the Country Chart: 
specially designed implements of torture, high performance computers, 
and communications intercepting devices. This part is organized so that 
it lists each reason for control in the order (reading left to right) in 
which the control appears on the Country Chart. In addition to 
describing the reasons for control and licensing requirements and 
policies, this part describes any applicable contract sanctity 
provisions that may apply to specific controls and includes a 
description of any multilateral regime under which specific controls are 
maintained.
    (b) Reasons for control listed on the CCL not covered by this part. 
This part describes the license requirements and the licensing policies 
for all the ``Reasons for Control'' that are listed on the Commerce 
Control List (CCL) except ``Short Supply'' and ``U.N. Sanctions,'' which 
do not appear on the Country Chart.
    (1) Short Supply. ECCNs containing items subject to short supply 
controls (``SS'') refer the exporter to part 754 of the EAR. These ECCNs 
are: 0A980 (Horses for export by sea); 1C980 (certain inorganic 
chemicals); 1C981 (Crude petroleum, including reconstituted crude 
petroleum, tar sands, and crude shale oil); 1C982 (certain other 
petroleum products); 1C983 (Natural gas liquids and other natural gas 
derivatives); 1C984 (certain manufactured gas and synthetic natural gas 
(except when commingled with natural gas and thus subject to export 
authorization from the Department of Energy); and 1C988 (Western red 
cedar (thuja plicata) logs and timber, and rough, dressed and worked 
lumber containing wane).
    (2) U.N. Sanctions. The United Nations imposes sanctions, short of 
complete embargoes, against certain countries which may result in 
controls that supplement those otherwise maintained under the EAR for 
that particular country. This part does not address license requirements 
and licensing policies for controls implementing U.N.

[[Page 192]]

sanctions. CCL entries containing items subject to U.N. sanctions will 
refer the exporter to part 746 of the EAR, Embargoes and Other Special 
Controls, for any supplemental controls that may apply to exports and 
reexports involving these countries.
    (c) Exports and reexports involving Cuba, Libya, North Korea, Iraq, 
Iran, and the Bosnian Serb-controlled areas of Bosnia-Herzegovina. This 
part does not cover license requirements and licensing policies that 
apply to exports and reexports to embargoed destinations (Cuba, Libya, 
North Korea, Iraq, Iran and the Bosnian-Serb controlled areas of Bosnia-
Herzegovina). These comprehensive embargoes cover a broader range of 
items than those reflected in the CCL. If you are exporting or 
reexporting to any of these destinations, you should first review part 
746 of the EAR, Embargoes and Other Special Controls.
    (d) Anti-terrorism Controls on Cuba, Libya, Iran, Iraq, North Korea, 
Sudan and Syria. Commerce maintains anti-terrorism controls on Iran, 
Syria and Sudan under section 6(a) of the Export Administration Act. 
Items controlled under section 6(a) to these three countries are 
described in Supplement No. 2 to part 742. Commerce also maintains 
controls under section 6(j) of the EAA to Cuba, Libya, Iraq, Iran, North 
Korea, Sudan and Syria. Items controlled to these seven countries under 
EAA section 6(j) are also described in Supplement 2 to part 742. The 
Secretaries of Commerce and State are required to notify appropriate 
Committees of the Congress 30 days before issuing a license for an item 
controlled under section 6(j) to Cuba, Libya, North Korea, Iran, Iraq, 
Sudan or Syria. As noted in paragraph (c) of this section, if you are 
exporting or reexporting to Cuba, Libya, Iran, Iraq and North Korea, you 
should review Part 746 of the EAR, Embargoes and Other Special Controls.
    (e) End-user and end-use based controls. This part does not cover 
prohibitions and licensing requirements for exports of items not 
included on the CCL that are subject to end-use and end-user controls: 
certain nuclear end-uses; certain missile end-uses; certain chemical and 
biological weapons end-uses; certain naval nuclear propulsion end-uses; 
certain activities of U.S. persons; certain exports to and for the use 
of certain foreign vessels or aircraft; and certain exports to all 
countries for Libyan aircraft. Licensing requirements and policies for 
these exports are contained in part 744 of the EAR.
    (f) Overlapping license policies. Many items on the CCL are subject 
to more than one type of control (e.g., national security (NS), missile 
technology (MT), nuclear nonproliferation (NP), regional stability 
(RS)). In addition, applications for all items on the CCL, other than 
those controlled for short supply reasons, may be reviewed for missile 
technology (see Sec. 742.5(b)(3) of this part), nuclear nonproliferation 
(see Sec. 742.3(b)(2) of this part), or chemical and biological weapons 
(see Sec. 742.2(b)(3) of this part), if the end-use or end-user may be 
involved in certain proliferation activities. Finally, many 
multilaterally controlled items are reviewed for anti-terrorism reasons 
if they are destined for a terrorism-supporting country (see paragraph 
(d) of this section). Your application for a license will be reviewed 
under all applicable licensing policies. A license will be issued only 
if an application can be approved under all applicable licensing 
policies.

[61 FR 12786, Mar. 25, 1996, as amended at 62 FR 25458, May 9, 1997]



Sec. 742.2  Proliferation of chemical and biological weapons.

    (a) License requirements. The following controls are maintained in 
support of the U.S. foreign policy of opposing the proliferation and 
illegal use of chemical and biological weapons:
    (1) If CB Column 1 of the Country Chart (Supplement No. 1 to part 
738 of the EAR) is indicated in the appropriate ECCN, a license is 
required to all destinations except Canada for the following:
    (i) Human pathogens, zoonoses, toxins, animal pathogens, genetically 
modified microorganisms and plant pathogens identified in ECCNs 1C351, 
1C352, 1C353 and 1C354; and
    (ii) Technology (ECCNs 1E001 and 1E351) for the production and/or 
disposal of microbiological commodities described in paragraph (a)(1)(i) 
of this section.

[[Page 193]]

    (2) If CB Column 2 of the Country Chart (Supplement No. 1 to part 
738 of the EAR) is indicated in the appropriate ECCN, a license is 
required to all destinations except countries in Country Group A:3 (see 
Supplement No. 1 to part 740 of the EAR) (Australia Group members) for 
the following:
    (i) Chemicals identified in ECCN 1C350 (precursor and intermediate 
chemicals used in the production of chemical warfare agents).
    (A) This licensing requirement includes chemical mixtures containing 
any chemicals identified in ECCN 1C350, except as specified in Note 2 to 
that ECCN.
    (B) This licensing requirement does not include chemical compounds 
created with any chemicals identified in ECCN 1C350, unless those 
compounds are also identified in ECCN 1C350.
    (ii) Software (ECCN 1D390) for process control that is specifically 
configured to control or initiate production of the chemical precursors 
controlled by ECCN 1C350.
    (iii) Technology (ECCNs 1E001 and 1E351) for the production and/or 
disposal of chemical precursors described in ECCN 1C350, and technology 
(ECCNs 1E001 and 1E350) involving the following for facilities designed 
or intended to produce chemicals described in 1C350:
    (A) Overall plant design;
    (B) Design, specification, or procurement of equipment;
    (C) Supervision of construction, installation, or operation of 
complete plant or components thereof;
    (D) Training of personnel; or
    (E) Consultation on specific problems involving such facilities.
    (3) If CB Column 3 of the Country Chart (Supplement No. 1 to part 
738 of the EAR) is indicated in the appropriate ECCN, a license is 
required to Country Group D:3 (see Supplement No. 1 to part 740 of the 
EAR) for the following:
    (i) Equipment and materials identified in ECCNs 2B350 and 2B351 on 
the CCL, which can be used in the production of chemical weapons 
precursors or chemical warfare agents, and equipment and materials 
identified in ECCN 2B352, which can be used in the production of 
biological agents; and
    (ii) Technology (ECCNs 2E001, 2E002 and 2E301) for development, 
production, or use of the commodities covered in ECCNs 2B350, 2B351 and 
2B352.
    (b) Licensing policy. (1) License applications for the items 
described in paragraph (a) of this section will be considered on a case-
by-case basis to determine whether the export or reexport would make a 
material contribution to the design, development, production, 
stockpiling, or use of chemical or biological weapons. When an export or 
reexport is deemed to make such a contribution, the license will be 
denied.
    (2) The following factors are among those that will be considered to 
determine what action should be taken on license applications:
    (i) The specific nature of the end-use;
    (ii) The significance of the export and reexport in terms of its 
contribution to the design, development, production, stockpiling, or use 
of chemical or biological weapons;
    (iii) The nonproliferation credentials of the importing country;
    (iv) The types of assurances or guarantees against design, 
development, production, stockpiling, or use of chemical or biological 
weapons that are given in a particular case; and
    (v) The existence of a pre-existing contract.
    (3) BXA will review license applications in accordance with the 
licensing policy described in paragraph (b)(2) of this section for items 
not described in paragraph (a) of this section that:
    (i) Require a license for reasons other than short supply;
    (ii) Are destined to any country except countries in Country Group 
A:3 (see Supplement No. 1 to part 740 of the EAR) (Australia Group 
members); and
    (iii) Could be destined for the design, development, production, 
stockpiling, or use of chemical or biological weapons, or for a facility 
engaged in such activities.
    (c) Contract sanctity. Contract sanctity dates are set forth in 
Supplement No. 1 to part 742. Applicants who wish that a preexisting 
contract be considered in reviewing their license applications must 
submit documentation sufficient to establish the existence of such a 
contract.

[[Page 194]]

    (d) Australia Group. The Australia Group, a multilateral body that 
works to halt the spread of chemical and biological weapons, has 
developed common control lists of items specifically related to chemical 
and biological weapons. Australia Group members are listed in Country 
Group A:3 (see Supplement No. 1 to part 740 of the EAR). Controls on 
items listed in paragraph (a) of this section are consistent with lists 
agreed to in the Australia Group.

[61 FR 12786, Mar. 25, 1996, as amended at 62 FR 25458, May 9, 1997; 63 
FR 42228, Aug. 7, 1998]



Sec. 742.3  Nuclear nonproliferation.

    (a) License requirements. Section 309(c) of the Nuclear Non-
Proliferation Act of 1978 requires BXA to identify items subject to the 
EAR that could be of significance for nuclear explosive purposes if used 
for activities other than those authorized at the time of export or 
reexport. ECCNs on the CCL that include the symbol ``NP 1'' or ``NP 2'' 
in the ``Country Chart'' column of the ``License Requirements'' section 
identify items that could be of significance for nuclear explosive 
purposes and are therefore subject to licensing requirements under this 
part and under section 309(c) of the Nuclear Non-Proliferation Act of 
1978. These items are referred to as ``The Nuclear Referral List'' and 
are subject to the following licensing requirements:
    (1) If NP Column 1 of the Country Chart (Supplement No. 1 to part 
738 of the EAR) is indicated in the appropriate ECCN, a license is 
required to all destinations except Nuclear Suppliers Group (NSG) member 
countries (Country Group A:4) (see Supplement No. 1 to part 740 of the 
EAR).
    (2) If NP Column 2 of the Country Chart (Supplement No. 1 to part 
738 of the EAR) is indicated in the applicable ECCN, a license is 
required to Country Group D:2 (see Supplement No. 1 to part 740 of the 
EAR).
    (3) Other nuclear-related license requirements are described in 
Secs. 744.2 and 744.5 of the EAR.
    (b) Licensing policy. (1) To implement the controls in paragraph (a) 
of this section, the following factors are among those used to determine 
what action should be taken on individual applications:
    (i) Whether the items to be transferred are appropriate for the 
stated end-use and whether that stated end-use is appropriate for the 
end-user;
    (ii) The significance for nuclear purposes of the particular item;
    (iii) Whether the items to be exported or reexported are to be used 
in research on, or for the development, design, manufacture, 
construction, operation, or maintenance of, any reprocessing or 
enrichment facility;
    (iv) The types of assurances or guarantees given against use for 
nuclear explosive purposes or proliferation in the particular case;
    (v) Whether any party to the transaction has been engaged in 
clandestine or illegal procurement activities;
    (vi) Whether an application for a license to export or reexport to 
the end-user has previously been denied, or whether the end-user has 
previously diverted items received under a general license, a License 
Exception, or a validated license to unauthorized activities;
    (vii) Whether the export or reexport would present an unacceptable 
risk of diversion to a nuclear explosive activity or unsafeguarded 
nuclear fuel-cycle activity described in Sec. 744.2(a) of the EAR; and
    (viii) The nonproliferation credentials of the importing country, 
based on consideration of the following factors:
    (A) Whether the importing country is a party to the Nuclear Non-
Proliferation Treaty (NPT) or to the Treaty for the Prohibition of 
Nuclear Weapons in Latin America (Treaty of Tlatelolco) or to a similar 
international legally-binding nuclear nonproliferation agreement;
    (B) Whether the importing country has all of its nuclear activities, 
facilities, or installations that are operational, being designed, or 
under construction under International Atomic Energy Agency (IAEA) 
safeguards or equivalent full scope safeguards;
    (C) Whether there is an agreement for cooperation in the civil uses 
of atomic energy between the U.S. and the importing country;

[[Page 195]]

    (D) Whether the actions, statements, and policies of the government 
of the importing country are in support of nuclear nonproliferation and 
whether that government is in compliance with its international 
obligations in the field of non-proliferation;
    (E) The degree to which the government of the importing country 
cooperates in non-proliferation policy generally (e.g., willingness to 
consult on international nonproliferation issues); and
    (F) Information on the importing country's nuclear intentions and 
activities.
    (2) In addition, BXA will review license applications in accordance 
with the licensing policy described in paragraph (b) of this section for 
items not on the Nuclear Referral List that:
    (i) Require a license on the CCL for reasons other than ``short 
supply;'' and
    (ii) Are intended for a nuclear related end-use or end-user.
    (3) For the People's Republic of China, the general licensing policy 
for applications for those items that would make a direct and 
significant contribution to nuclear weapons and their delivery systems 
is extended review or denial.
    (c) Contract sanctity. Contract sanctity provisions are not 
available for license applications reviewed under this section.
    (d) Nuclear Suppliers Group. Most items on the Nuclear Referral List 
that require a license under NP Column No. 1 on the Country Chart (see 
Supplement No. 1 to part 738 of the EAR) are contained in the Annex to 
the ``Guidelines for Transfers of Nuclear-Related Dual-Use Equipment, 
Material, and Related Technology'' (the Annex), as published by the 
International Atomic Energy Agency in INFCIRC/254/Revision 1/Part 2. The 
adherents to INFCIRC/254/Revision 1/Part 2, which includes the Nuclear 
Suppliers Guidelines, have agreed to establish export licensing 
procedures for the transfer of items identified in the Annex. Items that 
are listed as requiring a license under NP Column No. 2 on the Country 
Chart (see Supplement No. 1 to part 738 of the EAR) are not included in 
the Annex and are controlled only by the United States.



Sec. 742.4  National security.

    (a) License requirements. It is the policy of the United States to 
restrict the export and reexport of items that would make a significant 
contribution to the military potential of any other country or 
combination of countries that would prove detrimental to the national 
security of the United States. Accordingly, a license is required for 
exports and reexports to all destinations, except Canada, for all items 
in ECCNs on the CCL that include NS Column 1 in the Country Chart column 
of the ``License Requirements'' section. A license is required to all 
destinations except Country Group A:1 and cooperating countries (see 
Supplement No. 1 to part 740) for all items in ECCNs on the CCL that 
include NS Column 2 in the Country Chart column of the ``License 
Requirements'' section. The purpose of the controls is to ensure that 
these items do not make a contribution to the military potential of 
countries in Country Group D:1 (see Supplement No. 1 to part 740 of the 
EAR) that would prove detrimental to the national security of the United 
States. License Exception GBS is available for the export and reexport 
of certain national security controlled items to Country Group B (see 
Sec. 740.4 and Supplement No. 1 to part 740 of the EAR).
    (b) Licensing policy. (1) The policy for national security 
controlled items exported or reexported to any country except a country 
in Country Group D:1 (see Supplement No. 1 to part 740 of the EAR) is to 
approve applications unless there is a significant risk that the items 
will be diverted to a country in Country Group D:1.
    (2) Except for those countries described in paragraphs (b)(5) 
through (b)(7) of this section, the general policy for exports and 
reexports of items to Country Group D:1 (see Supplement No. 1 to part 
740 of the EAR) is to approve applications when BXA determines, on a 
case-by-case basis, that the items are for civilian use or would 
otherwise not make a significant contribution to the military potential 
of the country of destination that would prove detrimental to the 
national security of the United States.

[[Page 196]]

    (3) To permit such policy judgments to be made, each application is 
reviewed in the light of prevailing policies with full consideration of 
all aspects of the proposed transaction. The review generally includes:
    (i) An analysis of the kinds and quantities of items to be shipped;
    (ii) Their military or civilian uses;
    (iii) The unrestricted availability abroad of the same or comparable 
items;
    (iv) The country of destination;
    (v) The ultimate end-users in the country of destination; and
    (vi) The intended end-use.
    (4) Although each proposed transaction is considered individually, 
items described in Advisory Notes on the Commerce Control List are more 
likely to be approved than others.
    (5) In recognition of efforts made to adopt safeguard measures for 
exports and reexports, Bulgaria, Latvia, Kazakhstan, Lithuania, 
Mongolia, and Russia are accorded enhanced favorable consideration 
licensing treatment.
    (6) The general policy for Cambodia and Laos is to approve license 
applications when BXA determines, on a case-by-case basis, that the 
items are for an authorized use in Cambodia or Laos and are not likely 
to be diverted to another country or use contrary to the national 
security or foreign policy controls of the United States.
    (7) For the People's Republic of China, the general licensing policy 
is to approve applications, except that those items that would make a 
direct and significant contribution to electronic and anti-submarine 
warfare, intelligence gathering, power projection, and air superiority 
receive extended review or denial. Each application will be considered 
individually. Items may be approved even though they may contribute to 
Chinese military development or the end-user or end-use is military. 
Note that the Advisory Notes in the CCL headed ``Note for the People's 
Republic of China'' provide guidance on equipment likely to be approved 
more rapidly for China.
    (c) Contract sanctity. Contract sanctity provisions are not 
available for license applications reviewed under this section.
    (d) [Reserved]

[61 FR 12786, Mar. 25, 1996, as amended at 61 FR 64283, Dec. 4, 1996]



Sec. 742.5  Missile technology.

    (a) License requirements. (1) In support of U.S. foreign policy to 
limit the proliferation of missiles, a license is required to export and 
reexport items related to the design, development, production, or use of 
missiles. These items are identified in ECCNs on the CCL as MT Column 
No. 1 in the Country Chart column of the ``License Requirements'' 
section. Licenses for these items are required to all destinations, 
except Canada, as indicated by MT Column 1 of the Country Chart (see 
Supplement No. 1 to part 738 of the EAR).
    (2) The term ``missiles'' is defined as rocket systems (including 
ballistic missile systems, space launch vehicles, and sounding rockets) 
and unmanned air vehicle systems (including cruise missile systems, 
target drones, and reconnaissance drones) capable of delivering at least 
500 kilograms (kg) payload to a range of at least 300 kilometers (km).
    (b) Licensing policy. (1) Applications to export and reexport items 
identified in ECCNs on the CCL as MT Column No. 1 in the Country Chart 
column of the ``License Requirements'' section will be considered on a 
case-by-case basis to determine whether the export or reexport would 
make a material contribution to the proliferation of missiles. 
Applications for exports and reexports of such items contained in 
Category 7A or described by ECCN 9A101 on the CCL will be considered 
more favorably if such exports or reexports are determined to be 
destined to a manned aircraft, satellite, land vehicle, or marine 
vessel, in quantities appropriate for replacement parts for such 
applications. When an export or reexport is deemed to make a material 
contribution to the proliferation of missiles, the license will be 
denied.
    (2) The following factors are among those that will be considered in 
reviewing individual applications.
    (i) The specific nature of the end-use;
    (ii) The significance of the export and reexport in terms of its 
contribution to the design, development, production, or use of missiles;

[[Page 197]]

    (iii) The capabilities and objectives of the missile and space 
programs of the recipient country;
    (iv) The nonproliferation credentials of the importing country;
    (v) The types of assurances or guarantees against design, 
development, production, or use of missiles that are given in a 
particular case; and
    (vi) The existence of a preexisting contract.
    (3) Controls on other items. BXA will review license applications, 
in accordance with the licensing policy described in paragraph (b)(1) of 
this section, for items not described in paragraph (a) of this section 
that:
    (i) Require a validated license for reasons other than short supply; 
and
    (ii) Could be destined for the design, development, production, or 
use of missiles, or for a facility engaged in such activities.
    (c) Contract sanctity. The following contract sanctity dates have 
been established:
    (1) License applications for batch mixers specified in ECCN 1B115.a 
involving contracts that were entered into prior to January 19, 1990, 
will be considered on a case-by-case basis.
    (2) License applications subject to ECCN 1B115.b or .c that involve 
a contract entered into prior to March 7, 1991, will be considered on a 
case-by-case basis.
    (3) Applicants who wish that a pre-existing contract be considered 
in reviewing their license applications must submit documentation 
sufficient to establish the existence of a contract.
    (d) Missile Technology Control Regime. Missile Technology Control 
Regime (MTCR) members are listed in Country Group A:2 (see Supplement 
No. 1 to part 740 of the EAR). Controls on items identified in paragraph 
(a) of this section are consistent with the list agreed to in the MTCR 
and included in the MTCR Annex.



Sec. 742.6  Regional stability.

    (a) License requirements. The following controls are maintained in 
support of U.S. foreign policy to maintain regional stability:
    (1) As indicated in the CCL and in RS Column 1 of the Country Chart 
(see Supplement No. 1 to part 738 of the EAR), a license is required to 
all destinations, except Canada, for items described on the CCL under 
ECCNs 6A002.a.1, a.2, a.3, or .c; 6A003.b.3 and b.4; 6E001 (only 
technology for development of items in 6A002.a.1, a.2, a.3, and .c, or 
6A003.b.3 and b.4); 6E002 (only technology for production of items in 
6A002.a.1, a.2, a.3, or .c, or 6A003.b.3 or b.4); 7D001 (only software 
for development or production of items in 7A001, 7A002, or 7A003); 7E001 
(only technology for the development of inertial navigation systems, 
inertial equipment, and specially designed components therefor for civil 
aircraft); 7E002 (only technology for the production of inertial 
navigation systems, inertial equipment, and specially designed 
components therefor for civil aircraft); 7E101 (only technology for the 
use of inertial navigation systems, inertial equipment, and specially 
designed components for civil aircraft)
    (2) As indicated in the CCL and in RS Column 2 of the Country Chart 
(see Supplement No. 1 to part 738 of the EAR), a license is required to 
any destination except countries in Country Group A:1 (see Supplement 
No. 1 to part 740 of the EAR), Iceland and New Zealand for military 
vehicles and certain commodities (specially designed) used to 
manufacture military equipment, described on the CCL in ECCNs 0A018.c, 
1B018.a, 2B018, and 9A018.a and .b.
    (b) Licensing policy. (1) Applications to export and reexport items 
described in paragraph (a)(1) 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.
    (2) Applications to export and reexport commodities described in 
paragraph (a)(2) of this section will generally be considered favorably 
on a case-by-case basis unless there is evidence that the export or 
reexport would contribute significantly to the destabilization of the 
region to which the equipment is destined.

[[Page 198]]

    (c) Contract sanctity. Contract sanctity provisions are not 
available for license applications reviewed under this section.
    (d) U.S. controls. Although the United States seeks cooperation from 
like-minded countries in maintaining regional stability controls, at 
this time these controls are maintained only by the United States.

[61 FR 12786, Mar. 25, 1996, as amended at 63 FR 2458, Jan. 15, 1998]



Sec. 742.7  Crime control.

    (a) License requirements. In support of U.S. foreign policy to 
promote the observance of human rights throughout the world, a license 
is required to export and reexport crime control and detection 
equipment, related technology and software as follows:
    (1) Crime control and detection instruments and equipment and 
related technology and software identified in the appropriate ECCNs on 
the CCL under CC Column 1 in the Country Chart column of the ``License 
Requirements'' section. A license is required to countries listed in CC 
Column 1 (Supplement No. 1 to part 738 of the EAR). Items affected by 
this requirement are identified on the CCL under the following ECCNs: 
0A982, 0A983, 0A984, 0A985, 0E984, 1A984, 3A980, 3A981, 3D980, 3E980, 
4A003 (for fingerprint computers only), 4A980, 4D001 (for fingerprint 
computers only), 4D980, 4E001 (for fingerprint computers only), 4E980, 
6A002 (for police-model infrared viewers only), 6E001 (for police-model 
infrared viewers only), 6E002 (for police-model infrared viewers only), 
and 9A980.
    (2) Shotguns with a barrel length greater than or equal to 24 
inches, identified in ECCN 0A984 on the CCL under CC Column 2 in the 
Country Chart column of the ``License Requirements'' section regardless 
of end-user to countries listed in CC Column 2 (Supplement No. 1 part 
738 of the EAR).
    (3) Shotguns with a barrel length greater than or equal to 24 
inches, identified in ECCN 0A984 on the CCL under CC Column 3 in the 
Country Chart column of the ``License Requirements'' section only if for 
sale or resale to police or law enforcement entities in countries listed 
in CC Column 3 (Supplement No. 1 part 738 of the EAR).
    (b) Licensing policy. Applications for items controlled under this 
section will generally be considered favorably on a case-by-case basis 
unless there is evidence that the government of the importing country 
may have violated internationally recognized human rights and that the 
judicious use of export controls would be helpful in deterring the 
development of a consistent pattern of such violations or in distancing 
the United States from such violations.
    (c) Contract sanctity. Contract sanctity provisions are not 
available for license applications reviewed under this section.
    (d) U.S. controls. Although the United States seeks cooperation from 
like-minded countries in maintaining controls on crime control and 
detection items, at this time these controls are maintained only by the 
United States.

[61 FR 12786, Mar. 25, 1996, as amended at 62 FR 25458, May 9, 1997; 63 
FR 42228, Aug. 7, 1998]



Sec. 742.8  Anti-terrorism: Iran.

    (a) License requirements. (1) If AT column 1 or AT column 2 of the 
Country Chart (Supplement No. 1 to Part 738 of the EAR) is indicated in 
the appropriate ECCN, a license is required for export to Iran for anti-
terrorism purposes. In addition, portable electric power generators and 
related software and technology (ECCNs 2A994, 2D994 and 2E994) are 
controlled for export to Iran for anti-terrorism purposes. See paragraph 
(a)(5) of this section for controls maintained by the Department of the 
Treasury.
    (2) If AT column 1 or AT column 2 of the Commerce Country Chart 
(Supplement No. 1 to part 738 of the EAR) is indicated in the 
appropriate ECCN, a license is required for reexport to Iran for anti-
terrorism purposes, except for ECCNs 2A994; 3A992.a; 5A991.f; 5A992; 
6A991; 6A998; 7A994; 8A992.d, .e, .f, and .g; 9A990.a and .b; and 
9A991.d and .e. In addition, items in these ECCNs are not counted as 
controlled U.S. content for the purpose of determining license 
requirements for U.S. parts, components or materials incorporated into 
foreign made products. However, the export from the United States to any 
destination with knowledge that they will be

[[Page 199]]

reexported directly or indirectly, in whole or in part to Iran is 
prohibited without a license. See paragraph (a)(5) of this section for 
controls maintained by the Department of the Treasury.
    (3) The Secretary of State has designated Iran as a country whose 
Government has repeatedly provided support for acts of international 
terrorism.
    (4) In support of U.S. foreign policy on terrorism-supporting 
countries, BXA maintains two types of anti-terrorism controls on the 
export and reexport of items described in Supplement 2 to part 742.
    (i) Items described in paragraphs (c)(1) through (c)(5) of 
Supplement No. 2 to part 742 are controlled under section 6(j) of the 
Export Administration Act, as amended (EAA), if destined to military, 
police, intelligence or other sensitive end-users.
    (ii) Items described in paragraphs (c)(1) through (c)(5) of 
Supplement No. 2 to part 742 destined to non-sensitive end-users, as 
well as items described in paragraphs (c)(6) through (c)(39) to all end-
users, are controlled to Iran under section 6(a) of the EAA. (See 
Supplement No. 2 to part 742 for more information on items controlled 
under sections 6(a) and 6(j) of the EAA and Sec. 750.6 of the EAR for 
procedures for processing license applications for items controlled 
under EAA section 6(j).)
    (5) Exports and certain reexports to Iran are subject to a 
comprehensive embargo administered by the Department of the Treasury's 
Office of Foreign Assets Control (OFAC). If you wish to export or 
reexport to Iran, the Government of Iran or any entity owned or 
controlled by that Government, you should review part 746 of the EAR and 
consult with OFAC. Please note that authorization from OFAC constitutes 
authorization under the EAR and no separate license or authorization 
from BXA is required.
    (b) Licensing policy. (1) The Iran-Iraq Arms Non-Proliferation Act 
of October 23, 1992, requires BXA to deny licenses for items controlled 
to Iran for national security (section 5 of the 1979 EAA) or foreign 
policy reasons (section 6 of the 1979 EAA), absent contract sanctity or 
a Presidential waiver. License applications for which contract sanctity 
is established may be considered under policies in effect prior to the 
enactment of that Act. Otherwise, licenses for such items to Iran are 
subject to a general policy of denial.
    (2) License applications for items controlled under section 6(a) of 
the EAA will also be reviewed to determine whether requirements of 
section 6(j) apply. Whenever the Secretary of State determines that an 
export or reexport could make a significant contribution to the military 
potential of Iran, including its military logistics capability, or could 
enhance Iran's ability to support acts of international terrorism, the 
Secretaries of State and Commerce will notify the Congress 30 days prior 
to the issuance of a license.
    (c) Contract sanctity. Contract sanctity dates and related policies 
for Iran are listed in Supplement No. 2 to part 742. Applicants who wish 
a pre-existing contract to be considered must submit sufficient evidence 
to establish the existence of a contract.
    (d) U.S. controls. Although the United States seeks cooperation from 
like-minded countries in maintaining anti-terrorism controls, at this 
time these controls are maintained only by the United States.

[61 FR 12786, Mar. 25, 1996, as amended at 63 FR 42228, Aug. 7, 1998]



Sec. 742.9  Anti-terrorism: Syria.

    (a) License requirements. (1) If AT Column 1 of the Country Chart 
(Supplement No. 1 to part 738 of the EAR) is indicated in the 
appropriate ECCN, a license is required for export and reexport to Syria 
for anti-terrorism purposes.
    (2) The Secretary of State has designated Syria as a country whose 
government has repeatedly provided support for acts of international 
terrorism.
    (3) In support of U.S. foreign policy against terrorism, BXA 
maintains two types of anti-terrorism controls on the export and 
reexport to Syria of items described in Supplement No. 2 to part 742.
    (i) Items described in paragraphs (c)(1) through (c)(5) of 
Supplement No. 2 to part 742, if destined to military, police, 
intelligence or other end-users in Syria, are controlled under section

[[Page 200]]

6(j) of the Export Administration Act, as amended (EAA).
    (ii) Items listed in paragraphs (c)(1) through (c)(5) of Supplement 
No. 2 to part 742 destined to other end-users in Syria, as well as items 
to all end-users listed in (c)(6) through (c)(8), (c)(10) through 
(c)(14), (c)(16) through (c)(19), and (c)(22) through (c)(39) of 
Supplement No. 2 to part 742, are controlled to Syria under section 6(a) 
of the EAA.
    (b) Licensing policy. (1) Applications for export and reexport to 
all end-users in Syria of the following items will generally be denied:
    (i) Items that are controlled for chemical and biological weapons 
proliferation reasons to any destination. These are items that contain 
CB Column 1, CB Column 2, or CB Column 3 in the Country Chart column of 
the ``License Requirements'' section of an ECCN on the CCL.
    (ii) Military-related items controlled for national security reasons 
to any destination. These are items that contain NS Column 1 in the 
Country Chart column of the ``License Requirements'' section in an ECCN 
on the CCL and is controlled by equipment or material entries ending in 
the number ``18.''
    (iii) Items that are controlled for missile proliferation reasons to 
any destination. These are items that have an MT Column 1 in the Country 
Chart column of the ``License Requirements'' section of an ECCN on the 
CCL.
    (iv) All aircraft (powered and unpowered), helicopters, engines, and 
related spare parts and components. These are items controlled to any 
destination for national security reasons and items controlled to Syria 
for anti-terrorism purposes. Such items contain an NS Column 1, NS 
Column 2, or AT Column 1 in the Country Chart column of the ``License 
Requirements'' section of an ECCN on the CCL. Note that, consistent with 
the general rule that applies to computing U.S. parts and components 
content incorporated in foreign made products, all aircraft-related 
items that require a license to Syria will be included as controlled 
U.S. content, except for ECCNs 6A998, 7A994, and 9A991.d, for purposes 
of such licensing requirements.
    (v) Cryptographic, cryptoanalytic, and cryptologic items controlled 
to any destination for national security reasons. Such items contain an 
AT Column 1 and an NS Column 1 or NS Column 2 in the Country Chart 
column of the ``License Requirements'' section of an ECCN on the CCL.
    (vi) Explosive device detectors controlled under ECCN 2A993.
    (2) Applications for export and reexport to Syria of all other items 
described in paragraph (a) of this section, and not described by 
paragraph (b)(1) of this section, will generally be denied if the export 
or reexport is destined to a military end-user or for military end-use. 
Applications for non-military end-users or for non-military end-uses 
will be considered on a case-by-case basis.
    (3) Notwithstanding the provisions of paragraphs (b)(1) and (b)(2), 
of this section, applications for Syria will be considered on a case-by-
case basis if:
    (i) The transaction involves the reexport to Syria of items where 
Syria was not the intended ultimate destination at the time of original 
export from the United States, provided that the exports from the U.S. 
occurred prior to the applicable contract sanctity date (or, where the 
contract sanctity date is December 16, 1986, prior to June 18, 1987).
    (ii) The U.S. content of foreign-produced commodities is 20% or less 
by value; or
    (iii) The commodities are medical items.
    Note to paragraph (b) of this section: Applicants who wish any of 
the factors described in paragraph (b) of this section to be considered 
in reviewing their license applications must submit adequate 
documentation demonstrating the value of the U.S. content, the 
specifications and medical use of the equipment, or the date of export 
from the United States.
    (4) License applications for items reviewed under 6(a) controls will 
also be reviewed to determine the applicability of 6(j) controls to the 
transaction. When it is determined that an export or reexport could make 
a significant contribution to the military potential of Syria, including 
its military logistics capability, or could enhance Syria's ability to 
support acts of international terrorism, the Secretaries of State and 
Commerce will notify the Congress 30 days prior to issuance of a 
license.

[[Page 201]]

    (c) Contract sanctity. Contract sanctity dates and related licensing 
policies for Syria are set forth in Supplement No. 2 to part 742. 
Applicants who wish a pre-existing contract to be considered must submit 
sufficient documentation to establish the existence of a contract.
    (d) U.S. controls. Although the United States seeks cooperation from 
like-minded countries in maintaining anti-terrorism controls, at this 
time these controls are maintained only by the United States.

[61 FR 12786, Mar. 25, 1996, as amended at 62 FR 25459, May 9, 1997; 63 
FR 42228, Aug. 7, 1998]



Sec. 742.10  Anti-terrorism: Sudan.

    (a) License requirements. (1) If AT column 1 or AT column 2 
1 of the Country Chart (Supplement No. 1 to part 738 of the 
EAR) is indicated in the appropriate ECCN, a license is required for 
export to Sudan for anti-terrorism purposes.
---------------------------------------------------------------------------

    \1\ AT column 1 refers to items controlled to Iran, Sudan, and Syria 
for anti-terrorism purposes. AT column 2 refers to additional items 
controlled to Iran and Sudan for anti-terrorism purposes. In addition, 
items included in ECCNs 2A994, 2D994 and 2E994 are controlled to Iran 
for anti-terrorism purposes.
---------------------------------------------------------------------------

    (2) If AT column 1 or AT column 2 of the Commerce Country Chart 
(Supplement No. 1 to part 738 of the EAR) is indicated in the 
appropriate ECCN, a license is required for reexport to Sudan for anti-
terrorism purposes, except for ECCNs 2A994; 3A992.a; 5A991.f; 5A992; 
6A991; 6A998; 7A994; 8A992.d, .e, .f, and .g; 9A990.a and .b; and 
9A991.d and .e. In addition, items in these ECCNs are not counted as 
controlled U.S. content for the purpose of determining license 
requirements for U.S. parts, components or materials incorporated into 
foreign made products. However, the export from the United States to any 
destination with knowledge that they will be reexported directly or 
indirectly, in whole or in part to Sudan is prohibited without a 
license.
    (3) The Secretary of State has designated Sudan as a country whose 
government has repeatedly provided support for acts of international 
terrorism.
    (4) In support of U.S. foreign policy against terrorism, BXA 
maintains anti-terrorism controls on the export and reexport to Sudan of 
items described in Supplement No. 2 to part 742.
    (i) Items described in paragraph (c)(1) through (c)(5) of Supplement 
No. 2 to part 742 if destined to military, police, intelligence or other 
sensitive end-users in Sudan are controlled under section 6(j) of the 
Export Administration Act, as amended (EAA).
    (ii) Items listed in paragraphs (c)(1) through (c)(5) of Supplement 
No. 2 to part 742 destined to other end-users in Sudan, as well as items 
to all end-users listed in (c)(6) through (c)(14) and (c)(16) through 
(c)(39) of Supplement No. 2 to part 742 are controlled to Sudan under 
section 6(a) of the EAA.
    (b) Licensing policy. (1) Applications for export and reexport to 
all end-users in Sudan of the following items will generally be denied:
    (i) Items that are controlled for chemical and biological weapons 
proliferation reasons to any destination. These are items that contain 
CB Column 1, CB Column 2, or CB Column 3 in the Country Chart column of 
the ``License Requirements'' section of an ECCN on the CCL.
    (ii) Military-related items controlled for national security reasons 
to any destination. These are items that contain NS Column 1 in the 
Country Chart column of the ``License Requirements'' section of an ECCN 
on the CCL and is controlled by equipment or material entries ending in 
the number ``18.''
    (iii) Items that are controlled for missile proliferation reasons to 
any destination. These are items that contain a MT Column 1 in the 
Country Chart column of the ``License Requirements'' section of an ECCN 
on the CCL.
    (iv) All aircraft (powered and unpowered), helicopters, engines, and 
related spare parts and components. These are items controlled to any 
destination for national security reasons and items controlled to Sudan 
for anti-terrorism reasons. Such items contain an NS Column 1, NS Column 
2, or AT Column 1 in the Country Chart column of the ``License 
Requirements'' section

[[Page 202]]

of an ECCN on the CCL. Note that, consistent with the general rule that 
applies to computing U.S. parts and components content incorporated in 
foreign made products, all aircraft-related items that require a license 
to Sudan will be included as controlled US content for purposes of such 
license requirements.
    (v) Cryptographic, cryptoanalytic, and cryptologic items controlled 
to any destination. These are items that contain an NS Column 1, NS 
Column 2, AT Column 1 or AT Column 2 in the Country Chart column of the 
``License Requirements'' section of an ECCN on the CCL.
    (vi) Explosive device detectors controlled under ECCN 2A993.
    (2) Applications for the export and reexport of all other items 
described in paragraph (a) of this section, and not described in 
paragraph (b)(1) of this section, will be denied if the export or 
reexport is destined to a military end-user or for military end-use. 
Applications for non-military end-users or for non-military end-uses 
will be considered on a case-by-case basis.
    (3) Notwithstanding the provisions of paragraphs (b)(1) and (b)(2) 
of this section, applications for Sudan will be considered on a case-by-
case basis if:
    (i) The transaction involves the reexport to Sudan of items where 
Sudan was not the intended ultimate destination at the time of original 
export from the United States, provided that the exports from the U.S. 
occurred prior to the applicable contract sanctity date.
    (ii) The U.S. content of foreign-produced commodities is 20% or less 
by value; or
    (iii) The commodities are medical items.
    Note to paragraph (b) of this section: Applicants who wish any of 
the factors described in paragraph (b)(4) of this section to be 
considered in reviewing their license applications must submit adequate 
documentation demonstrating the value of the U.S. content, the 
specifications and medical use of the equipment, or the date of export 
from the United States.
    (4) License applications for items reviewed under 6(a) controls will 
also be reviewed to determine the applicability of 6(j) controls to the 
transaction. When it is determined that an export or reexport could make 
a significant contribution to the military potential of Sudan, including 
its military logistics capability, or could enhance Sudan's ability to 
support acts of international terrorism, the appropriate committees of 
the Congress will be notified 30 days before issuance of a license to 
export or reexport such items.
    (c) Contract sanctity. Contract sanctity dates and related licensing 
information for Sudan are set forth in Supplement No. 2 to part 742. 
Applicants who wish a pre-existing contract to be considered must submit 
sufficient documentation to establish the existence of a contract.
    (d) U.S. controls. Although the United States seeks cooperation from 
like-minded countries in maintaining anti-terrorism controls, at this 
time these controls are maintained only by the United States.

[61 FR 12786, Mar. 25, 1996, as amended at 63 FR 42228, Aug. 7, 1998]



Sec. 742.11  Specially designed implements of torture.

    (a) License requirements. In support of U.S. foreign policy to 
promote the observance of human rights throughout the world, a license 
is required to export specially designed implements of torture 
controlled by 0A983 to all destinations, including Canada.
    (b) Licensing policy. Applications for such licenses will generally 
be denied to all destinations.
    (c) Contract sanctity. The contract sanctity date is November 9, 
1995. Contract sanctity will be a factor in considering only 
applications for export to the NATO countries, Japan, Australia, and New 
Zealand.
    (d) U.S. controls. Although the United States seeks cooperation from 
like-minded countries in maintaining controls on implements of torture, 
at this time these controls are maintained only by the United States.



Sec. 742.12  High performance computers.

    (a) License and recordkeeping requirements. (1) This section 
contains special provisions for exports, reexports, and certain intra-
country transfers of high performance computers, including software, and 
technology. This section affects the following ECCNs: 4A001, 4A002, 
4A003, 4D001, 4D002, and 4E001. It

[[Page 203]]

applies to computers with a Composite Theoretical Performance (CTP) 
greater than 2000, stated in Million Theoretical Operations Per Second 
(MTOPS). Licenses are required under this section for ECCN's having an 
``XP'' under ``Reason for Control'' when License Exception CTP is not 
available (see Sec. 740.7 of the EAR). License requirements reflected in 
this section are based on particular destinations, end-users, or end-
uses. For the calculation of CTP, see the Technical Note that follows 
the Advisory Notes for Category 4 in the Commerce Control List. Note 
that License Exception CTP contains restrictions on access by nationals 
of certain countries, and on reexports and transfers of computers.
    (2) In recognition of the strategic and proliferation significance 
of high performance computers, a license is required for the export or 
reexport of high performance computers to destinations, end-users, and 
end-uses, as specified in this section and on the CCL. These license 
requirements supplement requirements that apply for other control 
reasons, such as nuclear nonproliferation provided in Sec. 742.3 of the 
EAR. The license requirements described in this Sec. 742.12 are not 
reflected on the Country Chart (Supplement No. 1 to part 738 of the 
EAR). Four Computer Country Tiers have been established for the purposes 
of these controls. Countries included in Computer Tiers 1, 2, and 3 are 
listed in License Exception CTP in Sec. 740.7 of the EAR. Computer Tier 
4 consists of Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria.
    (3) Exporters must keep accurate records of each export to countries 
not included in Country Group A:1 (see Supplement No. 1 to part 740 of 
the EAR) of a computer with a CTP greater than 4,000 MTOPS. These 
records must be submitted semiannually to BXA and must contain the 
information as described in Sec. 743.1 of the EAR.
    (b) Licensing policy. Licensing policies described in this section 
vary according to the country of destination, and the end-use or end-
user involved in the transaction. Note that in addition, license 
applications for items covered by Sec. 742.12 will also be reviewed 
under the nuclear nonproliferation licensing policy in Sec. 742.3(b). In 
certain cases, licenses may be subject to safeguard conditions. The 
specific conditions that may be imposed by BXA will depend on the 
country of destination, and the end-use or end-user of the export. BXA 
may also require end-use certification which, in appropriate cases, is 
certified by the government of the importing country. The range of 
possible safeguard conditions and related information are provided in 
Supplement No. 3 to part 742.
    (1) Computer Tier 1--(i) License requirement. No license is required 
under this Sec. 742.12 for exports or reexports of computers to and 
among countries listed in Computer Tier 1, for consumption in such 
countries or other disposition in accordance with the EAR.
    (ii) Licensing policy. A license is not required under this 
Sec. 742.12.
    (2) Computer Tier 2--(i) License requirement. A license is required 
to export or reexport a computer having a Composite Theoretical 
Performance (CTP) greater than 10,000 Millions of Theoretical Operations 
Per Second (MTOPS) to a country in Computer Tier 2.
    (ii) Licensing policy. License applications for a country in 
Computer Tier 2 will generally be approved.
    (3) Computer Tier 3--(i) License requirement. (A) A license is 
required to export or reexport computers with a CTP greater than 2,000 
MTOPS to countries in Computer Tier 3 to military end-users and end-uses 
and to nuclear, chemical, biological, or missile end-users and end-uses 
defined in part 744 of the EAR in Computer Tier 3 countries.
    (B) A license is required to export or reexport computers with a CTP 
greater than 7,000 MTOPS to all end-users and end-uses located in 
countries in Computer Tier 3.
    (C) A license may be required to export or reexport computers with a 
CTP between 2,000 and 7,000 MTOPS to countries in Computer Tier 3 
pursuant to the NDAA (see Sec. 740.7(d)(4) of the EAR).
    (ii) Licensing policy. License applications for exports and 
reexports to military end-users and end-uses and nuclear, chemical, 
biological, or missile end-users and end-uses defined in part

[[Page 204]]

744 of the EAR in countries in Computer Tier 3 will be reviewed on a 
case-by-case basis using the following criteria:
    (A) The presence and activities of countries and end-users of 
national security and proliferation concern and the relationships that 
exist between the government of the importing country and such countries 
and end-users;
    (B) The ultimate consignee's participation in, or support of, any of 
the following:
    (1) Activities that involve national security concerns; or
    (2) Nuclear, chemical, biological or missile proliferation 
activities described in part 744 of the EAR;
    (C) The extent to which the importing country is involved in 
nuclear, chemical, biological, or missile proliferation activities 
described in part 744 of the EAR;
    (D) The end-user, whether the end-use is single-purpose or multiple-
purpose.
    (iii) Licensing policy for other end-users and end-uses. License 
applications for exports and reexports to other end-uses and end-users 
located in Computer Tier 3 countries will generally be approved, except 
there is a presumption of denial for all applications for exports and 
reexports of computers having a CTP greater than 2,000 MTOPS destined to 
Indian and Pakistani entities determined to be involved in nuclear, 
missile, or military activities included in Supplement No. 4 to part 744 
(Entity List). All license applications for exports and reexports to 
India and Pakistan not meeting these criteria for presumption of denial 
will be considered on a case-by-case basis under other licensing 
policies set forth in the EAR applicable to such computers.
    (iv) Post-shipment verification. This section outlines special post-
shipment reporting requirements for exporters of computers with a CTP in 
excess of 2,000 MTOPS to destinations in Computer Tier 3 under the NDAA. 
These reporting requirements also apply when you know that the items 
being exported will be used to enhance beyond 2,000 MTOPS the CTP of a 
previously exported or reexported computer. Such reports must be 
submitted in accordance with the provisions of this paragraph 
(b)(3)(iv), and records of such exports subject to the post-shipment 
reporting requirements of this section, must be kept in accordance with 
part 762 of the EAR.
    (A) Information that must be included in each post-shipment report. 
No later than the last day of the month following the month in which the 
export takes place, the exporter must submit the following information 
to BXA at the address listed in paragraph (b)(3)(iv)(B) of this section:
    (1) Exporter name, address, and telephone number;
    (2) License number;
    (3) Date of export;
    (4) End-user name, point of contact, address, telephone number;
    (5) Carrier;
    (6) Air waybill or bill of lading number;
    (7) Commodity description, quantities--listed by model numbers, 
serial numbers, and CTP level in MTOPS; and
    (8) Certification line for exporters to sign and date. The exporter 
must certify that the information contained in the report is accurate to 
the best of his or her knowledge.
    (B) Mailing address. A copy of the post-shipment report[s] required 
under paragraph (b)(3)(vi)(A) of this section shall be delivered to one 
of the following addresses. Note that BXA will not accept reports sent 
C.O.D.
    (1) For deliveries by U.S. postal service:

Bureau of Export Administration, U.S. Department of Commerce, P.O. Box 
273, Washington, D.C. 20044, Attn: HPC Team.

    (2) For courier deliveries:

U.S. Department of Commerce, Office of the Assistant Secretary For 
Export Enforcement, Room H3721, 14th Street and Constitution Ave. NW, 
Washington, DC 20230, Attn: HPC Team.
    (4) Computer Tier 4--(i) License requirement. A license is required 
to export or reexport any items covered by this section to a country in 
Country Tier 4.
    (ii) Licensing policy. The licensing policies for countries in 
Computer Tier 4 are the same as described in the following EAR sections: 
for Sudan see Sec. 742.10(b); for Syria see Sec. 742.9(b); for Cuba see 
Sec. 746.2; for Iran see Sec. 746.7; for Iraq see Sec. 746.3; for Libya 
see Sec. 746.4; and for North Korea see Sec. 746.5.

[[Page 205]]

    (c) Contract sanctity. Contract sanctity provisions are not 
available for license applications involving exports and reexports of 
high performance computers.
    (d) High performance computer regime. The United States and Japan 
participate in a high performance computer regime. Other countries are 
expected to join. The regime provides uniform and effective safeguards 
to protect high performance computers from unauthorized destinations, 
end-users and end-uses.

[61 FR 12786, Mar. 25, 1996, as amended at 61 FR 64283, Dec. 4, 1996; 63 
FR 2458, Jan. 15, 1998; 63 FR 5451, Feb. 3, 1998; 63 FR 63143, Nov. 12, 
1998; 63 FR 64324, Nov. 19, 1998]



Sec. 742.13  Communications intercepting devices.

    (a) License requirement. (1) As set forth in ECCN 5A980, a license 
is required for the export or reexport to any destination, including 
Canada, of any electronic, mechanical, or other device primarily useful 
for surreptitious interception of wire or oral communications. This 
control implements a provision of the Omnibus Crime Control and Safe 
Streets Act of 1968 (Public Law 90-361). This license requirement is not 
reflected on the Country Chart (Supplement No. 1 to part 738 of the 
EAR).
    (2) Communications intercepting devices are electronic, mechanical, 
or other devices that can be used for interception of wire or oral 
communications if their design renders them primarily useful for 
surreptitious listening even though they may also have innocent uses. A 
device is not restricted merely because it is small or may be adapted to 
wiretapping or eavesdropping. Some examples of devices to which these 
restrictions apply are: the martini olive transmitter; the infinity 
transmitter; the spike mike; and the disguised microphone appearing as a 
wristwatch, cufflink, or cigarette pack; etc. The restrictions do not 
apply to devices such as the parabolic microphone or other directional 
microphones ordinarily used by broadcasters at sports events, since 
these devices are not primarily useful for surreptitious listening.
    (b) Licensing policy. (1) License applications will generally be 
approved for:
    (i) A provider of wire or electronic communication services or an 
officer, agent, or employee of, or person under contract with, such a 
provider in the normal course of the business of providing that wire or 
electronic communication service; and
    (ii) Officers, agents, or employees of, or person under contract 
with the United States, one of the 50 States, or a political subdivision 
thereof, when engaged in the normal course of government activities.
    (2) Other applications will generally be denied.
    (c) Contract sanctity. Contract sanctity provisions are not 
available for license applications involving exports and reexports of 
communications interception devices.
    (d) U.S. controls. Controls on this equipment are maintained by the 
United States government in accordance with the Omnibus Crime Control 
and Safe Streets Act of 1968.



Sec. 742.14  Significant items: commercial communications satellites; hot section technology for the development, production or overhaul of commercial aircraft 
          engines, components, and systems.

    (a) License requirements. Licenses are required for all 
destinations, except Canada, for ECCNs having an ``SI'' under the 
``Reason for Control'' paragraph. These items include commercial 
communications satellites controlled by ECCN 9A004.a., and hot section 
technology for the development, production or overhaul of commercial 
aircraft engines controlled under ECCN 9E003.a.1. through a.12., .f, and 
related controls.
    (b) Licensing policy. Pursuant to section 6 of the Export 
Administration Act of 1979, as amended (EAA), foreign policy controls 
apply to commercial communications satellites controlled under 9A004.a. 
and technology required for the development, production or overhaul of 
commercial aircraft engines controlled by ECCN 9E003.a.1. through a.12, 
.f, and related controls. These controls supplement the national 
security controls that apply to those items. Applications for export and 
reexport to all destinations will be

[[Page 206]]

reviewed on a case-by-case basis to determine whether the export or 
reexport is consistent with U.S. national security and foreign policy 
interests. The following factors are among those that will be considered 
to determine what action will be taken on license applications:
    (1) The country of destination;
    (2) The ultimate end-user(s);
    (3) The technology involved;
    (4) The specific nature of the end-use(s); and
    (5) The types of assurance against unauthorized use or diversion 
that are given in a particular case.
    (c) Contract sanctity. Contract sanctity provisions are not 
available for license applications reviewed under this Sec. 742.14.
    (d) [Reserved]

[61 FR 54543, Oct. 21, 1996]



Sec. 742.15  Encryption items.

    Encryption items can be used to maintain the secrecy of information, 
and thereby may be used by persons abroad to harm national security, 
foreign policy and law enforcement interests. As the President indicated 
in E.O. 13026 and in his Memorandum of November 15, 1996, export of 
encryption software, like export of encryption hardware, is controlled 
because of this functional capacity to encrypt information on a computer 
system, and not because of any informational or theoretical value that 
such software may reflect, contain, or represent, or that its export may 
convey to others abroad. For this reason, export controls on encryption 
software are distinguished from controls on other software regulated 
under the EAR.
    (a) Licenses are required for exports and reexports to all 
destinations, except Canada, for items controlled under ECCNs having an 
``EI'' (for ``encryption items'') under the ``Control(s)'' paragraph. 
Such items include: encryption commodities controlled under ECCN 5A002; 
encryption software controlled under ECCN 5D002; and encryption 
technology controlled under ECCN 5E002. (Refer to part 772 of the EAR 
for the definition of ``encryption items'). For encryption items 
previously on the U.S. Munitions List and currently authorized for 
export or reexport under a State Department license, distribution 
arrangement or any other authority of the State Department, U.S. persons 
holding valid USML licenses and other approvals issued by the Department 
of State prior to December 30, 1996 may ship remaining balances 
authorized by such licenses or approvals under the authority of the EAR 
by filing Shippers Export Declarations (SEDs) with District Directors of 
Customs, citing the provisions of this section effective on December 30, 
1996 and the State Department license number. Such shipments shall be in 
accordance with the terms and conditions, including the expiration date, 
existing at the time of issuance of the State license. Violations of 
such authorizations, terms and conditions constitute violations of the 
EAR. Any reports required for distribution and other types of agreements 
previously authorized by the Department of State, valid prior to 
December 30, 1996, should be henceforth submitted to BXA at the 
following address: Office of Strategic Trade and Foreign Policy 
Controls, Bureau of Export Administration, Department of Commerce, 14th 
Street and Pennsylvania Ave., N.W., Room 2705, Washington, D.C. 20230.
    (b) Licensing policy. The following licensing policies apply to 
items identified in paragraph (a) of this section. This section refers 
you to Supplement No. 4 to this part 742. For purposes of these 
supplements, ``products'' refers to commodities and software. Except as 
otherwise noted, applications will be reviewed on a case-by-case basis 
by BXA, in conjunction with other agencies, to determine whether the 
export or reexport is consistent with U.S. national security and foreign 
policy interests.
    (1) Certain mass-market encryption commodities and software.
    (i) Consistent with E.O. 13026 of November 15, 1996 (61 FR 58767), 
certain encryption software that was transferred from the U.S. Munitions 
List to the Commerce Control List pursuant to the Presidential 
Memorandum of November 15, 1996, may be released from EI controls and 
thereby made eligible for mass market treatment after a technical 
review. Further, certain encryption commodities may be released from EI 
controls and thereby

[[Page 207]]

made eligible for mass market treatment after a technical review. To 
determine eligibility for mass market treatment, exporters must submit a 
classification request to BXA. 56-bit mass market encryption commodities 
and software using RC2, RC4, RC5, DES or CAST, and key exchange 
mechanisms including, but not limited to, symmetric algorithms with the 
same or double the key length authorized for the confidentiality 
algorithm, asymmetric algorithms with key space of 512, 768 or up to and 
including 1024 bits, proprietary key exchange mechanisms, or others, may 
be eligible for a 7-day review process, and company proprietary 
commodities and software implementations may be eligible for 15-day 
processing. Refer to Supplement No. 6 to part 742 and Sec. 748.3(b)(3) 
of the EAR for additional information. Note that the technical review is 
for a determination to release encryption commodities and software in 
object code only unless otherwise specifically requested. Exporters 
requesting release of the source code should refer to paragraph 
(b)(3)(v)(E) of Supplement No. 6 to part 742.
    (ii) If, after a one-time technical review, BXA determines that the 
software is released from EI controls, such software is eligible for all 
provisions of the EAR applicable to other software, such as License 
Exception TSU for mass-market software. Furthermore, for such software 
released from EI controls, subsequent bundling, updates, or releases 
consisting of or incorporating this software may be exported and 
reexported without a separate one-time technical review, so long as the 
functional encryption capacity (e.g., algorithm, key modulus) of the 
originally reviewed mass-market encryption software has not been 
modified or enhanced. However, if BXA determines that the software is 
not released from EI controls, a license is required for export and 
reexport to all destinations, except Canada, and license applications 
will be considered on a case-by-case basis.
    (iii) If after a technical review, BXA determines that the 
encryption commodity is released from EI controls, the commodity is 
eligible for export under License Exception ENC and all provisions of 
the EAR applicable to other commodities. However, if BXA determines that 
the commodity is not released from EI controls, and no License Exception 
applies, a license is required for export and reexport to all 
destinations, except Canada, and license applications will be considered 
on a case-by-case basis.
    (iv) Mass-market encryption software that has already been 
classified after a technical review and that has been released from EI 
controls under the provisions of this paragraph (b)(1) will be permitted 
for export and reexport under license exception TSU with increases of 
56-bits for the confidentiality algorithm, the same or double the key 
length authorized for the confidentiality algorithm for symmetric 
algorithms for key exchange mechanisms and with key spaces of 512, 768 
or up to and including 1024 bits for asymmetric algorithms for key 
exchange without an additional technical review, provided that there is 
no other change in the cryptographic functionality. Exporters must 
notify BXA in writing of the increase in the key length for the 
confidentiality algorithm, the asymmetric or symmetric key exchange 
algorithms, and include the original authorization number issued by BXA 
and the information identified in paragraphs (a)(2)(iii) through (v) of 
Supplement No. 6 to part 742 of the EAR (if this information was 
submitted previously, then only identify the modifications). BXA must 
receive such notification by March 31, 1999.
    (A) The notification should be sent to:

Office of Strategic Trade and Foreign Policy Controls, Bureau of Export 
Administration, Department of Commerce, 14th Street and Pennsylvania 
Ave., N.W., Room 2705, Washington, D.C. 20230, Attn: Encryption Upgrade

    (B) A copy of the certification should be sent to:

Attn: ENC Encryption Request Coordinator, P.O. Box 246, Annapolis 
Junction, MD 20701-0246

    (2) Key escrow and key recovery encryption commodities and software. 
Certain recovery encryption commodities and software of any key length 
that are classified under ECCNs 5A002

[[Page 208]]

and 5D002 after a technical review are eligible for export and reexport 
under License Exception KMI. See Sec. 740.8(b)(1) of the EAR for 
information on additional eligibility requirements.
    (3) General purpose encryption commodities and software of any key 
length for use by banks and financial institutions.
    (i) Commodities and software that were eligible for License 
Exception TSU or KMI or have been licensed for export or reexport under 
an Encryption Licensing Arrangement or a license prior to December 31, 
1998, are now eligible for export and reexport under License Exception 
ENC under the provisions of Sec. 740.17(b)(1) of the EAR.
    (ii) For exports and reexports not eligible under a License 
Exception, exports and reexports of general purpose non-voice encryption 
commodities and software classified under ECCNs 5A002 and 5D002 of any 
key length will generally be approved under an Encryption Licensing 
Arrangement for use by banks and financial institutions (as defined in 
part 772 of the EAR) in all destinations except Cuba, Iran, Iraq, Libya, 
North Korea, Sudan and Syria. Applications for such commodities and 
software will receive favorable consideration when the end-use is 
limited to secure business financial communications or transactions and 
financial communications/transactions between the bank and/or financial 
institution and its customers provided that there are no concerns about 
the country or end-user. No customer to customer communications or 
transactions are allowed.
    (iii) Note that any country or end-user prohibited in the past from 
receiving encryption commodities and software under a specific 
Encryption Licensing Arrangement will be reviewed on a case-by-case 
basis, and may be considered by BXA for eligibility under future 
Encryption Licensing Arrangement requests.
    (iv) Note that distributors, resellers or other entities who are not 
manufacturers of the encryption commodities and software are permitted 
to use an existing Encryption Licensing Arrangement for exports and 
reexports of these products only when Encryption Licensing Arrangement 
has been granted to the manufacturer and the export and reexport meets 
the terms and conditions of this paragraph (b)(3).
    (v) There are no reporting requirements for exports to banks and 
financial institutions.
    (4) Financial-specific encryption items of any key length. After a 
one-time technical review via a classification request, financial-
specific encryption items of any key length that are restricted by 
design (e.g. highly field-formatted and validation procedures, and not 
easily diverted to other end-uses) for financial applications will be 
permitted for export and reexport under License Exception ENC (see 
Sec. 740.17(a)(1) of the EAR). No business and marketing plan is 
required.
    (5) Encryption commodities and software of any key length for use by 
health and medical end-users. (i) Commodities and software that have 
been classified after a technical review through a classification 
request or have been licensed for export under an Encryption Licensing 
Arrangement or a license are eligible for export and reexport under 
License Exception ENC to health and medical end-users without an 
additional technical review, provided that the export or reexport meets 
all the terms and conditions of that License Exception. See Sec. 740.17 
of the EAR. Commodities and software that were eligible for License 
Exception TSU or KMI or have been licensed for export or reexport under 
an Encryption Licensing Arrangement or a license prior to December 31, 
1998, are now eligible for export and reexport under License Exception 
ENC under the provisions of Sec. 740.17(b)(2) of the EAR.
    (ii) For exports and reexports that are not eligible under License 
Exception ENC, exports and reexports of encryption commodities and 
software classified under ECCNs 5A002 and 5D002 of any key length will 
generally be approved under an Encryption Licensing Arrangement for use 
by health and medical end-users (as defined in part 772 of the EAR) in 
all destinations except Cuba, Iran, Iraq, Libya, North Korea, Sudan and 
Syria except for non-U.S. biochemical and pharmaceutical manufacturers 
and non-U.S. military health and medical entities. No customer to 
customer communications or transactions are allowed.

[[Page 209]]

    (iii) Note that any country or end-user prohibited in the past from 
receiving encryption commodities and software under a specific 
Encryption Licensing Arrangement will be reviewed on a case-by-case 
basis, and may be considered by BXA for eligibility under future 
Encryption Licensing Arrangement requests.
    (iv) Note that distributors, resellers or other entities who are not 
manufacturers of the encryption commodities and software are permitted 
to use an existing Encryption Licensing Arrangement for exports and 
reexports of these products only when Encryption Licensing Arrangement 
has been granted to the manufacturer and the export and reexport meets 
the terms and conditions of this paragraph (b)(5).
    (v) You must submit to BXA the name and address of the end-user.
    (6) Encryption commodities and software of any key length for on-
line merchants. (i) Commodities and software that were eligible for 
export to on-line merchants under an Encryption Licensing Arrangement 
prior to December 31, 1998, are now eligible for export and reexport 
under License Exception ENC under the provisions of Sec. 740.17(b)(3).
    (ii) Exports and reexports of encryption commodities and software 
classified under ECCNs 5A002 and 5D002 of any key length which are 
limited to client-server applications (e.g., Secure Socket Layer (SSL) 
based applications) or applications specially designed for on-line 
transactions for the purchase or sale of goods and software will be 
permitted under an Export Licensing Arrangement in all destinations 
except Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria for use by 
foreign on-line merchants as defined in part 772 of the EAR. End-use is 
limited to: the purchase or sale of goods and software; and services 
connected with the purchase or sale of goods and software, including 
interactions between purchasers and sellers necessary for ordering, 
payment and delivery of goods and software. No other end-uses or 
customer to customer communications or transactions are allowed.
    (iii) Applications for Encryption Licensing Arrangements for on-line 
merchants will generally be approved, except for foreign on-line 
merchants or their separate business units (as defined in part 772 of 
the EAR) who are engaged in the manufacturing and distribution of items 
or services controlled on the U.S. Munitions List. Such end-users will 
be considered on a case-by-case basis.
    (iv) Note that any country or end-user prohibited in the past from 
receiving encryption commodities and software under a specific 
Encryption Licensing Arrangement will be reviewed on a case-by-case 
basis, and may be considered by BXA for eligibility under future 
Encryption Licensing Arrangement requests.
    (v) Note that distributors, resellers or other entities who are not 
manufacturers of the encryption commodities and software are permitted 
to use an existing Encryption Licensing Arrangement for exports and 
reexports of these products only when Encryption Licensing Arrangement 
has been granted to the manufacturer and the export and reexport meets 
the terms and conditions of this paragraph (b)(6).
    (v) You must submit to BXA the name and address of the end-user.
    (7) Recoverable encryption commodities and software of any key 
length for use by commercial entities. (i) Exports and reexports of 
recoverable encryption commodities and software (as defined in part 772 
of the EAR) classified under ECCNs 5A002 and 5D002 of any key length 
will generally be approved under an Encryption Licensing Arrangement to 
destinations designated with a ``*'' or ``**'' in Supplement No. 3 to 
part 740 of the EAR to foreign commercial entities for internal company 
proprietary use. Such encryption commodities and software will generally 
be approved for export and reexport to foreign subsidiaries of 
commercial firms headquartered in countries designated with a ``**'' in 
Supplement No. 3 to part 740 of the EAR that are located in any 
destination except Cuba, Iran, Iraq, Libya, North Korea, Sudan and 
Syria. Exports and reexports to telecommunication and internet service 
providers is permitted under this policy for internal company 
proprietary use. Use by service providers to provide service to 
customers is excluded from this policy,

[[Page 210]]

but exports may be possible under a license or an Encryption Licensing 
Arrangement on a case-by-case basis. This policy of approval excludes 
those foreign commercial firms or their separate business units (as 
defined in part 772 of the EAR) engaged in the manufacturing and 
distribution of items or services controlled by the U.S. Munitions List.
    (ii) Note that any country or end-user prohibited in the past from 
receiving encryption commodities and software under a specific 
Encryption Licensing Arrangement will be reviewed on a case-by-case 
basis, and may be considered by BXA for eligibility under future 
Encryption Licensing Arrangement requests.
    (iii) Note that distributors, resellers or other entities who are 
not manufacturers of the encryption commodities and software are 
permitted to use an existing Encryption Licensing Arrangement for 
exports and reexports of these products only when Encryption Licensing 
Arrangement has been granted to the manufacturer and the export and 
reexport meets the terms and conditions of this paragraph (b)(7).
    (iv) You must submit to BXA the name and address of the end-user.
    (8) All other encryption items. (i) Encryption licensing 
arrangement. Applicants may submit license applications for exports and 
reexports of certain encryption commodities and software in unlimited 
quantities for all destinations except Cuba, Iran, Iraq, Libya, North 
Korea, Syria, and Sudan. Applications will be reviewed on a case-by-case 
basis. If approved, encryption licensing arrangements may be valid for 
extended periods as requested by the applicant in block #24 on Form BXA-
748P. In addition, the applicant must specify the sales territory and 
class(es) of end-user(s). Such licenses may require the license holder 
to report to BXA certain information such as ECCN, item description, 
quantity, and end-user name and address.
    (ii) Applications for encryption items not authorized under an 
encryption licensing arrangement. Applications for the export and 
reexport of all other encryption items will be considered on a case-by-
case basis.
    (iii) Exports and reexports of encryption commodities and software 
of any key length to ``strategic partners'' of U.S. companies will 
receive favorable consideration when the end-use is for the protection 
of U.S. company proprietary information.
    (9) Applications for encryption technology. Applications for the 
export and reexport of encryption technology will be considered on a 
case-by-case basis.
    (c) Contract sanctity. Contract sanctity provisions are not 
available for license applications reviewed under this section.
    (d) [Reserved]

[61 FR 68580, Dec. 30, 1996, as amended at 63 FR 50522, Sept. 22, 1998; 
63 FR 72162, Dec. 31, 1998]



Sec. 742.16  India and Pakistan Sanctions.

    In accordance with section 102(b) of the Arms Export Control Act, 
President Clinton reported to the Congress on May 13th with regard to 
India and May 30th with regard to Pakistan his determinations that those 
non-nuclear weapon states had each detonated a nuclear explosive device. 
The President directed that the relevant agencies and instrumentalities 
of the United States take the necessary actions to impose the sanctions 
described in section 102 (b)(2) of that Act. Consistent with the 
provisions of section 102(b)(2)(G) of the Arms Export Control Act, the 
following sanctions measures are imposed against India and Pakistan.
    (a) License requirement. A license is required for all exports and 
reexports of items controlled for nuclear nonproliferation (NP) reasons 
to all end-users in India and Pakistan. In addition, a license is 
required for all exports and reexports of items controlled for missile 
technology (MT) reasons to all end-users in India and Pakistan, except 
items listed in Sec. 740.2(a)(5) of the EAR, which remain eligible for 
applicable License Exceptions when intended to ensure the safety of 
civil aviation and safe operation of commercial passenger aircraft.
    (b) Licensing policy.
    (1) Nuclear Nonproliferation. There is a policy of denial for all 
applications to export and reexport items controlled for nuclear 
proliferation (NP) reasons to all end-users in India and Pakistan,

[[Page 211]]

except high performance computers (see Sec. 742.12(b)(3)(iii) of this 
part for licensing policy regarding high performance computers).
    (2) Missile Technology. There is a policy of denial for all 
applications to export and reexport items controlled for missile 
technology (MT) reasons to all end-users in India and Pakistan, except 
items intended to ensure the safety of civil aviation and safe operation 
of commercial passenger aircraft, which will be reviewed on a case-by-
case basis.

[63 FR 64324, Nov. 19, 1998]

     Supplement No. 1 to Part 742--Nonproliferation of Chemical and 
                           Biological Weapons

    Note: Exports and reexports of items in performance of contracts 
entered into before the applicable contract sanctity date(s) will be 
eligible for review on a case-by-case basis or other applicable 
licensing policies that were in effect prior to the contract sanctity 
date. The contract sanctity dates set forth in this supplement are for 
the guidance of exporters. Contract sanctity dates are established in 
the course of the imposition of foreign policy controls on specific 
items and are the relevant dates for the purpose of licensing 
determinations involving such items. If you believe that a specific 
contract sanctity date is applicable to your transaction, you should 
include all relevant information with your license application.
    (1) The contract sanctity date for exports to Iran or Syria of 
dimethyl methylphosphonate, methyl phosphonyldifluoride, phosphorous 
oxychloride, thiodiglycol, dimethylamine hydrochloride, dimethylamine, 
ethylene chlorohydrin (2-chloroethanol), and potassium fluoride is April 
28, 1986.
    (2) The contract sanctity date for exports to Iran or Syria of 
dimethyl phosphite (dimethyl hydrogen phosphite), methyl 
phosphonyldichloride, 3-quinuclidinol, N,N-diisopropylamino-ethane-2-
thiol, N,N-diisopropylaminoethyl-2-chloride, 3-hydroxy-1-
methylpiperidine, trimethyl phosphite, phosphorous trichloride, and 
thionyl chloride is July 6, 1987.
    (3) The contract sanctity date for exports to Iran or Syria of items 
in ECCNs 1C351, 1C352, 1C353 and 1C354 is February 22, 1989.
    (4) The contract sanctity date for exports to Iran of dimethyl 
methylphosphonate, methylphosphonyl difluoride, phosphorus oxychloride, 
and thiodiglycol is February 22, 1989.
    (5) The contract sanctity date for exports to Iran, Libya or Syria 
of potassium hydrogen fluoride, ammonium hydrogen fluoride, sodium 
fluoride, sodium bifluoride, phosphorus pentasulfide, sodium cyanide, 
triethanolamine, diisopropylamine, sodium sulfide, and N,N -
diethylethanolamine is December 12, 1989.
    (6) The contract sanctity date for exports to all destinations 
(except Iran or Syria) of phosphorus trichloride, trimethyl phosphite, 
and thionyl chloride is December 12, 1989. For exports to Iran or Syria, 
paragraph (2) of this supplement applies.
    (7) The contract sanctity date for exports to all destinations 
(except Iran, Libya or Syria) of 2-chloroethanol and triethanolamine is 
January 15, 1991. For exports of 2-chloroethanol to Iran or Syria, 
paragraph (1) of this supplement applies. For exports of triethanolamine 
to Iran, Libya or Syria, paragraph (5) of this supplement applies.
    (8) The contract sanctity date for exports to all destinations 
(except Iran, Libya or Syria) of chemicals controlled by ECCN 1C350 is 
March 7, 1991, except for applications to export the following 
chemicals: 2-chloroethanol, dimethyl methylphosphonate, dimethyl 
phosphite (dimethyl hydrogen phosphite), methylphosphonyl dichloride, 
methylphosphonyl difluoride, phosphorus oxychloride, phosphorous 
trichloride, thiodiglycol, thionyl chloride triethanolamine, and 
trimethyl phosphite. (See also paragraphs (6) and (7) of this 
supplement.) For exports to Iran, Libya or Syria, see paragraphs (1) 
through (6) of this supplement.
    (9) The contract sanctity date for exports and reexports of the 
following commodities and technical data is March 7, 1991:
    (i) Equipment (for producing chemical weapon precursors and chemical 
warfare agents) described in ECCNs 2B350 and 2B351;
    (ii) Equipment and materials (for producing biological agents) 
described in ECCNs 1C351, 1C352, 1C353, 1C354, and 2B352; and
    (iii) Technology (for the development, production, and use of 
equipment described in ECCNs 1C351, 1C352, 1C353, 1C354, 2B350, 2B351, 
and 2B352) described in ECCNs 2E001, 2E002, and 2E301.
    (10) The contract sanctity date for license applications subject to 
Sec. 742.2(b)(3) of this part is March 7, 1991.
    (11) The contract sanctity date for reexports of chemicals 
controlled under ECCN 1C350 is March 7, 1991, except that the contract 
sanctity date for reexports of these chemicals to Iran, Libya or Syria 
is December 12, 1989.
    (12) The contract sanctity date for reexports of human pathogens, 
zoonoses, toxins, animal pathogens, genetically modified microorganisms 
and plant pathogens controlled by ECCNs 1C351, 1C352, 1C353 and 1C354 is 
March 7, 1991.

[61 FR 12786, Mar. 25, 1996, as amended at 62 FR 25459, May 9, 1997]

[[Page 212]]

Supplement No. 2 to Part 742--Anti-Terrorism Controls; Iran, Syria, and 
           Sudan Contract Sanctity Dates and Related Policies

    Note: Exports and reexports of items in performance of contracts 
entered into before the applicable contract sanctity date(s) will be 
eligible for review on a case-by-case basis or other applicable 
licensing policies that were in effect prior to the contract sanctity 
date. The contract sanctity dates set forth in this supplement are for 
the guidance of exporters. Contract sanctity dates are established in 
the course of the imposition of foreign policy controls on specific 
items and are the relevant dates for the purpose of licensing 
determinations involving such items. If you believe that a specific 
contract sanctity date is applicable to your transaction, you should 
include all relevant information with your license application. BXA will 
determine any applicable contract sanctity date at the time an 
application with relevant supporting documents is submitted.
    (a) Terrorist-supporting countries. The Secretary of State has 
designated Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria as 
countries whose governments have repeatedly provided support for acts of 
international terrorism under section 6(j) of the Export Administration 
Act (EAA).
    (b) Items controlled under EAA sections 6(j) and 6(a). Whenever the 
Secretary of State determines that an export or reexport to any of these 
countries could make a significant contribution to the military 
potential of such country, including its military logistics capability, 
or could enhance the ability of such country to support acts of 
international terrorism, the item is subject to mandatory control under 
section EAA 6(j) and the Secretaries of Commerce and State are required 
to notify appropriate Committees of the Congress 30 days before a 
license for such an item may be issued.
    (1) On December 28, 1993, the Secretary of State determined that the 
export to Cuba, Libya, Iran, Iraq, North Korea, Sudan or Syria of items 
described in paragraphs (c)(1) through (c)(5) of this supplement, if 
destined to military, police, intelligence or other sensitive end-users, 
are controlled under EAA section 6(j). Therefore, the 30-day advance 
Congressional notification requirement applies to the export or reexport 
of these items to sensitive end-users in any of these countries.
    (2) License applications for items controlled to designated 
terrorist-supporting countries under EAA section 6(a) will also be 
reviewed to determine whether the Congressional notification 
requirements of EAA section 6(j) apply.
    (3) Items controlled for anti-terrorism reasons under section 6(a) 
to Iran, Sudan and Syria are:
    (i) items described in paragraphs (c)(1) through (c)(5) to non-
sensitive end-users, and
    (ii) the following items to all end-users: for Iran, items in 
paragraphs (c)(6) through (c)(39) of this supplement; for Sudan, items 
in paragraphs (c)(6) through (c)(14), and (c)(16) through (c)(39) of 
this supplement; for Syria, items in paragraphs (c)(6) through (c)(8), 
(c)(10) through (c)(14), (c)(16) through (c)(19), and (c)(22) through 
(c)(39) of this supplement.
    (c) The license requirements and licensing policies for items 
controlled for anti-terrorism reasons to Iran, Syria and Sudan are 
generally described in Secs. 742.8, 742.9 and 742.10 of this part. This 
supplement provides guidance on licensing policies for Syria and Sudan 
and related contract sanctity dates that may be available for 
transactions benefitting from pre-existing contracts involving Syria and 
Sudan. This supplement also provides information on licensing policies 
and contract sanctity dates for Iran. Exporters are advised that the 
Treasury Department's Office of Foreign Assets Control administers a 
comprehensive trade and investment embargo against Iran (See Executive 
Orders 12957 and 12959 of March 15, 1995 and May 6, 1995, respectively.) 
Exporters are further advised that exports and reexports to Iran of 
items that are listed on the CCL as requiring a license for national 
security or foreign policy reasons are subject to a policy of denial 
under the Iran-Iraq Arms Non-Proliferation Act of October 23, 1992 (50 
U.S.C. 1701 note (1994)). Transactions involving Iran and benefitting 
from a contract that pre-dates October 23, 1992 may be considered under 
the applicable licensing policy in effect prior to that date.
    (1) All items subject to national security controls--(i) Iran. 
Applications for all end-users in Iran will generally be denied.
    (A) Contract sanctity date for military end-users or end-uses of 
items valued at $7 million or more: January 23, 1984.
    (B) Contract sanctity date for military end-users or end-uses of all 
other national security controlled items: September 28, 1984.
    (C) Contract sanctity date for non-military end-users or end-uses: 
August 28, 1991, unless otherwise specified in paragraphs (c)(2) through 
(c)(39) of this supplement.
    (ii) Syria. Applications for military end-users or military end-uses 
in Syria will generally be denied. Applications for non-military end-
users or end-uses will be considered on a case-by-case basis, unless 
otherwise specified in paragraphs (c)(2) through (c)(39) of this 
supplement. No contract sanctity date is available for items valued at 
$7 million or more to military end-users or end-uses. The contract 
sanctity date for all other items for all end-users: December 16, 1986.

[[Page 213]]

    (iii) Sudan. Applications for military end-users or military end-
uses in Sudan will generally be denied. Applications for non-military 
end-users or end-uses will be considered on a case-by-case basis. 
Contract sanctity date: January 19, 1996, unless a prior contract 
sanctity date applies (e.g., items first controlled to Sudan for foreign 
policy reasons under EAA section 6(j) have a contract sanctity date of 
December 28, 1993).
    (2) All items subject to chemical and biological weapons 
proliferation controls. Applications for all end-users in Iran, Syria or 
Sudan of these items will generally be denied. See Supplement No. 1 to 
part 742 for contract sanctity dates for Iran and Syria. Contract 
sanctity date for Sudan: January 19, 1996, unless a prior contract 
sanctity date applies (e.g., items first controlled to Sudan for foreign 
policy reasons under EAA section 6(j) have a contract sanctity date of 
December 28, 1993), or unless an earlier date for any item is listed in 
Supplement 1 to part 742.
    (3) All items subject to missile proliferation controls (MTCR). 
Applications for all end-users in Iran, Syria or Sudan will generally be 
denied. Contract sanctity provisions for Iran and Syria are not 
available. Contract sanctity date for Sudan: January 19, 1996, unless a 
prior contract sanctity date applies (e.g., items first controlled to 
Sudan for foreign policy reasons under EAA section 6(j) have a contract 
sanctity date of December 28, 1993).
    (4) All items subject to nuclear weapons proliferation controls 
(NRL)--(i) Iran. Applications for all end-users in Iran will generally 
be denied. No contract sanctity date is available.
    (ii) Syria. Applications for military end-users or end-uses to Syria 
will generally be denied. Applications for non-military end-users or 
end-uses will be considered on a case-by-case basis. No contract 
sanctity date is available.
    (iii) Sudan. Applications for military end-users or end-uses in 
Sudan will generally be denied. Applications for export and reexport to 
non-military end-users or end-uses will be considered on a case-by-case 
basis. No contract sanctity date is available.
    (5) All military-related items, i.e., applications for export and 
reexport of items controlled by CCL entries ending with the number 
``18''--(i) Iran. Applications for all end-users in Iran will generally 
be denied. Contract sanctity date: see paragraph (c)(1)(i) of this 
supplement.
    (ii) Syria. Applications for all end-users in Syria will generally 
be denied. Contract sanctity date: see paragraph (c)(1)(ii) of this 
supplement.
    (iii) Sudan. Applications for all end-users in Sudan will generally 
be denied. Contract sanctity date for Sudan: January 19, 1996, unless a 
prior contract sanctity date applies (e.g., items first controlled to 
Sudan for foreign policy reasons under EAA section 6(j) have a contract 
sanctity date of December 28, 1993).
    (6) All aircraft (powered and unpowered), helicopters, engines, and 
related spare parts and components--(i) Iran. Applications for all end-
users in Iran will generally be denied.
    (A) Contract sanctity date for helicopters exceeding 10,000 lbs. 
empty weight or fixed wing aircraft valued at $3 million or more: 
January 23, 1984.
    (B) Contract sanctity date for other helicopters and aircraft and 
gas turbine engines therefor: September 28, 1984.
    (C) Contract sanctity date for helicopter or aircraft parts and 
components controlled by ECCN 9A991.d: October 22, 1987.
    (ii) Syria. Applications for all end-users in Syria will generally 
be denied.
    (A) There is no contract sanctity for helicopters exceeding 10,000 
lbs. empty weight or fixed wing aircraft valued at $3 million or more; 
except that passenger aircraft, regardless of value, have a contract 
sanctity date of December 16, 1986, if destined for a regularly 
scheduled airline with assurance against military use.
    (B) Contract sanctity date for helicopters with 10,000 lbs. empty 
weight or less: April 28, 1986.
    (C) Contract sanctity date for other aircraft and gas turbine 
engines therefor: December 16, 1986.
    (D) Contract sanctity date for helicopter or aircraft parts and 
components controlled by 9A994: August 28, 1991.
    (iii) Sudan. Applications for all end-users in Sudan will generally 
be denied. Contract sanctity date: January 19, 1996.
    (7) Heavy duty, on-highway tractors--(i) Iran. Applications for all 
end-users in Iran will generally be denied. Contract sanctity date: 
August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria will generally be denied. Applications for non-military 
end-users or for non-military end-uses in Syria will be considered on a 
case-by-case basis. Contract sanctity date: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan will generally be denied. Applications for non-
military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date: January 19, 
1996.
    (8) Off-highway wheel tractors of carriage capacity 9t (10 tons) or 
more--(i) Iran. Applications for all end-users in Iran will generally be 
denied. Contract sanctity date: October 22, 1987.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria will generally be denied. Applications for non-military 
end-users or for non-military end-uses in Syria will be considered on a 
case-by-

[[Page 214]]

case basis. Contract sanctity date: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan will generally be denied. Applications for non-
military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date: January 19, 
1996.
    (9) Large diesel engines (greater than 400 horsepower) and parts to 
power tank transporters--(i) Iran. Applications for all end-users in 
Iran will generally be denied. Contract sanctity date: October 22, 1987.
    (ii) Sudan. Applications for military end-users or for military end-
uses in Sudan will generally be denied. Applications for non-military 
end-users or for non-military end-uses in Sudan will be considered on a 
case-by-case basis. Contract sanctity date: January 19, 1996.
    (10) Cryptographic, cryptoanalytic, and cryptologic equipment--(i) 
Iran. Applications for all end-users in Iran will generally be denied.
    (A) Contract sanctity date for military end-users or end-uses of 
cryptographic, cryptoanalytic, and cryptologic equipment that was 
subject to national security controls on October 22, 1987: see paragraph 
(c)(1)(i) of this supplement.
    (B) Contract sanctity date for all other cryptographic, 
cryptoanalytic, and cryptologic equipment for all end-users: October 22, 
1987.
    (ii) Syria. A license is required for all national security-
controlled cryptographic, cryptoanalytic, and cryptologic equipment to 
all end-users. Applications for all end-users in Syria will generally be 
denied. Contract sanctity date for cryptographic, cryptoanalytic, and 
cryptologic equipment that was subject to national security controls on 
August 28, 1991: see paragraph (c)(1)(ii) of this supplement.
    (iii) Sudan. Applications for all end-users in Sudan of any such 
equipment will generally be denied. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (11) Navigation, direction finding, and radar equipment--(i) Iran. 
Applications for all end-users in Iran will generally be denied.
    (A) Contract sanctity date for military end-users or end-uses of 
navigation, direction finding, and radar equipment that was subject to 
national security controls on August 28, 1991: see paragraph (c)(1)(i) 
of this supplement.
    (B) Contract sanctity date for all other navigation, direction 
finding, and radar equipment for all end-users: October 22, 1987.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such equipment will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Syria will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for exports of navigation, direction 
finding, and radar equipment that was subject to national security 
controls on August 28, 1991: see paragraph (c)(1)(ii) of this 
supplement.
    (B) Contract sanctity date for all other navigation, direction 
finding, and radar equipment: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan will generally be denied. Applications for non-
military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (12) Electronic test equipment--(i) Iran. Applications for all end-
users in Iran will generally be denied.
    (A) Contract sanctity date for military end-users or end-uses of 
electronic test equipment that was subject to national security controls 
on October 22, 1987: see paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity date for all other electronic test equipment 
for all end-users: October 22, 1987.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such equipment will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Syria will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for electronic test equipment that was 
subject to national security controls on August 28, 1991: see paragraph 
(c)(1)(ii) of this supplement.
    (B) Contract sanctity date for all other electronic test equipment: 
August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of such equipment will generally be denied. 
Applications for non-military end-users or for non-military end-uses in 
Sudan will be considered on a case-by-case basis. Contract sanctity date 
for Sudan: January 19, 1996, unless a prior contract sanctity date 
applies (e.g., items first controlled to Sudan for foreign policy 
reasons under EAA section 6(j) have a contract sanctity date of December 
28, 1993).
    (13) Mobile communications equipment--(i) Iran. Applications for all 
end-users in Iran of such equipment will generally be denied.
    (A) Contract sanctity date for military end-users or end-uses of 
mobile communications equipment that was subject to national security 
controls on October 22, 1987: see paragraph (c)(1)(i) of this 
supplement.

[[Page 215]]

    (B) Contract sanctity date for all end-users of all other mobile 
communications equipment: October 22, 1987.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such equipment will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Syria will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for mobile communications equipment that 
was subject to national security controls on August 28, 1991: see 
paragraph (c)(1)(ii) of this supplement.
    (B) Contract sanctity date for exports of all other mobile 
communications equipment: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of such equipment will generally be denied. 
Applications for non-military end-users or for non-military end-uses in 
Sudan will be considered on a case-by-case basis. Contract sanctity date 
for Sudan: January 19, 1996, unless a prior contract sanctity date 
applies (e.g., items first controlled to Sudan for foreign policy 
reasons under EAA section 6(j) have a contract sanctity date of December 
28, 1993).
    (14) Acoustic underwater detection equipment--(i) Iran. Applications 
for all end-users in Iran of such equipment will generally be denied.
    (A) Contract sanctity date for military end-users or end-uses of 
acoustic underwater detection equipment that was subject to national 
security controls on October 22, 1987: see paragraph (c)(1)(i) of this 
supplement.
    (B) Contract sanctity date for all other acoustic underwater 
detection equipment for all end-users: October 22, 1987.
    (ii) Syria. A license is required for acoustic underwater detection 
equipment that was subject to national security controls on August 28, 
1991, to all end-users. Applications for military end-users or for 
military end-uses in Syria will generally be denied. Applications for 
non-military end-users or for non-military end-uses in Syria will be 
considered on a case-by-case basis. Contract sanctity date for acoustic 
underwater detection equipment that was subject to national security 
controls on August 28, 1991: see paragraph (c)(1)(ii) of this 
supplement.
    (iii) Sudan. Applications for military end-users or for military 
end-uses to Sudan of such equipment will generally be denied. 
Applications for non-military end-users or for non-military end-uses in 
Sudan will be considered on a case-by-case basis. Contract sanctity date 
for Sudan: January 19, 1996, unless a prior contract sanctity date 
applies (e.g., items first controlled to Sudan for foreign policy 
reasons under EAA section 6(j) have a contract sanctity date of December 
28, 1993).
    (15) Portable electric power generators--(i) Iran. Applications for 
all end-users in Iran of such equipment will generally be denied. 
Contract sanctity date: October 22, 1987.
    (ii) [Reserved]
    (16) Vessels and boats, including inflatable boats--(i) Iran. 
Applications for all end-users in Iran of these items will generally be 
denied.
    (A) Contract sanctity date for military end-users or end-uses of 
vessels and boats that were subject to national security controls on 
October 22, 1987: see paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity date for all other vessels and boats for all 
end-users: October 22, 1987.
    (ii) Syria. A license is required for national security-controlled 
vessels and boats. Applications for military end-users or for military 
end-uses in Syria of these items will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Syria will be 
considered on a case-by-case basis. Contract sanctity date for vessels 
and boats that were subject to national security controls on August 28, 
1991: see paragraph (c)(1)(ii) of this supplement.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of these items will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (17) Marine and submarine engines (outboard/inboard, regardless of 
horsepower)--(i) Iran. Applications for all end-users in Iran of these 
items will generally be denied.
    (A) Contract sanctity date for military end-users or end-uses of 
marine and submarine engines that were subject to national security 
controls on October 22, 1987: See paragraph (c)(1)(i) of this 
supplement.
    (B) Contract sanctity date for outboard engines of 45 HP or more for 
all end-users: September 28, 1984.
    (C) Contract sanctity date for all other marine and submarine 
engines for all end-users: October 22, 1987.
    (ii) Syria. A license is required for all marine and submarine 
engines subject to national security controls to all end-users. 
Applications for military end-users or for military end-uses in Syria of 
these items will generally be denied. Applications for non-military end-
users or for non-military end-uses in Syria will be considered on a 
case-by-case basis. Contract sanctity date for marine and submarine 
engines that were subject to national security controls on August 28, 
1991: See paragraph (c)(1)(ii) of this supplement.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of

[[Page 216]]

these items will generally be denied. Applications for non-military end-
users or for non-military end-uses in Sudan will be considered on a 
case-by-case basis. Contract sanctity date for Sudan: January 19, 1996, 
unless a prior contract sanctity date applies (e.g., items first 
controlled to Sudan for foreign policy reasons under EAA section 6(j) 
have a contract sanctity date of December 28, 1993).
    (18) Underwater photographic equipment--(i) Iran. Applications for 
all end-users in Iran of such equipment will generally be denied.
    (A) Contract sanctity date for military end-users or end-uses of 
underwater photographic equipment that was subject to national security 
controls on October 22, 1987: See paragraph (c)(1)(i) of this 
supplement.
    (B) Contract sanctity date for all other underwater photographic 
equipment for all end-users: October 22, 1987.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such equipment will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Syria will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for underwater photographic equipment 
that was subject to national security controls on August 28, 1991: See 
paragraph (c)(1)(ii) of this supplement.
    (B) Contract sanctity date for all other underwater photographic 
equipment: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of such equipment will generally be denied. 
Applications for non-military end-users or for non-military end-uses in 
Sudan will be considered on a case-by-case basis. Contract sanctity date 
for Sudan: January 19, 1996, unless a prior contract sanctity date 
applies (e.g., items first controlled to Sudan for foreign policy 
reasons under EAA section 6(j) have a contract sanctity date of December 
28, 1993).
    (19) Submersible systems--(i) Iran. Applications for all end-users 
in Iran of such systems will generally be denied.
    (A) Contract sanctity date for military end-users or end-uses of 
submersible systems that were subject to national security controls on 
October 22, 1987: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity date for all other submersible systems for all 
end-users: October 22, 1987.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such systems will generally be denied. Applications for 
non-military end-users or for non-military end-uses in Syria will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for submersible systems that were subject 
to national security controls on August 28, 1991: See paragraph 
(c)(1)(ii) of this supplement.
    (B) Contract sanctity date for all other submersible systems: August 
28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of such systems will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (20) Scuba gear and related equipment--(i) Iran. Applications for 
all end-users in Iran of such equipment will generally be denied. No 
contract sanctity is available for such items to Iran.
    (ii) Sudan. Applications for military end-users and end-uses in 
Sudan of these items will generally be denied. Applications for non-
military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date: January 19, 
1996.
    (21) Pressurized aircraft breathing equipment--(i) Iran. 
Applications for all end-users in Iran of such equipment will generally 
be denied. Contract sanctity date: October 22, 1987.
    (ii) Sudan. Applications for military end-users or for military end-
uses in Sudan of these items will generally be denied. Applications for 
non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date: January 19, 
1996.
    (22) Computer numerically controlled machine tools--(i) Iran. 
Applications for all end-users in Iran of these items will generally be 
denied.
    (A) Contract sanctity date for military end-users and end-uses of 
computer numerically controlled machine tools that were subject to 
national security controls on August 28, 1991: See paragraph (c)(1)(i) 
of this supplement.
    (B) Contract sanctity dates for all other computer numerically 
controlled machine tools for all end-users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of these items will generally be denied. Applications for 
non-military end-users or for non-military end-uses will be considered 
on a case-by-case basis.
    (A) Contract sanctity date for computer numerically controlled 
machine tools that were subject to national security controls on August 
28, 1991: See paragraph (c)(1)(ii) of this supplement.
    (B) Contract sanctity date for exports of all other computer 
numerically controlled machine tools: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of

[[Page 217]]

these items will generally be denied. Applications for non-military end-
users or for non-military end-uses in Sudan will be considered on a 
case-by-case basis. Contract sanctity date for Sudan: January 19, 1996, 
unless a prior contract sanctity date applies (e.g., items first 
controlled to Sudan for foreign policy reasons under EAA section 6(j) 
have a contract sanctity date of December 28, 1993).
    (23) Vibration test equipment--(i) Iran. Applications for all end-
users in Iran of such equipment will generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
vibration test equipment that was subject to national security controls 
on August 28, 1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity dates for all other vibration test equipment 
for all end-users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such equipment will generally be denied. Applications 
for non-military end-users or for non-military end-uses will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for vibration test equipment that was 
subject to national security controls on August 28, 1991: See paragraph 
(c)(1)(ii) of this supplement.
    (B) Contract sanctity date for exports of all other vibration test 
equipment: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of such equipment will generally be denied. 
Applications for non-military end-users or for non-military end-uses in 
Sudan will be considered on a case-by-case basis. Contract sanctity date 
for Sudan: January 19, 1996, unless a prior contract sanctity date 
applies (e.g., items first controlled to Sudan for foreign policy 
reasons under EAA section 6(j) have a contract sanctity date of December 
28, 1993).
    (24) Digital computers with a CTP of 6 or above, assemblies, related 
equipment, equipment for development or production of magnetic and 
optical storage equipment, and materials for fabrication of head/disk 
assemblies--(i) Iran. Applications for all end-users in Iran of these 
items will generally be denied.
    (A) Contract sanctity dates for military end-users and end-uses of 
items that were subject to national security controls on August 28, 
1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity date for all other items for all end-users: 
August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of these items will generally be denied. Applications for 
non-military end-users or for non-military end-uses will be considered 
on a case-by-case basis.
    (A) Contract sanctity dates for items that were subject to national 
security controls on August 28, 1991: See paragraph (c)(1)(ii) of this 
supplement.
    (B) Contract sanctity date for all other items: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of these items will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (25) Telecommunications equipment--(i) A license is required for the 
following telecommunications equipment:
    (A) Radio relay systems or equipment operating at a frequency equal 
to or greater than 19.7 GHz or ``spectral efficiency'' greater than 3 
bit/s/Hz;
    (B) Fiber optic systems or equipment operating at a wavelength 
greater than 1000 nm;
    (C) ``Telecommunications transmission systems'' or equipment with a 
``digital transfer rate'' at the highest multiplex level exceeding 45 
Mb/s.
    (ii) Iran. Applications for all end-users in Iran of such equipment 
will generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
telecommunications equipment that was subject to national security 
controls on August 28, 1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity dates for all other vibration test equipment 
for all end-users: August 28, 1991.
    (iii) Syria. Applications for military end-users or for military 
end-uses in Syria of such equipment will generally be denied. 
Applications for non-military end-users or for non-military end-uses 
will be considered on a case-by-case basis.
    (A) Contract sanctity date for exports of telecommunications 
equipment that was subject to national security controls on August 28, 
1991: See paragraph (c)(1)(ii) of this supplement.
    (B) Contract sanctity date for exports of all other 
telecommunications equipment: August 28, 1991.
    (iv) Sudan. Applications for military end-users or for military end-
uses in Sudan of such equipment will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j)

[[Page 218]]

have a contract sanctity date of December 28, 1993).
    (26) Microprocessors operating at a clock speed over 25 MHz--(i) 
Iran. Applications for all end-users in Iran of these items will 
generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
microprocessors that were subject to national security controls on 
August 28, 1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity dates for all other microprocessors for all 
end-users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of these items will generally be denied. Applications for 
non-military end-users or for non-military end-uses will be considered 
on a case-by-case basis.
    (A) Contract sanctity date for microprocessors that were subject to 
national security controls on August 28, 1991: See paragraph (c)(1)(ii) 
of this supplement.
    (B) Contract sanctity date for all other microprocessors: August 28, 
1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of these items will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (27) Semiconductor manufacturing equipment. For Iran, Syria or 
Sudan, a license is required for all such equipment described in ECCNs 
3B001 and 3B991--(i) Iran. Applications for all end-users in Iran of 
such equipment will generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
semiconductor manufacturing equipment that was subject to national 
security controls on August 28, 1991: See paragraph (c)(1)(i) of this 
supplement.
    (B) Contract sanctity dates for all other microprocessors for all 
end-users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such equipment will generally be denied. Applications 
for non-military end-users or for non-military end-uses will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for such semiconductor manufacturing 
equipment that was subject to national security controls on August 28, 
1991: See paragraph (c)(1)(ii) of this supplement.
    (B) Contract sanctity date for all other semiconductor manufacturing 
equipment: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of such equipment will generally be denied. 
Applications for non-military end-users or for non-military end-uses in 
Sudan will be considered on a case-by-case basis. Contract sanctity date 
for Sudan: January 19, 1996, unless a prior contract sanctity date 
applies (e.g., items first controlled to Sudan for foreign policy 
reasons under EAA section 6(j) have a contract sanctity date of December 
28, 1993).
    (28) Software specially designed for the computer-aided design and 
manufacture of integrated circuits--(i) Iran. Applications for all end-
users in Iran of such software will generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
such software that was subject to national security controls on August 
28, 1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity dates for all other such software for all end-
users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such software will generally be denied. Applications 
for non-military end-users or for non-military end-uses will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for such software that was subject to 
national security controls on August 28, 1991: See paragraph (c)(1)(ii) 
of this supplement.
    (B) Contract sanctity date for all other such software: August 28, 
1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of such software will generally be denied. 
Applications for non-military end-users or for non-military end-uses in 
Sudan will be considered on a case-by-case basis. Contract sanctity date 
for Sudan: January 19, 1996, unless a prior contract sanctity date 
applies (e.g., items first controlled to Sudan for foreign policy 
reasons under EAA section 6(j) have a contract sanctity date of December 
28, 1993).
    (29) Packet switches. Equipment described in ECCNs 5A001.c and 
5A991.c.1--(i) Iran. Applications for all end-users in Iran of such 
equipment will generally be denied.
    (A) Contract sanctity date for military end-users and end-uses in 
Iran of packet switches that were subject to national security controls 
on August 28, 1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity dates for all other packet switches for all 
end-users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such equipment will generally be denied. Applications 
for non-military end-users or for non-military end-uses will be 
considered on a case-by-case basis.

[[Page 219]]

    (A) Contract sanctity date for packet switches that were subject to 
national security controls on August 28, 1991: See paragraph (c)(1)(ii) 
of this supplement.
    (B) Contract sanctity date for all other packet switches: August 28, 
1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of such equipment will generally be denied. 
Applications for non-military end-users or for non-military end-uses in 
Sudan will be considered on a case-by-case basis. Contract sanctity date 
for Sudan: January 19, 1996, unless a prior contract sanctity date 
applies (e.g., items first controlled to Sudan for foreign policy 
reasons under EAA section 6(j) have a contract sanctity date of December 
28, 1993).
    (30) Specially designed software for air traffic control 
applications that uses any digital signal processing techniques for 
automatic target tracking or that has a facility for electronic 
tracking--(i) Iran. Applications for all end-users in Iran of such 
software will generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
such software that was subject to national security controls on August 
28, 1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity dates for all other such software for all end-
users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such software will generally be denied. Applications 
for non-military end-users or for non-military end-uses will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for such software that was subject to 
national security controls on August 28, 1991: See paragraph (c)(1)(ii) 
of this supplement.
    (B) Contract sanctity date for exports of such software: August 28, 
1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of such software will generally be denied. 
Applications for non-military end-users or for non-military end-uses in 
Sudan will be considered on a case-by-case basis. Contract sanctity date 
for Sudan: January 19, 1996, unless a prior contract sanctity date 
applies (e.g., items first controlled to Sudan for foreign policy 
reasons under EAA section 6(j) have a contract sanctity date of December 
28, 1993).
    (31) Gravity meters having static accuracy of less (better) than 100 
microgal, or gravity meters of the quartz element (worden) type--(i) 
Iran. Applications for all end-users in Iran of these items will 
generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
gravity meters that were subject to national security controls on August 
28, 1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity dates for all other such gravity meters for 
all end-users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of these items will generally be denied. Applications for 
non-military end-users or for non-military end-uses will be considered 
on a case-by-case basis.
    (A) Contract sanctity date for gravity meters that were subject to 
national security controls on August 28, 1991: See paragraph (c)(1)(ii) 
of this supplement.
    (B) Contract sanctity date for exports of all other such gravity 
meters: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of these items will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (32) Magnetometers with a sensitivity lower (better) than 1.0 nt rms 
per square root Hertz--(i) Iran. Applications for all end-users in Iran 
of these items will generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
such magnetometers that were subject to national security controls on 
August 28, 1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity dates for all other such magnetometers for all 
end-users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of these items will generally be denied. Applications for 
non-military end-users or for non-military end-uses will be considered 
on a case-by-case basis.
    (A) Contract sanctity date for such magnetometers that were subject 
to national security controls on August 28, 1991: See paragraph 
(c)(1)(ii) of this supplement.
    (B) Contract sanctity date for all other such magnetometers: August 
28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of these items will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (33) Fluorocarbon compounds described in ECCN 1C006.d for cooling 
fluids for radar--(i)

[[Page 220]]

Iran. Applications for all end-users in Iran of such compounds will 
generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
such fluorocarbon compounds that were subject to national security 
controls on August 28, 1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity dates for all other such fluorocarbon 
compounds for all end-users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such compounds will generally be denied. Applications 
for non-military end-users or for non-military end-uses will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for such fluorocarbon compounds that were 
subject to national security controls on August 28, 1991: See paragraph 
(c)(1)(ii) of this supplement.
    (B) Contract sanctity date for all other such fluorocarbon 
compounds: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of such compounds will generally be denied. 
Applications for non-military end-users or for non-military end-uses in 
Sudan will be considered on a case-by-case basis. Contract sanctity date 
for Sudan: January 19, 1996, unless a prior contract sanctity date 
applies (e.g., items first controlled to Sudan for foreign policy 
reasons under EAA section 6(j) have a contract sanctity date of December 
28, 1993).
    (34) High strength organic and inorganic fibers (kevlar) described 
in ECCN 1C210--(i) Iran. Applications for all end-users in Iran of such 
fibers will generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
high strength organic and inorganic fibers (kevlar) described in 1C210 
that were subject to national security controls on August 28, 1991: See 
paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity dates for all other high strength organic and 
inorganic fibers (kevlar) described in 1C210 for all end-users: August 
28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of such fibers will generally be denied. Applications for 
non-military end-users or for non-military end-uses will be considered 
on a case-by-case basis.
    (A) Contract sanctity date for high strength organic and inorganic 
fibers (kevlar) described in 1C210 that were subject to national 
security controls on August 28, 1991: See paragraph (c)(1)(ii) of this 
supplement.
    (B) Contract sanctity date for all other high strength organic and 
inorganic fibers (kevlar) described in 1C210: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of such fibers will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (35) Machines described in ECCNs 2B003 and 2B993 for cutting gears 
up to 1.25 meters in diameter--(i) Iran. Applications for all end-users 
in Iran of these items will generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
such machines that were subject to national security controls on August 
28, 1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity dates for all other such machines for all end-
users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of these items will generally be denied. Applications for 
non-military end-users or for non-military end-uses will be considered 
on a case-by-case basis.
    (A) Contract sanctity date for machines that were subject to 
national security controls on August 28, 1991: See paragraph (c)(1)(ii) 
of this supplement.
    (B) Contract sanctity date for all other machines: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of these items will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (36) Aircraft skin and spar milling machines--(i) Iran. Applications 
for all end-users in Iran of these items will generally be denied.
    (A) Contract sanctity date for military end-users and end-uses of 
aircraft skin and spar milling machines that were subject to national 
security controls on August 28, 1991: See paragraph (c)(1)(i) of this 
supplement.
    (B) Contract sanctity dates for all other aircraft skin and spar 
milling machines to all end-users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of these items will generally be denied. Applications for 
non-military end-users or for non-military end-uses will be considered 
on a case-by-case basis.
    (A) Contract sanctity date for aircraft skin and spar milling 
machines that were subject to national security controls on August 28, 
1991: See paragraph (c)(1)(ii) of this supplement.

[[Page 221]]

    (B) Contract sanctity date for all other aircraft skin and spar 
milling machines: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of these items will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (37) Manual dimensional inspection machines described in ECCN 
2B992--(i) Iran. Applications for all end-users in Iran of these items 
will generally be denied.
    (A) Contract sanctity date for military end-users or end-uses of 
manual dimensional inspection machines that were subject to national 
security controls on August 28, 1991: See paragraph (c)(1)(i) of this 
supplement.
    (B) Contract sanctity date for all other manual dimensional 
inspection machines for all end-users: August 28, 1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of these items will generally be denied. Applications for 
non-military end-users or for non-military end-uses in Syria will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for such manual dimensional inspection 
machines that were subject to national security controls on August 28, 
1991: See paragraph (c)(1)(ii) of this supplement.
    (B) Contract sanctity date for all other such manual dimensional 
inspection machines: August 28, 1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of these items will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (38) Robots capable of employing feedback information in real time 
processing to generate or modify programs--(i) Iran. Applications for 
all end-users in Iran of these items will generally be denied.
    (A) Contract sanctity date for military end-users or end-uses of 
such robots that were subject to national security controls on August 
28, 1991: See paragraph (c)(1)(i) of this supplement.
    (B) Contract sanctity date for all other such robots: August 28, 
1991.
    (ii) Syria. Applications for military end-users or for military end-
uses in Syria of these items will generally be denied. Applications for 
non-military end-users or for non-military end-uses in Syria will be 
considered on a case-by-case basis.
    (A) Contract sanctity date for such robots that were subject to 
national security controls on August 28, 1991: See paragraph (c)(1)(ii) 
of this supplement.
    (B) Contract sanctity date for all other such robots: August 28, 
1991.
    (iii) Sudan. Applications for military end-users or for military 
end-uses in Sudan of these items will generally be denied. Applications 
for non-military end-users or for non-military end-uses in Sudan will be 
considered on a case-by-case basis. Contract sanctity date for Sudan: 
January 19, 1996, unless a prior contract sanctity date applies (e.g., 
items first controlled to Sudan for foreign policy reasons under EAA 
section 6(j) have a contract sanctity date of December 28, 1993).
    (39) Explosive device detectors--(i) Iran. Applications for all end-
users in Iran of these items will generally be denied. Contract sanctity 
date: January 19, 1996.
    (ii) Syria. Applications for all end-users in Syria of these items 
will generally be denied. Contract sanctity date: January 19, 1996.
    (iii) Sudan. Applications for all end-users in Sudan of these items 
will generally be denied. Contract sanctity date: January 19, 1996.

[61 FR 12786, Mar. 25, 1996, as amended at 63 FR 42228, Aug. 7, 1998]

  Supplement No. 3 to Part 742--High Performance Computers; Safeguard 
                   Conditions and Related Information

    This supplement sets forth the security conditions and safeguard 
plans for the export, reexport, or in-country transfer of high 
performance computers that may be imposed by BXA to certain 
destinations. The licensing policies for the export, reexport, or in-
country transfer of high performance computers are set forth in 
Sec. 742.12 of this part.
    (a) Safeguard conditions. Following interagency review of the 
application, the Bureau of Export Administration (BXA) will instruct the 
exporter to submit a safeguard plan signed by the ultimate consignee and 
certified by the export control authorities of the importing country 
(see Certification by export control authorities of importing country in 
this supplement). The safeguard plan must indicate that the ultimate 
consignee agrees to implement those safeguards required by the BXA as a 
condition of issuing the license. BXA will inform exporters concerning 
which of the following safeguards will be imposed as license conditions:
    (1) The applicant will assume responsibility for providing adequate 
security against

[[Page 222]]

physical diversion of the computer during shipment (e.g., delivery by 
either attended or monitored shipment, using the most secure route 
possible--this precludes using the services or facilities of any country 
in Computer Tier 4).
    (2) There will be no reexport or intra-country transfer of the 
computer without prior written authorization from BXA.
    (3) The computer systems will be used only for those activities 
approved on the license or reexport authorization.
    (4) There will be no changes either in the end-users or the end-uses 
indicated on the license without prior written authorization by BXA.
    (5) Only software that supports the approved end-uses will be 
shipped with the computer system.
    (6) The end-user will station security personnel at the computer 
using facility to ensure that the appropriate security measures are 
implemented.
    (7) The exporter will station representatives at the computer using 
facility, or make such individuals readily available, to guide the 
security personnel in the implementation and operation of the security 
measures.
    (8) The security personnel will undertake the following measures 
under the guidance of the exporter's representatives:
    (i) The physical security of the computer using facility;
    (ii) The establishment of a system to ensure the round-the-clock 
supervision of computer security;
    (iii) The inspection, if necessary, of any program or software to be 
run on the computer system in order to ensure that all usage conforms to 
the conditions of the license;
    (iv) The suspension, if necessary, of any run in progress and the 
inspection of any output generated by the computer to determine whether 
the program runs or output conform with the conditions of the license;
    (v) The inspection of usage logs daily to ensure conformity with the 
conditions of the license and the retention of records of these logs for 
at least a year;
    (vi) The determination of the acceptability of computer users to 
ensure conformity with the conditions of the license;
    (vii) The immediate reporting of any security breaches or suspected 
security breaches to the government of the importing country and to the 
exporter's representatives;
    (viii) The execution of the following key tasks:
    (A) Establishment of new accounts;
    (B) Assignment of passwords;
    (C) Random sampling of data;
    (D) Generation of daily logs;
    (ix) The maintenance of the integrity and security of tapes and data 
files containing archived user files, log data, or system backups.
    (9) The exporter's representatives will be present when certain key 
functions are being carried out (e.g., the establishment of new 
accounts, the assignment of passwords, the random sampling of data, the 
generating of daily logs, the setting of limits to computer resources 
available to users in the development mode, the certification of 
programs for conformity to the approved end-uses before they are allowed 
to run in the production mode, and the modification to previously 
certified production programs).
    (10) The security personnel and the exporter's representatives will 
provide monthly reports on the usage of the computer system and on the 
implementation of the safeguards.
    (11) The computer system will be housed in one secure building and 
protected against theft and unauthorized entry at all times.
    (12) Restricted nationals, i.e., nationals of Computer Tier 4 
countries, will not be allowed access to computers:
    (i) No physical or computational access to computers may be granted 
to restricted nationals without prior written authorization from BXA, 
except that commercial consignees as described in this supplement are 
prohibited only from giving such nationals user-accessible 
programmability without prior written authorization;
    (ii) No passwords or IDs may be issued to restricted nationals;
    (iii) No work may be performed on the computer on behalf of 
restricted nationals; and
    (iv) No conscious or direct ties may be established to networks 
(including their subscribers) operated by restricted nationals.
    (13) Physical access to the computer, the operator consoles, and 
sensitive storage areas of the computer using facility will be 
controlled by the security personnel, under the guidance and monitoring 
of the exporter's representatives, and will be limited to the fewest 
number of people needed to maintain and run the computer system.
    (14) The computer will be equipped with the necessary software to: 
Permit access to authorized persons only, detect attempts to gain 
unauthorized access, set and maintain limits on usage, establish 
accountability for usage, and generate logs and other records of usage. 
This software will also maintain the integrity of data and program 
files, the accounting and audit system, the password or computational 
access control system, and the operating system itself.
    (i) The operating system will be configured so that all jobs can be 
designated and tracked as either program development jobs or as 
production jobs.
    (ii) In the program development mode, users will be free, following 
verification that their application conforms to the agreed end-use, to 
create, edit, or modify programs, to use utilities such as editors, 
debuggers, or

[[Page 223]]

compilers and to verify program operation. Programs in the development 
mode will be subject to inspection as provided by paragraph (a)(8)(iii) 
of this supplement.
    (iii) In the production mode, users will have access to the full 
range of computer resources, but will be prohibited from modifying any 
program or using utilities that could modify any program. Before being 
allowed to run in the production mode, a program will have to be 
certified for conformity to approved end-uses by the security personnel 
and the exporter's representatives.
    (iv) Programs certified for execution in the production mode will be 
protected from unauthorized modification by appropriate software and 
physical security measures. Any modifications to previously certified 
production programs will be approved by the security personnel under the 
guidance and monitoring of the exporter's representatives.
    (v) The computer will be provided with accounting and audit software 
to ensure that detailed logs are maintained to record all computer 
usage. A separate log of security-related events will also be kept.
    (vi) For each job executed in the production mode, the operating 
system will record execution characteristics in order to permit 
generation of a statistical profile of the program executed.
    (15) The source code of the operating system will be accessible only 
to the exporter's representatives. Only those individuals will make 
changes in this source code.
    (16) The security personnel, under the guidance of the exporter's 
representatives, will change passwords for individuals frequently and at 
unpredictable intervals.
    (17) The security personnel, under the guidance of the exporter's 
representatives, will have the right to deny passwords to anyone. 
Passwords will be denied to anyone whose activity does not conform to 
the conditions of the license.
    (18) Misuse of passwords by users will result in denial of further 
access to the computer.
    (19) The exporter's representatives will install a strict password 
system and provide guidance on its implementation.
    (20) Only the exporter's representatives will be trained in making 
changes in the password system and only they will make such changes.
    (21) No computer will be networked to other computers outside the 
computer center without prior authorization from BXA.
    (22) Generally, remote terminals will not be allowed outside the 
computer using facility without prior authorization by BXA. If remote 
terminals are specifically authorized by the license:
    (i) The terminals will have physical security equivalent to the 
safeguards at the computer using facility;
    (ii) The terminals will be constrained to minimal amounts of 
computer resources (CPU time, memory access, number of input-output 
operations, and other resources);
    (iii) The terminals will not be allowed direct computational access 
to the computer (i.e., the security personnel, under the guidance of the 
exporter's representatives, will validate the password and identity of 
the user of any remote terminals before any such user is permitted to 
access the computer); all terminals will be connected to the computer 
system by a dedicated access line and a network access controller.
    (23) There will be no direct input to the computer from remote 
terminals. Any data originating from outside the computer using 
facility, except for direct input from terminals within the same 
compound as the computer using facility, will first be processed by a 
separate processor or network access controller in order to permit 
examination of the data prior to its entry into the computer.
    (24) The exporter will perform all maintenance of the computer 
system.
    (25) Spare parts kept on site will be limited to the minimum amount. 
Spares will be kept in an area accessible only to the exporter's 
representatives. These representatives will maintain a strict audit 
system to account for all spare parts.
    (26) No development or production technology on the computer system 
will be sent with the computer to the ultimate consignee.
    (27) The end-user must immediately report any suspicions or facts 
concerning possible violations of the safeguards to the exporter and to 
the export control authorities of the importing country.
    (28) The exporter must immediately report any information concerning 
possible violations of the safeguards to BXA. A violation of the 
safeguards might constitute grounds for suspension or termination of the 
license, preventing the shipment of unshipped spare parts, or the denial 
of additional licenses for spare parts, etc.
    (29) The end-user will be audited quarterly by an independent 
consultant who has been approved by the export control authorities of 
the importing and exporting countries, but is employed at the expense of 
the end-user. The consultant will audit the computer usage and the 
implementation of the safeguards.
    (30) The installation and operation of the computer will be 
coordinated and controlled by the following management structure:
    (i) Steering Committee. The Steering Committee will comprise 
nationals of the importing country who will oversee the management and 
operation of the computer.
    (ii) Security Staff. The Security Staff will be selected by the end-
user or the government of the importing country to ensure that the 
required safeguards are implemented. This staff will be responsible for

[[Page 224]]

conducting an annual audit to evaluate physical security, administrative 
procedures, and technical controls.
    (iii) Technical Consultative Committee. This committee will comprise 
technical experts from the importing country and the exporting company 
who will provide guidance in operating and maintaining the computer. At 
least one member of the committee will be an employee of the exporter. 
The committee will approve all accounts and maintain an accurate list of 
all users. In addition, the committee will advise the Steering Committee 
and the Security Staff concerning the security measures needed to ensure 
compliance with the safeguards required by the license.
    (31) An ultimate consignee who is a multiple-purpose end-user, such 
as a university, will establish a peer review group comprising experts 
who represent each department or application area authorized for use on 
the computer under the conditions of the license. This group shall have 
the following responsibilities:
    (i) Review all requests for computer usage and make recommendations 
concerning the acceptability of all projects and users;
    (ii) Submit these recommendations to the Security Staff and 
Technical Consultative Committee for review and approval (see paragraph 
(a)(28) of this supplement);
    (iii) Establish acceptable computer resource parameters for each 
project and review the results to verify their conformity with the 
authorized end-uses, restrictions, and parameters; and
    (iv) Prepare monthly reports that would include a description of any 
runs exceeding the established parameters and submit them to the 
security staff.
    (32) The end-user will also cooperate with any post-shipment 
inquiries or inspections by the U.S. Government or exporting company 
officials to verify the disposition and/or use of the computer, 
including access to the following:
    (i) Usage logs, which should include, at a minimum, computer users, 
dates, times of use, and amount of system time used;
    (ii) Computer access authorization logs, which should include, at a 
minimum, computer users, project names, and purpose of projects.
    (33) The end-user will also cooperate with the U.S. Government or 
exporting company officials concerning the physical inspection of the 
computer using facility, on short notice, at least once a year and will 
provide access to all data relevant to computer usage. This inspection 
will include:
    (i) Analyzing any programs or software run on the computer to ensure 
that all usage complies with the authorized end-uses on the license. 
This will be done by examining user files (e.g., source codes, machine 
codes, input/output data) that are either on-line at the time of the 
inspection or that have been previously sampled and securely stored.
    (ii) Checking current and archived usage logs for conformity with 
the authorized end-uses and the restrictions imposed by the license.
    (iii) Verifying the acceptability of all computer users in 
conformity with the authorized end-uses and the restrictions imposed by 
the license.
    (34) Usage requests that exceed the quantity of monthly CPU time 
specified on the license shall not be approved without prior written 
authorization from the BXA. Requests for computational access approval 
shall include a description of the intended purpose for which access is 
sought.
    (35) In addition to, or in lieu of, the normal access by on-site 
exporting company staff or its representatives, the company, when 
required by the exporting government, will provide a separate remote 
electronic access capability to the computer for the purposes of 
maintenance, troubleshooting, inspection of work in progress, and 
auditing of all work performed on the computer. On-site and central 
exporting company hardware and software maintenance facilities, at the 
direction of the exporting company staff or its representatives, to 
gather information such as:
    (i) Statistical profiles of production jobs;
    (ii) Logs of jobs run in both production and development mode;
    (iii) Logs and reports of security related events.
    If such method is used, the remote maintenance facilities will be 
considered part of the operating system and protected accordingly, and 
will be available only to exporting company operational staff or its 
representatives. The maintenance hardware and software and associated 
communication links will be protected to ensure the integrity and 
authenticity of data and programs and to prevent tampering with 
hardware.
    (36) The export company staff or its representatives will be 
required to provide personnel for a specified period of time at the 
computer facility for management, operation, and safeguarding of the 
computer.
    (b) Certification by export control authorities of importing 
country. (1) The following importing government certification may be 
required under Sec. 742.12 of this part:

    This is to certify that (name of ultimate consignee) has declared to 
(name of appropriate foreign government agency) that the computer (model 
name) will be used only for the purposes specified in the end-use 
statement and that the ultimate consignee will establish and adhere to 
all the safeguard conditions and perform all other undertakings 
described in the end-use statement.
    The (name of appropriate foreign government agency) will advise the 
United States Government of any evidence that might reasonably indicate 
the existence of circumstances

[[Page 225]]

(e.g., transfer of ownership) that could affect the objectives of the 
security safeguard conditions.

    (2) Other importing government assurances regarding prohibited 
activities may also be required on a case-by-case basis.
    (c) Commercial consignees. Exports or reexports of computers that 
are solely dedicated to the following non-scientific and non-technical 
commercial business uses will usually be eligible for a reduced set of 
security safeguard conditions:
    (1) Financial services (e.g., banking, securities and commodity 
exchanges);
    (2) Insurance;
    (3) Reservation systems;
    (4) Point-of-sales systems;
    (5) Mailing list maintenance for marketing purposes;
    (6) Inventory control for retail/wholesale distribution.

  Supplement No. 4 to Part 742--Key Escrow or Key Recoverable Products 
                                Criteria

                         Key Recoverable Feature

    (1) The key(s) or other material/information required to decrypt 
ciphertext shall be accessible through a key recoverable feature.
    (2) The product's cryptographic functions shall be inoperable until 
the key(s) or other material/information required to decrypt ciphertext 
is recoverable by government officials under proper legal authority and 
without the cooperation or knowledge of the user.
    (3) The output of the product shall automatically include, in an 
accessible format and with a frequency of at least once every three 
hours, the identity of the key recovery agent(s) and information 
sufficient for the key recovery agent(s) to identify the key(s) or other 
material/information required to decrypt the ciphertext.
    (4) The product's key recoverable functions shall allow access to 
the key(s) or other material/information needed to decrypt the 
ciphertext regardless of whether the product generated or received the 
ciphertext.
    (5) The product's key recoverable functions shall allow for the 
recovery of all required decryption key(s) or other material/information 
required to decrypt ciphertext during a period of authorized access 
without requiring repeated presentations of access authorization to the 
key recovery agent(s).

                        Interoperability Feature

    (6) The product's cryptographic functions may:
    (i) Interoperate with other key recoverable products that meet these 
criteria, and shall not interoperate with products whose key recovery 
feature has been altered, bypassed, disabled, or otherwise rendered 
inoperative;
    (ii) Send information to non-key recoverable products only when 
assured access is permitted to the key(s) or other material/information 
needed to decrypt ciphertext generated by the key recoverable product. 
Otherwise, key length is restricted to less than or equal to 56-bit DES 
or equivalent.
    (iii) Receive information from non-key recoverable products with a 
key length restricted to less than or equal to 56-bit DES or equivalent.

            Design, Implementation and Operational Assurance

    (7) The product shall be resistant to efforts to disable or 
circumvent the attributes described in criteria one through six.
    (8) The product's cryptographic function's key(s) or other material/
information required to decrypt ciphertext shall be accessible to 
government officials under proper legal authority.

[63 FR 50523, Sept. 22, 1998, as amended at 63 FR 72164, Dec. 31, 1998]

                 Supplement No. 5 to Part 742 [Reserved]

Supplement No. 6 to Part 742--Guidelines for Submitting a Classification 
       Request for Mass Market Encryption Commodities and Software

    Classification requests for release of certain mass market 
encryption commodities and software from EI controls must be submitted 
on Form BXA-748P, in accordance with Sec. 748.3 of the EAR. To expedite 
review of the request, clearly mark the envelope ``Attn.: Mass Market 
Encryption (Commodity) or (Software) Classification Request''. In Block 
9: Special Purpose of the Form BXA-748P, you must insert the phrase 
``Mass Market Encryption (Commodity) or (Software). Failure to insert 
this phrase will delay processing. In addition, the Bureau of Export 
Administration recommends that such requests be delivered via courier 
service to: Bureau of Export Administration, Office of Exporter 
Services, Room 2705, 14th Street and Pennsylvania Ave., N.W., 
Washington, D.C. 20230. In addition, send a copy of the request and all 
supporting documents by Express Mail to: Attn: Mass Market Encryption 
Request Coordinator, P.O. Box 246, Annapolis Junction, MD 20701-0246.
    (a) Requests for mass market encryption commodities and software 
that meet the criteria in paragraph (a)(2) of this Supplement will be 
processed in seven (7) working days from receipt of a properly completed 
request. Those requests for mass market encryption commodities and 
software that meet the criteria of paragraph (a)(1) of this Supplement 
only will be processed in fifteen (15) working

[[Page 226]]

days from receipt of a properly completed request. When additional 
information is requested, the request will be processed within 15 
working days of the receipt of the requested information.
    (1) A mass market product that meets the criteria established in 
this paragraph will be processed in fifteen (15) working days from 
receipt of the properly completed request:
    (i) The commodity or software must be mass market. Mass market 
commodities and software that are available to the public via sales from 
stock at retail selling points by means of over-the-counter 
transactions, mail order transactions, or telephone call transactions;
    (ii) The commodity or software must be designed for installation by 
the user without further substantial support by the supplier. 
Substantial support does not include telephone (voice only) help line 
services for installation or basic operation, or basic operation 
training provided by the supplier; and
    (iii) The commodity or software includes encryption for data 
confidentiality.
    (2) A mass market commodity or software product that meets all the 
criteria established in this paragraph will be processed in seven (7) 
working days from receipt of the properly completed request:
    (i) The commodity or software meets all the criteria established in 
paragraph (a)(1) (i) through (iii) of this Supplement;
    (ii) The confidentiality algorithm must be RC2, RC4, RC5, DES or 
CAST with a key space no longer than 56-bits. The RC2, RC4 and RC5 
algorithms are proprietary to RSA Data Security, Inc. To ensure that the 
subject commodity or software is properly licensed and correctly 
implemented, contact RSA Data Security, (415) 595-8782. The CAST 
algorithm is proprietary to Entrust Technologies, Inc. To ensure that 
the subject software is properly licensed and correctly implemented, 
contact Entrust Technologies, Inc., (972) 994-8000;
    (iii) If any combination of RC2, RC4, RC5, DES or CAST are used in 
the same commodity or software, their functionality must be separate. 
That is, no data can be operated sequentially on by both routines or 
multiply by either routine;
    (iv) The commodity or software must not allow the alteration of the 
confidentiality mechanism and its associated key spaces by the user or 
any other program;
    (v) The key exchange used in confidentiality must be:
    (A) A public key algorithm with a key space less than or equal to a 
512-bit, 768-bit or up to and including 1024 bit modulus and/or;
    (B) A symmetric algorithm with a key space less than or equal to 
112-bits; and
    (vi) The commodity or software must not allow the alteration of the 
key management mechanism and its associated key space by the user or any 
other program.
    (b)(1) To submit a classification request for a product that is 
eligible for the seven-day handling, you must provide the following 
information in a cover letter to the classification request. Send the 
original to the Bureau of Export Administration. Send a copy of the 
application and all supporting documentation by Express Mail to:

Attn.: Mass Market Encryption Request Coordinator, P.O. Box 246, 
Annapolis Junction, MD 20701-0246

    (2) Instructions for the preparation and submission of a 
classification request that is eligible for seven day handling are as 
follows:
    (3) If the commodity or software product meets the criteria in 
paragraph (a)(2) of this Supplement, you must call the Department of 
Commerce on (202) 482-0092 to obtain a test vector, or submit to BXA a 
copy of the encryption subsystem source code. The test vector or source 
code must be used in the classification process to confirm that the 
software has properly implemented the approved encryption algorithms.
    (4) Upon receipt of the test vector, the applicant must encrypt the 
test plain text input provided using the product's encryption routine 
(RC2, RC4, RC5, DES or CAST) with the given key value. The applicant 
should not pre-process the test vector by any compression or any other 
routine that changes its format. Place the resultant test cipher text 
output in hexadecimal format on an attachment to form BXA-748P.
    (5) You must provide the following information in a cover letter to 
the classification request:
    (i) Clearly state at the top of the page ``Mass Market Encryption 
(Commodity) (Software)--7 Day Expedited Review Requested'';
    (ii) State that you have reviewed and determined that the commodity 
or software subject to the classification request meets the criteria of 
paragraph (a)(2) of this Supplement;
    (iii) State the name of the single commodity or software product 
being submitted for review. A separate classification request is 
required for each product;
    (iv) State how the commodity or software has been written to 
preclude user modification of the encryption algorithm, key management 
mechanism, and key space;
    (v) Provide the following information for the commodity or software 
product:
    (A) Whether the commodity or software uses the RC2, RC4, RC5, DES or 
CAST algorithm and how the algorithm(s) is used. If any combination of 
these algorithms are used in the same product, and also state how

[[Page 227]]

the functionality of each is separated to assure that no data is 
operated by more than one algorithm;
    (B) Pre-processing information of plaintext data before encryption 
(e.g. the addition of clear text header information or compression of 
the data);
    (C) Post-processing information of cipher text data after encryption 
(e.g. the addition of clear text header information or packetization of 
the encrypted data);
    (D) Whether a public key algorithm or a symmetric key algorithm is 
used to encrypt keys and the applicable key space;
    (E) For classification requests regarding source code:
    (1) Reference the applicable executable product that has already 
received a technical review;
    (2) Include whether the source code has been modified by deleting 
the encryption algorithm, its associated key management routine(s), and 
all calls to the algorithm from the source code, or by providing the 
encryption algorithm and associated key management routine(s) in object 
code with all calls to the algorithm hidden. You must provide the 
technical details on how you have modified the source code;
    (3) Include a copy of the sections of the source code that contain 
the encryption algorithm, key management routines, and their related 
calls; and
    (F) Provide any additional information which you believe would 
assist in the review process.
    (c) Instructions for the preparation and submission of a 
classification request that is eligible for 15-day handling are as 
follows:
    (1) If the commodity or software product meets only the criteria in 
paragraph (a)(1) of this Supplement, you must prepare a classification 
request. Send the original to the Bureau of Export Administration. Send 
a copy of the application and all supporting documentation by Express 
Mail to:

Attn.: Mass Market Encryption Request Coordinator, P.O. Box 246, 
Annapolis Junction, MD 20701-0246

    (2) You must provide the following information in a cover letter to 
the classification request:
    (i) Clearly state at the top of the page ``Mass Market Encryption 
(Commodity)(Software)--15 Day Expedited Review Requested'';
    (ii) State that you have reviewed and determined that the commodity 
or software subject of the classification request, meets the criteria of 
paragraph (a)(1) of this Supplement;
    (iii) State the name of the single commodity or software product 
being submitted for review. A separate classification request is 
required for each product;
    (iv) State that a duplicate copy, in accordance with paragraph 
(c)(1) of this Supplement, has been sent to the 15-day Encryption 
Request Coordinator; and
    (v) Ensure that the information provided includes brochures or other 
documentation or specifications relating to the commodity or software, 
as well as any additional information which you believe would assist in 
the review process.
    (3) Contact the Bureau of Export Administration on (202) 482-0707 
prior to submission of the classification to facilitate the submission 
of proper documentation.

[63 FR 72164, Dec. 31, 1998]

                Supplement No. 7 to Part 742  [Reserved]



PART 743--SPECIAL REPORTING--Table of Contents




Sec.
743.1  Wassenaar Arrangement.
743.2   [Reserved]

Supplement No. 1 to Part 743-- Wassenaar Arrangement Member Countries

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O. 
12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Notice of August 15, 
1995, 3 CFR, 1995 Comp., p. 501; Notice of August 14, 1996, 3 CFR, 1996 
Comp., p. 289; Notice of August 13, 1997 (62 FR 43629, August 15, 1997); 
and Notice of August 13, 1998 (63 FR 44121).

    Source:  63 FR 2458, Jan. 15, 1998, unless otherwise noted.



Sec. 743.1  Wassenaar Arrangement.

    (a) Scope. This section outlines special reporting requirements for 
exports of certain commodities, software and technology controlled under 
the Wassenaar Arrangement. Such reports must be submitted to BXA 
semiannually in accordance with the provisions of paragraph (f) of this 
section, and records of all exports subject to the reporting 
requirements of this section must be kept in accordance with part 762 of 
the EAR. This section does not require reports for reexports.
    (b) Requirements. You must submit two (2) copies of each report 
required under the provisions of this section and maintain accurate 
supporting records (see Sec. 762.2(b) of the EAR) for all exports of 
items specified in paragraph (c) of this section under any of the 
following License Exceptions authorized by part 740 of the EAR: License 
Exceptions GBS, CIV, TSR, LVS, CTP, ENC.

[[Page 228]]

Exports of technology and source code under License Exception TSR to 
foreign nationals in the U.S. should not be reported. For purposes of 
this part 743, ``you'' has the same meaning as ``U.S. exporter'', as 
defined in part 772 of the EAR.
    (c) Items for which reports are required. (1) You must submit 
reports to BXA under the provisions of this section only for exports of 
items controlled under the following ECCNs:
    (i) Category 1: 1A002, 1C007.c and .d, 1C010.c and .d, 1D002, 1E001, 
1E002.e, and 1E002.f.;
    (ii) Category 2: 2B001.a or .b (certain items only; see Note to this 
paragraph) 2B001.f, 2B003, 2D001, 2E001, and 2E002;

    Note to paragraph (c)(1)(ii):
    The following are not controlled for NP reasons: turning machines 
controlled by 2B001.a with a capacity equal to or less than 35 mm 
diameter; bar machines (Swissturn), limited to machining only bar feed 
through, if maximum bar diameter is equal to or less than 42 mm and 
there is no capability of mounting chucks (machines may have drilling 
and/or milling capabilities for machining parts with diameters less than 
42 mm); or milling machines controlled by 2B001.b with x-axis travel 
greater than two meters and overall ``positioning accuracy'' on the x-
axis more (worse) than 0.030 mm. Therefore, exports of such items under 
License Exception GOV are subject to reporting requirements.

    (iii) Category 3: 3A002.g.2, 3B001.a.2, 3D001, and 3E001;
    (iv) Category 4: 4A001.a.2 and .b, 4A003.b and .c (see paragraph 
(c)(2) of this section), 4D001, 4D003.c, and 4E001;
    (v) Category 5: 5A001.b.8, 5B001 (items specially designed for 
5A001.b.8), 5D001.a and .b, 5E001.a;
    (vi) Category 6: 6A001.a.1.b, .a.2.c, .a.2.d, and .a.2.e; 6A002.b, 
6A004.c and d, 6A006.g and h, 6A008.d, .h, and .k; 6D001, 6D003.a, 
6E001, and 6E002;
    (vii) Category 8: 8A001.c; 8A002.b, .h, .j, .o.3.a, and .p; 8D001, 
8D002, 8E001, and 8E002.a; and
    (viii) Category 9: 9B001.b, 9D001, 9D002, 9D004.a and .c, 9E001, 
9E002, 9E003.a.1, 9E003.a.2, .a.3, .a.4, .a.5, .a.8, and .a.9.
    (2) Reports for ``digital computers'' and ``electronic assemblies'' 
controlled under ECCN 4A003.b and .c are required only for computers 
with a composite theoretical performance (CTP) exceeding 4,000 MTOPS or 
computer enhancements thereof such that the CTP exceeds 4,000 MTOPS. 
Records for software controlled by 4D001 are required for software 
specially designed for the development or production of computers having 
a CTP exceeding 4,000 MTOPS. For the calculation of CTP, see the 
Technical Note for Category 4 in the Commerce Control List (Supplement 
No. 2 to part 774 of the EAR).

    Note to paragraph (c)(2):
    Exports of computers controlled under 4A003.b to destinations in 
Computer Tier 3 (see Sec. 740.7(d)(1) of the EAR) should not be included 
in the reports required under paragraph (c) of this section. Reporting 
for computers under 4A003.b to Computer Tier 3 destinations should be 
reported under the post-shipment verification reporting provisions of 
Sec. 740.7(d)(4)(v) or under Sec. 742.12(b)(3)(iv) of the EAR.

    (d) Country Exceptions. You must report each export subject to the 
provisions of this section, except for exports to Wassenaar member 
countries, as identified in Supplement No. 1 to part 743.
    (e) Information that must be included in each report. (1) Each 
report submitted to BXA for items other than those identified in 
paragraph (e)(2) of this section must include the following information 
for each export during the time periods specified in paragraph (f) of 
this section:
    (i) Export Control Classification Number and paragraph reference as 
identified on the Commerce Control List;
    (ii) Number of units in the shipment; and

    Note to paragraph (e)(1)(ii):
    For exports of technology for which reports are required under 
Sec. 743.1(c) of this section, the number of units in the shipment 
should be reported as one (1) for the initial export of the technology 
to a single ultimate consignee. Additional exports of the technology 
must be reported only when the type or scope of technology changes or 
exports are made to other ultimate consignees. Additionally, do not 
report the release of technology or source code subject to the EAR to 
foreign nationals in the U.S.
    (iii) Country of ultimate destination.
    (2) Reports for ``digital computers'' and ``electronic assemblies'' 
controlled under ECCN 4A003.b and .c must include the following 
information:
    (i) Date of shipment;

[[Page 229]]

    (ii) Name and address of the end-user and each intermediate 
consignee;
    (iii) CTP of each computer or aggregation of computing elements in 
shipment;
    (iv) Quantity shipped; and
    (v) End-use.
    (f) Frequency and timing of reports. You must submit reports subject 
to the provisions of this section semiannually. The reports must be 
labeled with the exporting company's name and address at the top of each 
page and must include for each such export all the information specified 
in paragraph (e) of this section. The reports shall cover exports made 
during six month time periods spanning from January 1 through June 30 
and July 1 through December 31.
    (1) The first report must be submitted to and received by BXA no 
later than August 1, 1998 for the partial reporting period beginning 
January 15, 1998 and ending June 30, 1998. Thereafter, reports are due 
according to the provisions of paragraphs (f)(2) and (f)(3) of this 
section.
    (2) Reports for the reporting period ending June 30 must be 
submitted to and received by BXA no later than August 1.
    (3) Reports for the reporting period ending December 31 must be 
submitted to and received by BXA no later than February 1.
    (g) Mailing address and facsimile number: (1) Two (2) copies of 
reports required under this section shall be delivered to one of the 
following addresses. BXA will not accept reports sent C.O.D.
    (i) For deliveries by U.S. postal service:

Bureau of Export Administration, U.S. Department of Commerce, P.O. Box 
273, Attn: ``Wassenaar Reports'', Washington, D.C. 20044

    (ii) For courier deliveries:

Bureau of Export Administration, U.S. Department of Commerce, Attn: 
``Wassenaar Reports'', Room 2705, 14th Street and Pennsylvania Ave., 
N.W., Washington, D.C. 20230

    (2) Reports may also be sent by facsimile to: (202) 482-3345, Attn: 
``Wassenaar Reports''.
    (h) Contacts. General information concerning the Wassenaar 
Arrangement and reporting obligations thereof is available from the 
Office of Strategic Trade and Foreign Policy Controls, Tel. (202) 482-
0092, Fax: (202) 482-4094.

[63 FR 2458, Jan. 15, 1998, as amended at 63 FR 55020, Oct. 14, 1998; 63 
FR 72165, Dec. 31, 1998]



Sec. 743.2  [Reserved]

  Supplement No. 1 to Part 743--Wassenaar Arrangement Member Countries

Argentina
Australia
Austria
Belgium
Bulgaria
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Ireland
Italy
Japan
Luxembourg
Netherlands
New Zealand
Norway
Poland
Portugal
Romania
Russia
Slovakia
South Korea
Spain
Sweden
Switzerland
Turkey
Ukraine
United Kingdom
United States

[63 FR 55020, Oct. 14, 1998]



PART 744--CONTROL POLICY: END-USER AND END-USE BASED--Table of Contents




Sec.
744.1  General provisions.
744.2  Restrictions on certain nuclear end-uses.
744.3  Restrictions on certain missile end-uses.
744.4  Restrictions on certain chemical and biological weapons end-uses.
744.5  Restrictions on certain maritime nuclear propulsion end-uses.
744.6  Restrictions on certain activities of U.S. persons.

[[Page 230]]

744.7  Restrictions on certain exports to and for the use of certain 
          foreign vessels or aircraft.
744.8  Restrictions on certain exports to all countries for Libyan 
          aircraft.
744.9  Restrictions on technical assistance by U.S. persons with respect 
          to encryption items.
744.10  Restrictions on certain entities in Russia.
744.11  Restrictions on certain government, parastatal, and private 
          entities in Pakistan and India.
744.12  Restrictions on certain military entities in Pakistan and India.

Supplement No. 1 to Part 744  [Reserved]
Supplement No. 2 to Part 744  [Reserved]
Supplement No. 3 to Part 744 --Countries Not Subject to Certain Nuclear 
          End-Use Restrictions in Sec. 744.2(a)
Supplement No. 4 to Part 744 --Entity List

    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; 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. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 12938, 3 CFR, 
1994 Comp., p. 950; E.O. 13026, 3 CFR, 1996 Comp., p. 228; Notice of 
August 13, 1997 (62 FR 43629, August 15, 1997).

    Source: 61 FR 12802, Mar. 25, 1996, unless otherwise noted.



Sec. 744.1  General provisions.

    (a) Introduction. In this part, references to the EAR are references 
to 15 CFR chapter VII, subchapter C. This part contains prohibitions 
against exports, reexports, and selected transfers to certain end-users 
and end-uses as introduced under General Prohibition Four (Denial 
Orders) and prohibitions against exports or reexports to certain end-
uses as introduced, under General Prohibition Five (End-use/End-users). 
Sections 744.2, 744.3, 744.4, and 744.5 prohibit exports and reexports 
of items subject to the EAR to defined nuclear, missile, chemical and 
biological weapons, and nuclear maritime end-uses. Section 744.6 
prohibits certain activities by U.S. persons in support of certain 
nuclear, missile, chemical, or biological end-uses regardless of whether 
that support involves the export or reexport of items subject to the 
EAR. Sections 744.7 and 744.8 prohibit exports and reexports of certain 
items for certain aircraft and vessels. In addition, these sections 
include license review standards for export license applications 
submitted as required by these sections. It should also be noted that 
part 764 of the EAR prohibits exports, reexports and certain in-country 
transfers of items subject to the EAR to denied parties.
    (b) Steps. The following are steps you should follow in using the 
provisions of this part:
    (1) Review end-use and end-user prohibitions. First, review each 
end-use and end-user prohibition described in this part to learn the 
scope of these prohibitions.
    (2) Determine applicability. Second, determine whether any of the 
end-use and end-user prohibitions described in this part are applicable 
to your planned export, reexport, or other activity. See Supplement No. 
1 to part 732 for guidance.
    (c) A list of entities is included in Supplement No. 4 to this part 
744 of the EAR (Entity List). Exporters are hereby informed that these 
entities are ineligible to receive any items subject to the EAR without 
a license to the extent specified in the supplement. No License 
Exceptions are available for exports or reexports to listed entities of 
specified items, except License Exceptions for items destined to listed 
Indian or Pakistani entities intended to ensure the safety of civil 
aviation and safe operation of commercial passenger aircraft (see 
Sec. 744.11(b) and Sec. 744.12(b) of this part).

[61 FR 12802, Mar. 25, 1996, as amended at 62 FR 51370, Oct. 1, 1997; 63 
FR 64324, Nov. 19, 1998]



Sec. 744.2  Restrictions on certain nuclear end-uses.

    (a) General prohibition. In addition to the license requirements for 
items specified on the CCL, you may not export or reexport to any 
destination, other than countries in the Supplement No. 3 to this part, 
any item subject to the EAR without a license if at the time of the 
export or reexport you know 1 the item will be used directly 
or

[[Page 231]]

indirectly in any one or more of the following activities described in 
paragraphs (a)(1), (a)(2), and (a)(3) of this section:
---------------------------------------------------------------------------

    \1\  Part 772 of the EAR defines ``knowledge'' for all of the EAR 
except part 760, Restrictive Trade Practices and Boycotts. The 
definition, which includes variants such as ``know'' and ``reason to 
know'', encompasses more than positive knowledge. Thus, the use of 
``know'' in this section in place of the former wording ``know or have 
reason to know'' does not lessen or otherwise change the 
responsibilities of persons subject to the EAR.
---------------------------------------------------------------------------

    (1) Nuclear explosive activities. Nuclear explosive activities, 
including research on or development, design, manufacture, construction, 
testing or maintenance of any nuclear explosive device, or components or 
subsystems of such a device.\2\ \3\
---------------------------------------------------------------------------

    \2\ Nuclear explosive devices and any article, material, equipment, 
or device specifically designed or specially modified for use in the 
design, development, or fabrication of nuclear weapons or nuclear 
explosive devices are subject to export licensing or other requirements 
of the Office of Defense Trade Controls, U.S. Department of State, or 
the licensing or other restrictions specified in the Atomic Energy Act 
of 1954, as amended. Similarly, items specifically designed or 
specifically modified for use in devising, carrying out, or evaluating 
nuclear weapons tests or nuclear explosions (except such items as are in 
normal commercial use for other purposes) are subject to the same 
requirements.
    \3\ Also see Secs. 744.5 and 748.4 of the EAR for special provisions 
relating to technical data for maritime nuclear propulsion plants and 
other commodities.
---------------------------------------------------------------------------

    (2) Unsafeguarded nuclear activities. Activities including research 
on, or development, design, manufacture, construction, operation, or 
maintenance of any nuclear reactor, critical facility, facility for the 
fabrication of nuclear fuel, facility for the conversion of nuclear 
material from one chemical form to another, or separate storage 
installation, where there is no obligation to accept International 
Atomic Energy Agency (IAEA) safeguards at the relevant facility or 
installation when it contains any source or special fissionable material 
(regardless of whether or not it contains such material at the time of 
export), or where any such obligation is not met.
    (3) Safeguarded and unsafeguarded nuclear activities. Safeguarded 
and unsafeguarded nuclear fuel cycle activities, including research on 
or development, design, manufacture, construction, operation or 
maintenance of any of the following facilities, or components for such 
facilities: \4\
---------------------------------------------------------------------------

    \4\  Such activities may also require a specific authorization from 
the Secretary of Energy pursuant to Sec. 57.b.(2) of the Atomic Energy 
Act of 1954, as amended, as implemented by the Department of Energy's 
regulations published in 10 CFR 810.
---------------------------------------------------------------------------

    (i) Facilities for the chemical processing of irradiated special 
nuclear or source material;
    (ii) Facilities for the production of heavy water;
    (iii) Facilities for the separation of isotopes of source and 
special nuclear material; or
    (iv) Facilities for the fabrication of nuclear reactor fuel 
containing plutonium.
    (b) Additional prohibition on exporters or reexporters informed by 
BXA. BXA may inform an exporter or reexporter, either individually by 
specific notice or through amendment to the EAR, that a license is 
required for export or reexport of specified items to specified end-
users, because BXA has determined that there is an unacceptable risk of 
use in, or diversion to, any of the activities described in paragraph 
(a) of this section. Specific notice is to be given only by, or at the 
direction of, the Deputy Assistant Secretary for Export Administration. 
When such notice is provided orally, it will be followed by a written 
notice within two working days signed by the Deputy Assistant Secretary 
for Export Administration. The absence of any such notification does not 
excuse the exporter or reexporter from compliance with the license 
requirements of paragraph (a) of this section.
    (c) Exceptions. Despite the prohibitions described in paragraphs (a) 
and (b) of this section, you may export technology subject to the EAR 
under the operation technology and software or sales technology and 
software provisions of License Exception TSU (see Sec. 740.13 (a) and 
(b)), but only to and for use in countries listed in Country Group A:1 
(see Supplement No. 1 to part 740 of the EAR), Iceland and New Zealand. 
Notwithstanding the provisions of part 740 of the EAR, the provisions of 
Sec. 740.13 (a) and (b) will only overcome general prohibition five for

[[Page 232]]

countries listed in Country Group A:1, Iceland and New Zealand.
    (d) License review standards. The following factors are among those 
used by the United States to determine whether to grant or deny license 
applications required under this section:
    (1) Whether the commodities, software, or technology to be 
transferred are appropriate for the stated end-use and whether that 
stated end-use is appropriate for the end-user;
    (2) The significance for nuclear purposes of the particular 
commodity, software, or technology;
    (3) Whether the commodities, software, or technology to be exported 
are to be used in research on or for the development, design, 
manufacture, construction, operation, or maintenance of any reprocessing 
or enrichment facility;
    (4) The types of assurances or guarantees given against use for 
nuclear explosive purposes or proliferation in the particular case;
    (5) Whether the end-user has been engaged in clandestine or illegal 
procurement activities;
    (6) Whether an application for a license to export to the end-user 
has previously been denied, or whether the end-use has previously 
diverted items received under a license, License Exception, or NLR to 
unauthorized activities;
    (7) Whether the export would present an unacceptable risk of 
diversion to a nuclear explosive activity or unsafeguarded nuclear fuel-
cycle activity described in Sec. 744.2 of this part; and
    (8) The nonproliferation credentials of the importing country, based 
on consideration of the following factors:
    (i) Whether the importing country is a party to the Nuclear Non-
Proliferation Treaty (NPT) or to the Treaty for the Prohibition of 
Nuclear Weapons in Latin America (Treaty of Tlatelolco) (see Supplement 
No. 2 to part 742 of the EAR), or to a similar international legally-
binding nuclear nonproliferation agreement;
    (ii) Whether the importing country has all of its nuclear 
activities, facilities or installations that are operational, being 
designed, or under construction, under International Atomic Energy 
Agency (IAEA) safeguards or equivalent full scope safeguards;
    (iii) Whether there is an agreement for cooperation in the civil 
uses of atomic energy between the U.S. and the importing country;
    (iv) Whether the actions, statements, and policies of the government 
of the importing country are in support of nuclear nonproliferation and 
whether that government is in compliance with its international 
obligations in the field of nonproliferation;
    (v) The degree to which the government of the importing country 
cooperates in nonproliferation policy generally (e.g., willingness to 
consult on international nonproliferation issues);
    (vi) Intelligence data on the importing country's nuclear intentions 
and activities.

[61 FR 12802, Mar. 25, 1996, as amended at 61 FR 64284, Dec. 4, 1996; 62 
FR 25459, May 9, 1997]



Sec. 744.3  Restrictions on certain missile end-uses.

    (a) General prohibition. In addition to the license requirements for 
items specified on the CCL, you may not export or reexport an item 
subject to the EAR without a license if at the time of the export or 
reexport you know the item:
    (1) Is destined to or for a project listed in the footnote to 
Country Group D:4 (see Supplement No. 1 to part 740 of the EAR); or
    (2) Will be used in the design, development, production or use of 
missiles in or by a country listed in Country Group D:4, whether or not 
that use involves a listed project.
    (b) Additional prohibition on exporters informed by BXA. BXA may 
inform the exporter or reexporter, either individually by specific 
notice or through amendment to the EAR, that a license is required for a 
specific export or reexport, or for exports or reexports of specified 
items to a certain end-user, because there is an unacceptable risk of 
use in or diversion to activities described in paragraph (a) of this 
section, anywhere in the world. Specific notice is to be given only by, 
or at the direction of, the Deputy Assistant Secretary for Export 
Administration. When such

[[Page 233]]

notice is provided orally, it will be followed by a written notice 
within two working days signed by the Deputy Assistant Secretary for 
Export Administration. However, the absence of any such notification 
does not excuse the exporter from compliance with the license 
requirements of paragraph (a) of this section. An illustrative list of 
projects is included in a footnote to Country Group D:4. Exporters and 
reexporters are deemed to have been informed that an individual license 
is required to export or reexport to these projects. Exporters should be 
aware that the list of projects in Country Group D:4 is not 
comprehensive; extra caution should be exercised when making any 
shipments to a country listed in Country Group D:4.
    (c) Exceptions. No License Exceptions apply to the prohibitions 
described in paragraph (a) and (b) of this section.
    (d) License review standards for certain missile end-uses. (1) 
Applications to export the items subject to this section will be 
considered on a case-by-case basis to determine whether the export would 
make a material contribution to the proliferation of missiles. When an 
export is deemed to make a material contribution, the license will be 
denied.
    (2) The following factors are among those that will be considered to 
determine what action should be taken on an application required by this 
section:
    (i) The specific nature of the end-use;
    (ii) The significance of the export in terms of its contribution to 
the design, development, production, or use of missiles;
    (iii) The capabilities and objectives of the missile and space 
programs of the recipient country;
    (iv) The non-proliferation credentials of the importing country;
    (v) The types of assurances or guarantees against design, 
development, production or use for missiles delivery purposes that are 
given in a particular case; and
    (vi) The existence of a pre-existing contract.

[61 FR 12802, Mar. 25, 1996, as amended at 62 FR 25459, May 9, 1997]



Sec. 744.4  Restrictions on certain chemical and biological weapons end-uses.

    (a) General prohibition. In addition to the license requirements for 
items specified on the CCL, you may not export or reexport an item 
subject to the EAR without a license if at the time of the export or 
reexport you know the item will be used in the design, development, 
production, stockpiling, or use of chemical or biological weapons in or 
by a country listed in Country Group D:3 (see Supplement No. 1 to part 
740 of the EAR).
    (b) Additional prohibition on exporters informed by BXA. BXA may 
inform the exporter or reexporter, either individually by specific 
notice or through amendment to the EAR, that a license is required for a 
specific export or reexport, or for export or reexport of specified 
items to a certain end-user, because there is an unacceptable risk of 
use in or diversion to such activities, anywhere in the world. Specific 
notice is to be given only by, or at the direction of, the Deputy 
Assistant Secretary for Export Administration. When such notice is 
provided orally, it will be followed by a written notice within two 
working days signed by the Deputy Assistant Secretary for Export 
Administration. However, the absence of any such notification does not 
excuse the exporter from compliance with the license requirements of 
paragraph (a) of this section.
    (c) Exceptions. No License Exceptions apply to the prohibitions 
described in paragraphs (a) and (b) of this section.
    (d) License review standards. (1) Applications to export or reexport 
items subject to this section will be considered on a case-by-case basis 
to determine whether the export or reexport would make a material 
contribution to the design, development, production, stockpiling, or use 
of chemical or biological weapons. When an export is deemed to make such 
a contribution, the license will be denied.
    (2) The following factors are among those that will be considered to 
determine what action should be taken on an application required under 
this section:
    (i) The specific nature of the end-use;

[[Page 234]]

    (ii) The significance of the export in terms of its contribution to 
the design, development, production, stockpiling, or use of chemical or 
biological weapons;
    (iii) The non-proliferation credentials of the importing country;
    (iv) The types of assurances or guarantees against design, 
development, production, stockpiling, or use of chemical or biological 
weapons that are given in a particular case; and
    (v) The existence of a pre-existing contract.5
---------------------------------------------------------------------------

    \5\ See Supplement No. 1 to part 742 of the EAR for relevant 
contract sanctity dates.

[61 FR 12802, Mar. 25, 1996, as amended at 62 FR 25459, May 9, 1997]



Sec. 744.5  Restrictions on certain maritime nuclear propulsion end-uses.

    (a) General prohibition. In addition to the license requirements for 
items specified on the CCL, you may not export or reexport certain 
technology subject to the EAR without a license if at the time of the 
export or reexport you know the item is for use in connection with a 
foreign maritime nuclear propulsion project. This prohibition applies to 
any technology relating to maritime nuclear propulsion plants, their 
land prototypes, and special facilities for their construction, support, 
or maintenance, including any machinery, devices, components, or 
equipment specifically developed or designed for use in such plants or 
facilities.
    (b) Exceptions. The exceptions provided in part 740 of the EAR do 
not apply to the prohibitions described in paragraph (a) of this 
section.
    (c) License review standards. It is the policy of the United States 
Government not to participate in and not to authorize United States 
firms or individuals to participate in foreign naval nuclear propulsion 
plant projects, except under an Agreement for Cooperation on naval 
nuclear propulsion executed in accordance with Sec. 123(d) of the Atomic 
Energy Act of 1954. However, it is the policy of the United States 
Government to encourage United States firms and individuals to 
participate in maritime (civil) nuclear propulsion plant projects in 
friendly foreign countries provided that United States naval nuclear 
propulsion information is not disclosed.

[61 FR 12802, Mar. 25, 1996, as amended at 62 FR 25459, May 9, 1997]



Sec. 744.6  Restrictions on certain activities of U.S. persons.

    (a) General prohibitions--(1) Activities related to exports. (i) No 
U.S. person as defined in paragraph (c) of this section may, without a 
license from BXA, export, reexport, or transfer to or in any country any 
item where that person knows that such items:
    (A) Will be used in the design, development, production, or use of 
nuclear explosive devices in or by a country listed in Country Group D:2 
(see Supplement No. 1 to part 740 of the EAR).
    (B) Will be used in the design, development, production, or use of 
missiles in or by a country listed in Country Group D:4 (see Supplement 
No. 1 to part 740 of the EAR); or
    (C) Will be used in the design, development, production, 
stockpiling, or use of chemical or biological weapons in or by a country 
listed in Country Group D:3 (see Supplement No. 1 to part 740 of the 
EAR).
    (ii) No U.S. person shall, without a license from BXA, knowingly 
support an export, reexport, or transfer that does not have a license as 
required by this section. Support means any action, including financing, 
transportation, and freight forwarding, by which a person facilitates an 
export, reexport, or transfer without being the actual exporter or 
reexporter.
    (2) Other activities unrelated to exports. No U.S. person shall, 
without a license from BXA:
    (i) Perform any contract, service, or employment that the U.S. 
person knows will directly assist in the design, development, 
production, or use of missiles in or by a country listed in Country 
Group D:4 (see Supplement No. 1 to part 740 of the EAR); or
    (ii) Perform any contract, service, or employment that the U.S. 
person knows directly will directly assist in the design, development, 
production, stockpiling, or use of chemical or biological weapons in or 
by a country listed in Country Group D:3 (see Supplement No. 1 to part 
740 of the EAR).

[[Page 235]]

    (3) Whole plant requirement. No U.S. person shall, without a license 
from BXA, participate in the design, construction, export, or reexport 
of a whole plant to make chemical weapons precursors identified in ECCN 
1C350, in countries other than those listed in Country Group A:3 
(Australia Group) (See Supplement No. 1 to part 740 of the EAR).
    (b) Additional prohibitions on U.S. persons informed by BXA. BXA may 
inform U.S. persons, either individually or through amendment to the 
EAR, that a license is required because an activity could involve the 
types of participation and support described in paragraph (a) of this 
section anywhere in the world.
    Specific notice is to be given only by, or at the direction of, the 
Deputy Assistant Secretary for Export Administration. When such notice 
is provided orally, it will be followed by a written notice within two 
working days signed by the Deputy Assistant Secretary for Export 
Administration. However, the absence of any such notification does not 
excuse the exporter from compliance with the license requirements of 
paragraph (a) of this section.
    (c) Definition of U.S. person. For purposes of this section, the 
term U.S. person includes:
    (1) Any individual who is a citizen of the United States, a 
permanent resident alien of the United States, or a protected individual 
as defined by 8 U.S.C. 1324b(a)(3);
    (2) Any juridical person organized under the laws of the United 
States or any jurisdiction within the United States, including foreign 
branches; and
    (3) Any person in the United States.
    (d) Exceptions. No License Exceptions apply to the prohibitions 
described in paragraphs (a) and (b) of this section.
    (e) License review standards. Applications to engage in activities 
otherwise prohibited by this section will be denied if the activities 
would make a material contribution to the design, development, 
production, stockpiling, or use of nuclear explosive devices, chemical 
or biological weapons, or of missiles.

[61 FR 12802, Mar. 25, 1996, as amended at 62 FR 25459, May 9, 1997]



Sec. 744.7  Restrictions on certain exports to and for the use of certain foreign vessels or aircraft.

    (a) General end-use prohibition. In addition to the license 
requirements for items specified on the CCL, you may not export or 
reexport an item subject to the EAR to, or for the use of, a foreign 
vessel or aircraft, whether an operating vessel or aircraft or one under 
construction, located in any port including a Canadian port, unless a 
License Exception or NLR permits the shipment to be made:
    (1) To the country in which the vessel or aircraft is located, and
    (2) To the country in which the vessel or aircraft is registered, or 
will be registered in the case of a vessel or aircraft under 
construction, and
    (3) To the country, including a national thereof, which is currently 
controlling, leasing, or chartering the vessel or aircraft.
    (b) Exception for U.S. and Canadian carriers. (1) Notwithstanding 
the general end-use prohibition in paragraph (a) of this section, export 
and reexport may be made of the commodities described in paragraph 
(b)(3) of this section, for use by or on a specific vessel or plane of 
U.S. or Canadian registry located at any seaport or airport outside the 
United States or Canada except a port in North Korea or Country Group 
D:1 (excluding the PRC and Romania), (see Supplement No. 1 to part 740) 
provided that such commodities are 6 all of the following:
---------------------------------------------------------------------------

    \6\ Where a license is required, see Secs. 748.2 and 748.4(g) of the 
EAR.
---------------------------------------------------------------------------

    (i) Ordered by the person in command or the owner or agent of the 
vessel or plane to which they are consigned;
    (ii) Intended to be used or consumed on board such vessel or plane 
and necessary for its proper operation;
    (iii) In usual and reasonable kinds and quantities during times of 
extreme need, except that usual and reasonable quantities of ship's 
bunkers or aviation fuel are considered to be only that quantity 
necessary for a single onward voyage or flight; and
    (iv) Shipped as cargo for which a Shipper's Export Declaration (SED) 
is filed with the carrier, except that an SED is not required when any 
of the

[[Page 236]]

commodities, other than fuel, is exported by U.S. airlines to their own 
aircraft abroad for their use.
    (2) Exports to U.S. or Canadian Airline's Installation or Agent. 
Exports and reexports of the commodities described in paragraph (e) of 
this section, except fuel, may be made to a U.S. or Canadian airline's 
installation or agent in any foreign destination except North Korea or 
Country Group D:1 (excluding the PRC and Romania), (see Supplement No. 1 
to part 740) provided such commodities are all of the following:
    (i) Ordered by a U.S. or Canadian airline and consigned to its own 
installation or agent abroad;
    (ii) Intended for maintenance, repair, or operation of aircraft 
registered in either the United States or Canada, and necessary for the 
aircraft's proper operation, except where such aircraft is located in, 
or owned, operated or controlled by, or leased or chartered to, North 
Korea or Country Group D:1 (excluding the PRC) (see Supplement No. 1 to 
part 740) or a national of such country;
    (iii) In usual and reasonable kinds and quantities; and
    (iv) Shipped as cargo for which a Shipper's Export Declaration (SED) 
is filed with the carrier, except that an SED is not required when any 
of these commodities is exported by U.S. airlines to their own 
installations and agents abroad for use in their aircraft operations.
    (3) Applicable commodities. This Sec. 744.7 applies to the 
commodities listed subject to the provisions in paragraph (b) of this 
section:
    (i) Fuel, except crude petroleum and blends of unrefined crude 
petroleum with petroleum products, which is of non-Naval Petroleum 
Reserves origin or derivation (refer to short supply controls in part 
754 of the EAR);
    (ii) Deck, engine, and steward department stores, provisions, and 
supplies for both port and voyage requirements, except crude petroleum, 
provided that any commodities which are listed in Supplement No. 2 to 
part 754 of the EAR are of non-Naval Petroleum Reserves origin or 
derivation (refer to short supply controls in part 754 of the EAR);
    (iii) Medical and surgical supplies;
    (iv) Food stores;
    (v) Slop chest articles;
    (vi) Saloon stores or supplies; and
    (vii) Equipment and spare parts.



Sec. 744.8  Restrictions on certain exports to all countries for Libyan aircraft.

    (a) General end-use prohibition for Libyan aircraft. In addition to 
the license requirements for items specified on the CCL, you may not 
export or reexport to any destination such parts and accessories 
specified in paragraph (b) of this section if intended for use in the 
manufacture, overhaul, or rehabilitation in any country of aircraft that 
will be exported or reexported to Libya or Libyan nationals.
    (b) Scope of products subject to end-use prohibition for Libyan 
aircraft. The general end-use prohibition in paragraph (a) of this 
section applies to items controlled by ECCNs 6A008, 6A108, 6A998, 7A001, 
7A002, 7A003, 7A004, 7A006, 7A101, 7A102, 7A103, 7A104, 7A994, 9A001, 
9A003, 9A018.a, 9A101, and 9A991.

[61 FR 12802, Mar. 25, 1996, as amended at 63 FR 42229, Aug. 7, 1998]



Sec. 744.9  Restrictions on technical assistance by U.S. persons with respect to encryption items.

    (a) General prohibition. No U.S. person may, without a license from 
BXA, provide technical assistance (including training) to foreign 
persons with the intent to aid a foreign person in the development or 
manufacture outside the United States of encryption commodities and 
software that, if of United States origin, would be controlled for 
``EI'' reasons under ECCN 5A002 or 5D002. Note that this prohibition 
does not apply if the U.S. person providing the assistance has a license 
or is otherwise entitled to export the encryption commodities and 
software in question to the foreign person(s) receiving the assistance. 
Note in addition that the mere teaching or discussion of information 
about cryptography, including, for example, in an academic setting, by 
itself would not establish the intent described in this section, even 
where foreign persons are present.
    (b) Definition of U.S. person. For purposes of this section, the 
term U.S. person includes:

[[Page 237]]

    (1) Any individual who is a citizen or permanent resident alien of 
the United States;
    (2) Any juridical person organized under the laws of the United 
States or any jurisdiction within the United States, including foreign 
branches; and
    (3) Any person in the United States.
    (c) License review standards. Applications involving activities 
described in this section will be reviewed on a case-by-case basis to 
determine whether the activity is consistent with U.S. national security 
and foreign policy interests.

[61 FR 68584, Dec. 30, 1996]



Sec. 744.10   Restrictions on certain entities in Russia.

    (a) General prohibition. Certain entities in Russia, under 
investigation by the Russian government for suspected export control 
violations involving weapons of mass destruction and missile technology, 
are included in Supplement No. 4 of this part 744 (Entity List). (See 
also Sec. 744.1(c) of the EAR.) Exporters are hereby informed that these 
entities are ineligible to receive any items subject to he EAR without a 
license.
    (b) Exceptions. No License Exceptions apply to the prohibition 
described in paragraph (a) of this section.
    (c) License review standards. Applications to export or reexport 
items subject to the EAR to these entities will be reviewed with a 
presumption of denial.

[63 FR 40364, July 29, 1998]



Sec. 744.11  Restrictions on certain government, parastatal, and private entities in Pakistan and India.

    To supplement sanctions measures against India and Pakistan, set 
forth in Sec. 742.16 of the EAR, a prohibition is imposed on exports and 
reexports to certain government, parastatal, and private entities in 
India and Pakistan determined to be involved in nuclear or missile 
activities. With respect to subordinates of listed entities in India and 
Pakistan, only those specifically listed in Supplement No. 4 to part 
744, Entity List, are subject to the restrictions and policies set forth 
in this section. The addition of entities to Supplement No. 4 to part 
744, Entity List, does not relieve you of your obligations under General 
Prohibition 5 in Sec. 736.2(b)(5) of the EAR: ``you may not, without a 
license, knowingly export or reexport any item subject to the EAR to an 
end-user or end-use that is prohibited by part 744 of the EAR.'' You are 
urged to use the guidance in Supplement No. 3 to part 732 of the EAR, 
``BXA's `Know Your Customer' Guidance and Red Flags'' when exporting or 
reexporting to India and Pakistan.
    (a) General restriction. Certain government, parastatal, and private 
entities in India and Pakistan determined to be involved in nuclear or 
missile activities are included in Supplement No. 4 to this part 744 
(Entity List). (See also Sec. 744.1(c) of the EAR.) These entities are 
ineligible to receive exports or reexports of items subject to the EAR 
without a license. Exports and reexports of all items subject to the EAR 
to listed government, parastatal, and private entities require a 
license. A license is also required if you know that the ultimate 
consignee or end-user is a listed government, parastatal, or private 
Indian or Pakistani entity, and the item is subject to the EAR.
    (b) Exceptions. No License Exceptions are available to the entities 
described in paragraph (a) of this section, except those applicable to 
items listed in Sec. 740.2(a)(5) of the EAR, which remain available to 
such entities when intended to ensure the safety of civil aviation and 
safe operation of commercial passenger aircraft.
    (c) License review standards. (1) Government entities. Applications 
to export or reexport items controlled for NP or MT reasons to listed 
government entities will be denied, except items intended for the 
preservation of safety of civil aircraft, which will be reviewed on a 
case-by-case basis; and computers, which will be reviewed with a 
presumption of denial. All other items subject to the EAR to these 
listed entities will be reviewed with a presumption of denial.
    (2) Parastatal and Private entities. Applications to export or 
reexport items controlled for NP or MT reasons to certain parastatal and 
private entities will be denied, except items intended to ensure the 
safety of civil aviation

[[Page 238]]

and safe operation of commercial passenger aircraft, which will be 
reviewed on a case-by-case basis; and computers, which will be reviewed 
with a presumption of denial. All other items subject to the EAR to 
these listed entities will be reviewed with a presumption of denial. 
Except for items controlled for NP or MT reasons, exports or reexports 
to listed parastatals and private entities with whom you have a 
preexisting business arrangement will be considered on a case-by-case 
basis, with a presumption of approval in cases where neither the 
arrangement nor the specific transaction involves nuclear or missile 
activities and the exports or reexports are pursuant to that 
arrangement. The term ``business arrangement'' covers the full range of 
business agreements, including general contracts, general terms 
agreements (e.g., agreements whereby the seller delivers products under 
purchase orders to be issued by the buyer), general business agreements, 
offset agreements, letter agreements that are stand-alone contracts, and 
letter agreements that are amendments to existing contracts or other 
agreements. The terms of the preexisting business arrangement policy may 
also apply to the longstanding continued supply of a particular item or 
items from the exporter to the entity even when there is no current 
agreement between the firms. BXA, in conjunction with other agencies, 
will determine eligibility under the preexisting business arrangement 
policy. In order to be eligible under the policy, you must provide 
documentation to establish such an arrangement. The documentation should 
be provided at the time you submit a license application to export or 
reexport items to any listed parastatal or private entity.

[63 FR 64324, Nov. 19, 1998]



Sec. 744.12  Restrictions on certain military entities in Pakistan and India.

    (a) General restriction. Certain military entities in India and 
Pakistan are included in Supplement No. 4 to this part 744 (Entity 
List). (See also Sec. 744.1(c) of the EAR.) These entities are 
ineligible to receive exports or reexports of all items subject to the 
EAR having a classification other than EAR99 without a license. Exports 
and reexports of all items subject to the EAR having a classification 
other than EAR99 to listed military entities require a license. A 
license is also required if you know that the ultimate consignee or end-
user is a listed military Indian or Pakistani entity, and the item is 
subject to the EAR having a classification other than EAR99.
    (b) Exceptions. No License Exceptions are available to the entities 
described in paragraph (a) of this section, except those applicable to 
items listed in Sec. 740.2(a)(5) of the EAR, which remain available to 
such entities when intended to ensure the safety of civil aviation and 
safe operation of commercial passenger aircraft.
    (c) License review policy. Applications to export or reexport items 
controlled for NP or MT reasons to listed military entities will be 
denied, except items intended to ensure the safety of civil aviation and 
safe operation of commercial passenger aircraft, which will be reviewed 
on a case-by-case basis; and computers, which will be reviewed with a 
presumption of denial. All other license applications will be reviewed 
with a presumption of denial.

[63 FR 64325, Nov. 19, 1998]

                 Supplement No. 1 to Part 744 [Reserved]

                 Supplement No. 2 to Part 744 [Reserved]

 Supplement No. 3 to Part 744--Countries Not Subject to Certain Nuclear 
                  End-Use Restrictions in Sec. 744.2(a)

Australia
Belgium
Canada
Denmark
France
Germany
Greece
Iceland
Italy (includes San Marino and Holy See)
Japan
Luxembourg
Netherlands
New Zealand
Norway
Portugal
Spain
Turkey

[[Page 239]]

United Kingdom

[61 FR 12802, Mar. 25, 1996, as amended at 62 FR 25459, May 9, 1997]

                Supplement No. 4 to Part 744--Entity List

[[Page 240]]



                                    Supplement No. 4 to Part 744--Entity List
----------------------------------------------------------------------------------------------------------------
                                                              License         License review    Federal Register
            Country                      Entity             requirement           policy            citation
----------------------------------------------------------------------------------------------------------------
This Supplement lists certain entities subject to license requirements for specified items under this part 744
 of the EAR. License requirements for these entities includes exports and reexports, unless otherwise stated.
 This list of entities is revised and updated on a periodic basis in this Supplement by adding new or amended
 notifications and deleting notifications no longer in effect.
----------------------------------------------------------------------------------------------------------------
CHINA, PEOPLE'S REPUBLIC OF....  Chinese Academy of      For all items      Case-by-case       62 FR 35334, 6/30/
                                  Engineering Physics     subject to the     basis.             97.
                                  (aka Ninth Academy,     EAR.
                                  including the
                                  Southwest Institutes
                                  of: Applied
                                  Electronics, Chemical
                                  Materials, Electronic
                                  Engineering,
                                  Explosives and
                                  Chemical Engineering,
                                  Environmental
                                  Testing, Fluid
                                  Physics, General
                                  Designing and
                                  Assembly, Machining
                                  Technology,
                                  Materials, Nuclear
                                  Physics and
                                  Chemistry, Structural
                                  Mechanics; Research
                                  and Applications of
                                  Special Materials
                                  Factory; Southwest
                                  Computing Center (all
                                  of preceding located
                                  in or near Mianyang,
                                  Sichuan Province);
                                  Institute of Applied
                                  Physics and
                                  Computational
                                  Mathematics, Beijing;
                                  and High Power Laser
                                  Laboratory, Shanghai).
INDIA..........................  Advanced Fuel           For all items      See Sec.           63 FR 64326, 11/
                                  Fabrication Facility,   subject to the     744.11(c)(1) of    19/98.
                                  Department of Atomic    EAR.               this part.
                                  Energy (DAE), Tarapur.
                                 Aerial Delivery         For all items      See Sec.           63 FR 64326, 11/
                                  Research and            subject to the     744.11(c)(1) of    19/98.
                                  Development             EAR.               this part.
                                  Establishment
                                  (ADRDE), Defence
                                  Research and
                                  Development
                                  Organization (DRDO),
                                  Agra.
                                 Aeronautical            For all items      See Sec.           63 FR 64326, 11/
                                  Development Agency,     subject to the     744.11(c)(1) of    19/98.
                                  Ministry of Defense,    EAR.               this part.
                                  Bangalore.
                                 Aeronautical            For all items      See Sec.           63 FR 64326, 11/
                                  Development             subject to the     744.11(c)(1) of    19/98.
                                  Establishment (ADE),    EAR.               this part.
                                  Defence Research and
                                  Development
                                  Organization (DRDO),
                                  Bangalore.
                                 Aerospace Division,     For all items      See Sec.           63 FR 64326, 11/
                                  Hindustan Aeronautics   subject to the     744.11(c)(2) of    19/98.
                                  Limited (HAL),          EAR.               this part.
                                  Bangalore.
                                 Ambajhari Ordnance      For all items      See Sec.           63 FR 64326, 11/
                                  Factory, Ordnance       subject to the     744.12(c) of       19/98.
                                  Factory Board,          EAR having a       this part.
                                  Department of Defense   classification
                                  Production and          other than EAR99.
                                  Supplies, Ministry of
                                  Defense.
                                 Ambarnath Machine Tool  For all items      See Sec.           63 FR 64326, 11/
                                  Prototype Factory,      subject to the     744.12(c) of       19/98.
                                  Ordnance Factory        EAR having a       this part.
                                  Board, Department of    classification
                                  Defense Production      other than EAR99.
                                  and Supplies,
                                  Ministry of Defense.
                                 Ambarnath Ordnance      For all items      See Sec.           63 FR 64326, 11/
                                  Factory, Ordnance       subject to the     744.12(c) of       19/98.
                                  Factory Board,          EAR having a       this part.
                                  Department of Defense   classification
                                  Production and          other than EAR99.
                                  Supplies, Ministry of
                                  Defense.
                                 Ammonium Perchlorate    For all items      See Sec.           63 FR 64326, 11/
                                  Experimental Plant,     subject to the     744.11(c)(1) of    19/98.
                                  Indian Space Research   EAR.               this part.
                                  Organization (ISRO),
                                  Department of Space,
                                  Alwaye.
                                 Armament Research and   For all items      See Sec.           63 FR 64326, 11/
                                  Development             subject to the     744.11(c)(1) of    19/98.
                                  Establishment (ARDE),   EAR.               this part.
                                  Defence Research and
                                  Development
                                  Organization (DRDO),
                                  Pune.

[[Page 241]]

 
                                 Aruvankadu Cordite      For all items      See Sec.           63 FR 64326, 11/
                                  Factory, Ordnance       subject to the     744.12(c) of       19/98.
                                  Factory Board,          EAR having a       this part.
                                  Department of Defense   classification
                                  Production and          other than EAR99.
                                  Supplies, Ministry of
                                  Defense.
                                 Aspara Research         For all items      See Sec.           63 FR 64326, 11/
                                  Reactor, Bhabha         subject to the     744.11(c)(1) of    19/98.
                                  Atomic Research         EAR.               this part.
                                  Centre (BARC),
                                  Department of Atomic
                                  Energy (DAE),
                                  Trombay, suburban
                                  city of Mumbai
                                  (formerly Bombay).
                                 Atomic Energy           For all items      See Sec.           63 FR 64326, 11/
                                  Commission (AEC)        subject to the     744.11(c)(1) of    19/98.
                                  located in Mumbai       EAR.               this part.
                                  (formerly Bombay) and
                                  subordinate entities
                                  specifically listed
                                  in this Supplement.
                                 Atomic Energy           For all items      See Sec.           63 FR 64326, 11/
                                  Regulatory Board        subject to the     744.11(c)(1) of    19/98.
                                  (AERB), Mumbai          EAR.               this part.
                                  (formerly Bombay).
                                 The Atomic Minerals     For all items      See Sec.           63 FR 64326, 11/
                                  Division (AMD),         subject to the     744.11(c)(1) of    19/98.
                                  Department of Atomic    EAR.               this part.
                                  Energy (DAE),
                                  Hyderabad.
                                 AURO Engineering,       For all items      See Sec.           63 FR 64327, 11/
                                  Pondicherry.            subject to the     744.11(c)(2) of    19/98.
                                                          EAR.               this part.
                                 Avadi Combine Engine    For all items      See Sec.           63 FR 64322, 11/
                                  Plant, Ordnance         subject to the     744.12(c) of       19/98.
                                  Factory Board,          EAR having a       this part.
                                  Department of Defense   classification
                                  Production and          other than EAR99.
                                  Supplies, Ministry of
                                  Defense.
                                 Avadi Heavy Vehicle     For all items      See Sec.           63 FR 64322, 11/
                                  Factory, Ordnance       subject to the     744.12(c) of       19/98.
                                  Factory Board,          EAR having a       this part.
                                  Department of Defense   classification
                                  Production and          other than EAR99.
                                  Supplies, Ministry of
                                  Defense.
                                 Avadi Ordnance          For all items      See Sec.           63 FR 64322, 11/
                                  Clothing Factory,       subject to the     744.12(c) of       19/98.
                                  Ordnance Factory        EAR having a       this part.
                                  Board, Department of    classification
                                  Defense Production      other than EAR99.
                                  and Supplies,
                                  Ministry of Defense.
                                 Baroda Ammonia Plant,   For all items      See Sec.           63 FR 64322, 11/
                                  (collocated with the    subject to the     744.11(c)(2) of    19/98.
                                  Baroda Heavy Water      EAR.               this part.
                                  Production Facility),
                                  Gujarat Fertilizers,
                                  Baroda.
                                 Baroda Heavy Water      For all items      See Sec.           63 FR 64322, 11/
                                  Production Facility,    subject to the     744.11(c)(1) of    19/98.
                                  Heavy Water Board,      EAR.               this part.
                                  Department of Atomic
                                  Energy (DAE), Baroda.
                                 Beryllium Machining     For all items      See Sec.           63 FR 64322, 11/
                                  Facility, Indian        subject to the     744.11(c)(1) of    19/98.
                                  Space Research          EAR.               this part.
                                  Organization (ISRO),
                                  and Department of
                                  Atomic Energy (DAE),
                                  Mumbai (formerly
                                  Bombay).
                                 Bhabha Atomic Research  For all items      See Sec.           62 FR 35334, 6/30/
                                  Center (BARC),          subject to the     744.11(c)(1) of    97; 63 FR 64322,
                                  Department of Atomic    EAR.               this part.         11/19/98.
                                  Energy (DAE),
                                  Trombay, suburban
                                  city of Mumbai
                                  (formerly Bombay).
                                 Bharat Dynamics         For all items      See Sec.           63 FR 64322, 11/
                                  Limited, Bhanur and     subject to the     744.11(c)(2) of    19/98.
                                  Hyderabad.              EAR.               this part.
                                 Bharat Earth Movers     For all items      See Sec.           63 FR 64322, 11/
                                  Limited (BEML),         subject to the     744.11(c)(2) of    19/98.
                                  Bangalore.              EAR.               this part.
                                 Bharat Electronics      For all items      See Sec.           62 FR 26922, 5/16/
                                  Limited (BEL),          subject to the     744.11(c)(2) of    97; 62 FR 51369,
                                  Bangalore, Ghaziabad,   EAR.               this part.         10/1/97; 63 FR
                                  and Hyderabad.                                                64322, 11/19/98.
                                 Bharat Heavy            For all items      See Sec.           63 FR 64322, 11/
                                  Electrical Limited      subject to the     744.11(c)(2) of    19/98.
                                  (BHEL), Trichy          EAR.               this part.
                                  (Tiruchirapalli),
                                  Hyderabad, Hardwar,
                                  New Delhi, and
                                  Ranipet.
                                 Bhatin Uranium Mine     For all items      See Sec.           63 FR 64322, 11/
                                  and Mill, Uranium       subject to the     744.11(c)(2) of    19/98.
                                  Corporation of India,   EAR.               this part.
                                  Ltd. (UCIL), Bhatin.
                                 Bhusawal Ordnance       For all items      See Sec.           63 FR 64322, 11/
                                  Factory, Avadi          subject to the     744.12(c) of       19/98.
                                  Combine Engine Plant,   EAR having a       this part.
                                  Ordnance Factory        classification
                                  Board, Department of    other than EAR99.
                                  Defense Production
                                  and Supplies,
                                  Ministry of Defense.

[[Page 242]]

 
                                 Board of Radiation and  For all items      See Sec.           63 FR 64322, 11/
                                  Isotope Technology      subject to the     744.11(c)(1) of    19/98.
                                  (BRIT), Department of   EAR.               this part.
                                  Atomic Energy (DAE),
                                  Mumbai (formerly
                                  Bombay).
                                 Boron Enrichment        For all items      See Sec.           63 FR 64322, 11/
                                  Plant, Bhabha Atomic    subject to the     744.11(c)(1) of    19/98.
                                  Research Centre         EAR.               this part.
                                  (BARC), Department of
                                  Atomic Energy (DAE),
                                  Trombay, suburban
                                  city of Mumbai
                                  (formerly Bombay).
                                 Central Manufacturing   For all items      See Sec.           63 FR 64322, 11/
                                  Technology Institute,   subject to the     744.11(c)(1) of    19/98.
                                  a.k.a. Central          EAR.               this part.
                                  Machine Tool
                                  Institute, Bangalore.
                                 Central Workshops,      For all items      See Sec.           63 FR 64322, 11/
                                  Bhabha Atomic           subject to the     744.11(c)(1) of    19/98.
                                  Research Centre         EAR.               this part.
                                  (BARC), Department of
                                  Atomic Energy (DAE),
                                  Trombay, suburban
                                  city of Mumbai
                                  (formerly Bombay).
                                 The Centre for          For all items      See Sec.           63 FR 64322, 11/
                                  Advanced Technology     subject to the     744.11(c)(1) of    19/98.
                                  (CAT), Department of    EAR.               this part.
                                  Atomic Energy (DAE),
                                  Indore.
                                 Centre for              For all items      See Sec.           63 FR 64322, 11/
                                  Aeronautical Systems    subject to the     744.11(c)(1) of    19/98.
                                  Studies and Analysis    EAR.               this part.
                                  (CASSA), Defence
                                  Research and
                                  Development
                                  Organization (DRDO),
                                  Bangalore.
                                 Centre for the          For all items      See Sec.           63 FR 64322, 11/
                                  Compositional           subject to the     744.11(c)(1) of    19/98.
                                  Characterization of     EAR.               this part.
                                  Materials, Bhabha
                                  Atomic Research
                                  Centre (BARC),
                                  Department of Atomic
                                  Energy (DAE),
                                  Hyderabad.
                                 Centre for Development  For all items      See Sec.           63 FR 64322, 11/
                                  of Advanced             subject to the     744.11(c)(1) of    19/98.
                                  Computing, Department   EAR.               this part.
                                  of Electronics, Pune.
                                 Ceramic Fuels           For all items      See Sec.           63 FR 64322, 11/
                                  Fabrication Plant,      subject to the     744.11(c)(1) of    19/98.
                                  Nuclear Fuel Complex    EAR.               this part.
                                  (NFC), Department of
                                  Atomic Energy (DAE),
                                  Hyderabad.
                                 Chanda Ammunition       For all items      See Sec.           63 FR 64322, 11/
                                  Loading Plant, Avadi    subject to the     744.12(c) of       19/98.
                                  Combine Engine Plant,   EAR having a       this part.
                                  Ordnance Factory        classification
                                  Board, Department of    other than EAR99.
                                  Defense Production
                                  and Supplies,
                                  Ministry of Defense.
                                 Chanda Ordnance         For all items      See Sec.           63 FR 64322, 11/
                                  Factory, Ordnance       subject to the     744.12(c) of       19/98.
                                  Factory Board,          EAR having a       this part.
                                  Department of Defense   classification
                                  Production and          other than EAR99.
                                  Supplies, Ministry of
                                  Defense.
                                 Chandigarh Ordnance     For all items      See Sec.           63 FR 64322, 11/
                                  Cable Factory, Avadi    subject to the     744.12(c) of       19/98.
                                  Combine Engine Plant,   EAR having a       this part.
                                  Ordnance Factory        classification
                                  Board, Department of    other than EAR99.
                                  Defense Production
                                  and Supplies,
                                  Ministry of Defense.
                                 Chandigarh Ordnance     For all items      See Sec.           63 FR 64322, 11/
                                  Parachute Factory,      subject to the     744.12(c) of       19/98.
                                  Ordnance Factory        EAR having a       this part.
                                  Board, Department of    classification
                                  Defense Production      other than EAR99.
                                  and Supplies,
                                  Ministry of Defense.
                                 Cirus Reactor, Bhabha   For all items      See Sec.           63 FR 64322, 11/
                                  Atomic Research         subject to the     744.11(c)(1) of    19/98.
                                  Centre (BARC),          EAR.               this part.
                                  Department of Atomic
                                  Energy (DAE), Mumbai
                                  (formerly Bombay).

[[Page 243]]

 
                                 Combat Vehicle          For all items      See Sec.           63 FR 64322, 11/
                                  Research and            subject to the     744.11(c)(1) of    19/98.
                                  Development             EAR.               this part.
                                  Establishment
                                  (CVRDE), Defence
                                  Research and
                                  Development
                                  Organization (DRDO),
                                  Chennai (formerly
                                  Madras).
                                 Construction Services   For all items      See Sec.           63 FR 64322, 11/
                                  and Estate Management   subject to the     744.11(c)(1) of    19/98.
                                  Group, Directorate of   EAR.               this part.
                                  Purchase and Stores
                                  (DPS), Department of
                                  Atomic Energy (DAE),
                                  Mumbai (formerly
                                  Bombay).
                                  Cossipore Gun and      For all items      See Sec.           63 FR 64322, 11/
                                  Shell Factory, Avadi    subject to the     744.12(c) of       19/98.
                                  Combine Engine Plant,   EAR having a       this part.
                                  Ordnance Factory        classification
                                  Board, Department of    other than EAR99.
                                  Defense Production
                                  and Supplies,
                                  Ministry of Defense.
                                  Defence Bio-           For all items      See Sec.           63 FR 64322, 11/
                                  Engineering and         subject to the     744.11(c)(1) of    19/98.
                                  Electro-Medical         EAR.               this part.
                                  Laboratory (DEBEL),
                                  Defence Research and
                                  Development
                                  Organization (DRDO),
                                  Bangalore.
                                  Defence Electronics    For all items      See Sec.           63 FR 64322, 11/
                                  Applications            subject to the     744.11(c)(1) of    19/98.
                                  Laboratory (DEAL),      EAR.               this part.
                                  Defence Research and
                                  Development
                                  Organization (DRDO),
                                  Dehra Dun.
                                  Defence Electronics    For all items      See Sec.           63 FR 64322, 11/
                                  Research Laboratory     subject to the     744.11(c)(1) of    19/98.
                                  (DERL or DLRL),         EAR.               this part.
                                  Defence Research and
                                  Development
                                  Organization (DRDO),
                                  Hyderabad.
                                 Defence Food Research   For all items      See Sec.           63 FR 64322, 11/
                                  Laboratory (DFRL),      subject to the     744.11(c)(1) of    19/98.
                                  Defence Research and    EAR.               this part.
                                  Development
                                  Organization (DRDO),
                                  Mysore.
                                 Defence Institute of    For all items      See Sec.           63 FR 64322, 11/
                                  Fire Research (DIFR),   subject to the     744.11(c)(1) of    19/98.
                                  Defence Research and    EAR.               this part.
                                  Development
                                  Organization (DRDO),
                                  Delhi.
                                 Defence Institute of    For all items      See Sec.           63 FR 64322, 11/
                                  Physiology and Allied   subject to the     744.11(c)(1) of    19/98.
                                  Sciences (DIPAS),       EAR.               this part.
                                  Defence Research and
                                  Development
                                  Organization (DRDO),
                                  Delhi.
                                 Defence Institute of    For all items      See Sec.           63 FR 64322, 11/
                                  Psychological           subject to the     744.11(c)(1) of    19/98.
                                  Research (DIPR),        EAR.               this part.
                                  Defence Research and
                                  Development
                                  Organization (DRDO),
                                  New Delhi.
                                 Defence Institute of    For all items      See Sec.           63 FR 64322, 11/
                                  Workstudy (DIWS),       subject to the     744.11(c)(1) of    19/98.
                                  Defence Research and    EAR.               this part.
                                  Development
                                  Organization (DRDO),
                                  Mussoorie.
                                 Defence Laboratory      For all items      See Sec.           63 FR 64322, 11/
                                  (DL), Defence           subject to the     744.11(c)(1) of    19/98.
                                  Research and            EAR.               this part.
                                  Development
                                  Organization (DRDO),
                                  Jodhpur.
                                  Defence Materials and  For all items      See Sec.           63 FR 64322, 11/
                                  Store Research and      subject to the     744.11(c)(1) of    19/98.
                                  Development             EAR.               this part.
                                  Establishment
                                  (DMSRDE), Defence
                                  Research and
                                  Development
                                  Organization (DRDO),
                                  Kanpur.
                                 Defence Metallurgical   For all items      See Sec.           63 FR 64322, 11/
                                  Research Laboratory     subject to the     744.11(c)(1) of    19/98.
                                  (DMRL), Defence         EAR.               this part.
                                  Research and
                                  Development
                                  Organization (DRDO),
                                  Hyderabad.
                                 Defence Research and    For all items      See Sec.           63 FR 64322, 11/
                                  Development             subject to the     744.11(c)(1) of    19/98.
                                  Establishment (DRDE),   EAR.               this part.
                                  Defence Research and
                                  Development
                                  Organization (DRDO),
                                  Gwalior.
                                 Defence Research and    For all items      See Sec.           63 FR 64322, 11/
                                  Development             subject to the     744.11(c)(1) of    19/98.
                                  Laboratory (DRDL),      EAR.               this part.
                                  Defence Research and
                                  Development
                                  Organization (DRDO),
                                  Hyderabad.

[[Page 244]]

 
                                 Defence Research and    For all items      See Sec.           63 FR 64322, 11/
                                  Development             subject to the     744.11(c)(1) of    19/98.
                                  Organization (DRDO)     EAR.               this part.
                                  located in New Delhi
                                  and subordinate
                                  entities specifically
                                  listed in this
                                  Supplement.
                                 Defence Research and    For all items      See Sec.           63 FR 64322, 11/
                                  Development Unit        subject to the     744.11(c)(1) of    19/98.
                                  (DRDU), Defence         EAR.               this part.
                                  Research and
                                  Development
                                  Organization (DRDO),
                                  Calcutta.
                                 Defence Research        For all items      See Sec.           63 FR 64322, 11/
                                  Laboratory (DRL),       subject to the     744.11(c)(1) of    19/98.
                                  Defence Research and    EAR.               this part.
                                  Development
                                  Organization (DRDO),
                                  Tezpur.
                                 Defence Science Centre  For all items      See Sec.           63 FR 64322, 11/
                                  (DSC), Defence          subject to the     744.11(c)(1) of    19/98.
                                  Research and            EAR.               this part.
                                  Development
                                  Organization (DRDO),
                                  New Delhi.
                                 Defence Terrain         For all items      See Sec.           63 FR 64322, 11/
                                  Research Laboratory     subject to the     744.11(c)(1) of    19/98.
                                  (DTRL), Defence         EAR.               this part.
                                  Research and
                                  Development
                                  Organization (DRDO),
                                  New Delhi.
                                 Dehra Dun Opto-         For all items      See Sec.           63 FR 64322, 11/
                                  Electronics Factory,    subject to the     744.12(c) of       19/98.
                                  Ordnance Factory        EAR having a       this part.
                                  Board, Department of    classification
                                  Defense Production      other than EAR99.
                                  and Supplies,
                                  Ministry of Defense.
                                 Dehra Dun Ordnance      For all items      See Sec.           63 FR 64322, 11/
                                  Factory, Dehra Dun      subject to the     744.12(c) of       19/98.
                                  Opto-Electronics        EAR having a       this part.
                                  Factory, Ordnance       classification
                                  Factory Board,          other than EAR99.
                                  Department of Defense
                                  Production and
                                  Supplies, Ministry of
                                  Defense.
                                 Dehu Road Ordnance      For all items      See Sec.           63 FR 64322, 11/
                                  Factory, Ordnance       subject to the     744.12(c) of       19/98.
                                  Factory Board,          EAR having a       this part.
                                  Department of Defense   classification
                                  Production and          other than EAR99.
                                  Supplies, Ministry of
                                  Defense.
                                 Department of Defense   For all items      See Sec.           63 FR 64322, 11/
                                  Production and          subject to the     744.12(c) of       19/98.
                                  Supplies and            EAR having a       this part.
                                  subordinate entities    classification
                                  specifically listed     other than EAR99.
                                  in this Supplement.
                                 Department of Space     For all items      See Sec.           63 FR 64322, 11/
                                  located in Bangalore    subject to the     744.11(c)(1) of    19/98.
                                  and subordinate         EAR.               this part.
                                  entities specifically
                                  listed in this
                                  Supplement.
                                 Department of Atomic    For all items      See Sec.           63 FR 64322, 11/
                                  Energy (DAE) located    subject to the     744.11(c)(1) of    19/98.
                                  in Mumbai (formerly     EAR.               this part.
                                  Bombay) and
                                  subordinate entities
                                  specifically listed
                                  in this Supplement.
                                 Dhruva Reactor, Bhabha  For all items      See Sec.           63 FR 64322, 11/
                                  Atomic Research         subject to the     744.11(c)(1) of    19/98.
                                  Centre (BARC),          EAR.               this part.
                                  Department of Atomic
                                  Energy (DAE), Mumbai
                                  (formerly Bombay).
                                 Directorate of          For all items      See Sec.           63 FR 64322, 11/
                                  Purchase and Stores     subject to the     744.11(c)(1) of    19/98.
                                  (DPS), Department of    EAR.               this part.
                                  Atomic Energy (DAE),
                                  Mumbai (formerly
                                  Bombay).
                                 Dum Dum Ordnance        For all items      See Sec.           63 FR 64322, 11/
                                  Factory, Ordnance       subject to the     744.12(c) of       19/98.
                                  Factory Board,          EAR having a       this part.
                                  Department of Defense   classification
                                  Production and          other than EAR99.
                                  Supplies, Ministry of
                                  Defense.
                                 Electronics and Radar   For all items      See Sec.           63 FR 64322, 11/
                                  Development             subject to the     744.11(c)(1) of    19/98.
                                  Establishment (ERDE     EAR.               this part.
                                  or LRDE), Defence
                                  Research and
                                  Development
                                  Organization (DRDO),
                                  Bangalore.
                                 Electronics             For all items      See Sec.           63 FR 64322, 11/
                                  Corporation of India,   subject to the     744.11(c)(2) of    19/98.
                                  Ltd. (ECIL),            EAR.               this part.
                                  Hyderabad.

[[Page 245]]

 
                                 Engine Division,        For all items      See Sec.           63 FR 64322, 11/
                                  Hindustan Aeronautics   subject to the     744.11(c)(2) of    19/98.
                                  Limited (HAL),          EAR.               this part.
                                  Bangalore.
                                 Explosive Research and  For all items      See Sec.           63 FR 64322, 11/
                                  Development             subject to the     744.11(c)(1) of    19/98.
                                  Laboratory (ERDL),      EAR.               this part.
                                  Defence Research and
                                  Development
                                  Organization (DRDO),
                                  Pune.
                                 Fast Breeder Test       For all items      See Sec.           63 FR 64322, 11/
                                  Reactor (FBTR),         subject to the     744.11(c)(1) of    19/98.
                                  Indira Gandhi Centre    EAR.               this part.
                                  for Atomic Research
                                  (IGCAR), Department
                                  of Atomic Energy
                                  (DAE), Kalpakkam.
                                 Fast Reactor Fuel       For all items      See Sec.           63 FR 64322, 11/
                                  Reprocessing Plant      subject to the     744.11(c)(1) of    19/98.
                                  (FRFRP), Indira         EAR.               this part.
                                  Gandhi Centre for
                                  Atomic Research
                                  (IGCAR), Department
                                  of Atomic Energy
                                  (DAE), Kalpakkam.
                                 Ferrodie Private        For all items      See Sec.           63 FR 64322, 11/
                                  Limited (FPL), Thane.   subject to the     744.11(c)(2) of    19/98.
                                                          EAR.               this part.
                                 Gas Turbine Research    For all items      See Sec.           63 FR 64322, 11/
                                  Establishment (GTRE),   subject to the     744.11(c)(1) of    19/98.
                                  Defence Research and    EAR.               this part.
                                  Development
                                  Organization (DRDO),
                                  Bangalore.
                                 General Services        For all items      See Sec.           63 FR 64322, 11/
                                  Organization,           subject to the     744.11(c)(1) of    19/98.
                                  Directorate of          EAR.               this part..
                                  Purchase and Stores
                                  (DPS), Department of
                                  Atomic Energy (DAE),
                                  Kalpakkam.
                                 Godrej & Boyce Mfg.,    For all items      See Sec.           63 FR 64322, 11/
                                  Co., Ltd., Precision    subject to the     744.11(c)(2) of    19/98.
                                  Equipment Division      EAR.               this part.
                                  (PED) and Tool Room
                                  Division, Mumbai
                                  (formerly Bombay).
                                 Hazira Ammonia Plant,   For all items      See Sec.           63 FR 64322, 11/
                                  (collocated at the      subject to the     744.11(c)(2) of    19/98.
                                  Hazira Heavy Water      EAR.               this part.
                                  Production Facility)
                                  Krishak Bharati
                                  Cooperative, Ltd.,
                                  Hazira.
                                 Hazira Heavy Water      For all items      See Sec.           63 FR 64322, 11/
                                  Production Facility,    subject to the     744.11(c)(1) of    19/98.
                                  Heavy Water Board,      EAR.               this part.
                                  Department of Atomic
                                  Energy (DAE), Hazira.
                                 Hazratpur Ordnance      For all items      See Sec.           63 FR 64322, 11/
                                  Equipment Factory,      subject to the     744.12(c) of       19/98.
                                  Dum Dum Ordnance        EAR having a       this part.
                                  Factory, Ordnance       classification
                                  Factory Board,          other than EAR99.
                                  Department of Defense
                                  Production and
                                  Supplies, Ministry of
                                  Defense.
                                 Heavy Water Board,      For all items      See Sec.           63 FR 64322, 11/
                                  Department of Atomic    subject to the     744.11(c)(1) of    19/98.
                                  Energy (DAE), Mumbai    EAR.               this part.
                                  (formerly Bombay).
                                 Heavy Water Upgrade     For all items      See Sec.           63 FR 64322, 11/
                                  Plant, Kakrapar         subject to the     744.11(c)(2) of    19/98.
                                  Atomic Power Station    EAR.               this part.
                                  (KAPS), Nuclear Power
                                  Corporation of India,
                                  Ltd. (NPCIL),
                                  Kakrapar.
                                 Indian Institute of     For all items      See Sec.           63 FR 64322, 11/
                                  Science (IIS),          subject to the     744.11(c)(1) of    19/98.
                                  Departments of:         EAR.               this part.
                                  Aerospace Engineering
                                  and Space Technology
                                  Cell, Bangalore.
                                 Indian Institute of     For all items      See Sec.           63 FR 64322, 11/
                                  Technology (IIT),       subject to the     744.11(c)(1) of    19/98.
                                  Departments of:         EAR.               this part.
                                  Aerospace Engineering
                                  and Space Technology
                                  Cell, Chennai
                                  (formerly Madras).
                                 Indian Institute of     For all items      See Sec.           63 FR 64322, 11/
                                  Technology (IIT),       subject to the     744.11(c)(1) of    19/98.
                                  Departments of:         EAR.               this part.
                                  Physics, Aerospace
                                  Engineering, and
                                  Space Technology
                                  Cell, Mumbai
                                  (formerly Bombay).
                                 India Minerals          For all items      See Sec.           62 FR 35335, 6/30/
                                  Separation Plants,      subject to the     744.11(c)(2) of    97; 63 FR 64322,
                                  Indian Rare Earths,     EAR.               this part.         11/19/98.
                                  Ltd., (IREL),
                                  Chhatrapur, Orissa,
                                  and Chavara.
                                 Indian Rare Earths,     For all items      See Sec.           62 FR 35335, 6/30/
                                  Ltd., (IREL), Mumbai    subject to the     744.11(c)(2) of    97; 63 FR 64322,
                                  (formerly Bombay).      EAR.               this part.         11/19/98.

[[Page 246]]

 
                                 Indian Space Research   For all items      See Sec.           63 FR 64322, 11/
                                  Organization (ISRO),    subject to the     744.11(c)(1) of    19/98.
                                  Department of Space,    EAR.               this part.
                                  Bangalore.
                                 Indira Gandhi Center    For all items      See Sec.           62 FR 35334, 6/30/
                                  for Atomic Research     subject to the     744.11(c)(1) of    97. 63 FR 64322,
                                  (IGCAR), Kalpakkam.     EAR.               this part.         11/19/98.
                                 Institute of Armament   For all items      See Sec.           63 FR 64322, 11/
                                  Technology (IAT),       subject to the     744.11(c)(1) of    19/98.
                                  Defense Research and    EAR.               this part.
                                  Development
                                  Organization (DRDO),
                                  Pune.
                                 Institute of            For all items      See Sec.           63 FR 64322, 11/