In addition, this rule establishes a new license requirement for the export or reexport of general purpose microprocessors if, at the time of the export or reexport, the exporter or reexporter knows, has reason to know, or is informed by BIS that the item will be or is intended to be used for a “military end-use” in a country that is of concern for national security reasons or by a “military end-user” in such a country.  This license requirement does not apply to items for the official use by personnel and agencies of the U.S. Government or agencies of a cooperating government in a country of concern for national security reasons.  The license review standard for applications to export or reexport general-purpose microprocessors subject to this license required is a presumption of denial.  No license exceptions are available for this license requirement.

2. Implementation of the 2002 Wassenaar Arrangement List of Dual-Use Items:  Revisions to Categories 2, 3, 4, 5, 6, 7, 8, and 9 of the Commerce Control List, General Software Note, and Reporting Requirements (68 FR 10586 on March 5, 2003)

Commentary: The Bureau of Industry and Security has published a final rule revising certain entries controlled for national security reasons in Categories 2, 3, 4, 5 Part I (Telecommunications), 5 Part II (Information Security), 6, 7, 8, and 9 to conform with changes in the List of Dual-Use Goods and Technologies maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar Arrangement). The Wassenaar Arrangement controls strategic items with the objective of improving regional and international security and stability.

The purpose of this rule is to make the necessary changes to the Commerce Control List to implement revisions to the Wassenaar List that were agreed upon in the February 2002 meeting (and finalized in May 2002) and to make necessary revisions to reporting requirements, definitions, and the General Technology and Software Notes.  The changes that affected microprocessors were published in a separate rule on January 14, 2003 (968 FR 1796).

3. Revisions to the Unverified List – Guidance as to “Red Flags” under Supplement No. 3 to 15 CFR 732 (68 FR 15151 on March 28, 2003)

Commentary: The Bureau of Industry and Security has published a notice that sets forth a list of persons in foreign countries who were parties to past export transactions where pre-license checks (“PLC”) or post-shipment verifications (“PSV”) could not be conducted for reasons outside the control of the U.S. Government (“Unverified List”).  The notice also advised exporters that the involvement of a listed person as a party to a proposed transaction constitutes a “red flag” as described in the guidance set forth in Supplement No. 3 to 15 CFR Part 732, requiring heightened scrutiny by the exporter before proceeding with such a transaction.  The notice also stated that, when warranted, BIS would add and remove persons from the Unverified List.

Specifically, this notice advises exporters that Brilliant Intervest located at 14-1, Persian 65C, Jalan Pahang Barat, Juala Lumpur, 53000, Malaysia, is added to the Unverified List, and a “red flag” now exists for transactions involving this person due to its inclusion on the Unverified List. As a result, exporters have an affirmative duty to inquire, verify, or otherwise substantiate the proposed transaction to satisfy themselves that the transaction does not involve a proliferation activity set forth in 15 CFR 744, and does not violate the EAR.

In addition, BIS has now conducted a PSV in a transaction involving Xian XR Aerocomponents Co., Ltd., Xujiawen Beijiao, Xian, Shaanxi, People’s Republic of China, “Xian”), a person included on the Unverified List.  Consequently, this notice advised exporters that Xian is removed from the Unverified List and the “red flag” resulting from Xian’s inclusion on the Unverified List is removed.

4. Revisions to the Export Administration Regulations Related to the Missile Technology Control Regime (MTCR) (68 FR 16144 on April 2, 2003)

Commentary: The Bureau of Industry and Security has amended the Commerce Control List (CCL) to reflect the reformatted Missile Technology Control Regime (MTCR) Annex of October 14, 1999.  In Addition this final rule amends Country Group A:2, MTCR, to add the Czech Republic, Korea (Republic of), Poland, Turkey, and Ukraine to reflect their membership in the MTCR.  Finally, the revision corrects the control text in 9B106 that erroneously captures standalone altitude chambers, and corrects the MT/NP reasons for control of spin forming and flow forming machines described in 2B009. 

5. Exports and Reexports of Explosives Detection Equipment and Related Software and Technology; Imposition and Expansion of Foreign Policy Controls (68 FR 16208 on April 3, 2003)

Commentary:   The Bureau of Industry and Security (BIS) is amending the Export Administration Regulations (EAR) to expand the scope of explosives detection equipment controlled under Export Control Classification Number (ECCN) 2A983, previously 2A993, to include equipment that detects the presence of explosives, explosive residue, or detonators.  BIS is also expanding controls on the export and reexport of such explosives detection equipment by imposing regional stability (RS) controls and clarifying the previously-existing anti-terrorism (AT) controls on this equipment.  Additionally, BIS is imposing RS and AT controls on related software and technology, previously EAR99, but now classified under newly created ECCNs 2D983 and 2E983.  This rule makes available for most destinations the use of License Exception Servicing and Replacement of Parts and Equipment (RPL) for one-for-one replacement of explosives detection equipment controlled under ECCN 2A983 that was legally exported or reexported and related software controlled under ECCN 2D983. 

License Exception Technology and Software—Unrestricted (TSU) may also be used to export or reexport certain operation technology and software controlled under ECCNs 2D983 and 2E983.  Special records must be maintained when utilizing such License Exceptions.  License Exception Governments, International Organizations, and International Inspections Under the Chemical Weapons Convention (GOV) also is available to export and reexport items controlled under ECCNs 2A983, 2D983 and 2ED983 for official use by personnel and agencies of the U.S. Government.

6. Best Practices for Exporters/Re-Exporters and Trade Facilitation/Freight Forwarding Companies Regarding the Transit, Transshipment, and Reexport of Dual-Use Items (68 FR 26567 on May 16, 2003)

Commentary: The Bureau of Industry and Security (BIS) is seeking public comments on proposed “Best Practices for Exporters/Re-exporters and Trade Facilitation/Freight Forwarding Companies regarding the Transit, Transshipment, and re-export of Dual-Use Items.”  The best practices identified represent the types of practices that many companies already observe, which is consistent with the broader view of the Department of Commerce (DOS) that implementing effective export compliance programs is an important component of responsible corporate citizenship and good business practices generally.  The purpose of the “Best Practices for Exporters/Re-exporters and Trade Facilitation/Freight Forwarding Companies regarding the Transit, Transshipment, and re-export of Dual-Use Items” is to help industry, and in particular Trade Facilitators/Freight Forwarders and Exporters/Re-Exporters, contribute to a reduction in the illicit transshipment, transit, or re-export of dual use items subject to U.S. and foreign export controls, and to facilitate legitimate global commerce by improving the capacity to distinguish between licit and illicit transactions. Comment must be received before June 16, 2003.

7. Addition of Persons to Unverified List – Guidance as to “Red Flags” under Supplement No. 3 to 15 CFR Part 732(68 FR 26569 on May 16, 2003)

Commentary:   The Bureau of Industry and Security (BIS) is adding three individuals to the list of persons in foreign countries who were parties to past export transactions where pre-license checks (“PLC”) or post-shipment verifications (“PSV”) could not be conducted for reasons outside the control of the U.S. Government (“Unverified List”).  The individuals added are Lucktrade International PTE Ltd. and Peluang Teguh, which are located in Singapore, and Lucktrade International, which is located in Hong Kong. This notice reminds exporters that any involvement of a listed person and a party to a proposed transaction constitutes a “red flag” as described in Supplement No. 3 to 15 CFR Part 732, requiring heightened scrutiny by the exporter before proceeding with such a transaction. 

8. Imposition and Expansion of Controls on Designated Terrorists(68 FR 34192 on June 6, 2003)

Commentary: The Bureau of Industry and Security (BIS) has amended the Export Administration Regulations (EAR) by imposing a license requirement on the export and reexxport of any item subject to the EAR by a U.S. person or non-U.S. person to persons designated in or pursuant to Executive Order 13224 of September 23, 2001. In response to the grave acts of terrorism and threats of terrorism, Executive Order 13224 blocks the property and interests in property of persons listed in an Annex to the order and persons designated by the Secretary of State or the Secretary of the Treasury pursuant to criteria set forth in the order.  Executive Order 13224 also prohibits U.S. persons from engaging in any transactions with such blocked persons.  The Department of Treasury’s Office of Foreign Assets Control (OFAC) announces the names of persons designated pursuant to Executive Order 13224 in the Federal Register and includes such persons in a listing of persons subject to various sanctions programs administered by OFAC.  The Department of State also announces the names of foreign persons designated pursuant to Executive Order 13224 in the Federal Register.  All persons designated in or pursuant to Executive Order 13224 are identified by the bracketed initials [SDGT] in the Department of Treasury listing and are also known as Specially Designated Global Terrorists [SDGTs].

This rule also amends the EAR by expanding reexport controls on Specially Designated Terrorists [SDTs] and Foreign Terrorist Organizations [FTOs].  OFAC also includes SDTs and FTOs in the Department of Treasury listing and identifies them by the bracketed initials [SDT] and [FTO] respectfully.

9. Implementation of the Understandings Reached at the June 2002 Australia Group (AG) Plenary Meeting and the AG Intersessional Decision on Cross Flow Filtration Equipment – Chemical and Biological Weapons Controls in the Export Administration Regulations.(68 FR 34526 on June 10, 2003)

Commentary:   The Bureau of Industry and Security (BIS) has published a final rule to describe the understandings reached at the June 2002 plenary meeting of the Australia Group (AG) and to amend the Export Administration Regulations (EAR) as needed, to implement these AG understandings.  Specifically, this rule amends the licensing policy provisions in the EAR that apply to exports and reexports of items on the AG control list by clarifying several factors that are among those used to evaluate license applications for these AG-listed items and by identifying additional factors not previously listed in the EAR.  In addition, the rule clarifies the circumstances under which BIS would deny license application to export or reeexport these AG-listed items. All of these changes are intended to ensure that the EAR provisions that apply to AG-listed items are consistent with the “Guidelines for Transfers of Sensitive Chemical or Biological Items,” which were adopted at the June 2002 AG plenary meeting.

This rule also implements understandings reached at the June 2002 plenary meeting concerning AG controls on fermenters and toxins.  The control threshold for AG-listed fermenters described on the Commerce Control List (CCL) is lowered from a capacity of 100 liters or greater to a capacity of 20 liters or greater.  In addition, the rule adds eight new toxins to the list of AG-listed human and zoonotic pathogens and toxins described on the CCR.  The eight new toxins added to the list under ECCN 1C351.d of the CCL are abrin, cholara toxin, diacetoxyscirpenol toxin, T-2 toxin, HT-2 toxin, modeccin toxin, volkensin toxin, and viscum album lectin 1 (viscumin).

In addition to the AG plenary meeting changes described above, the rule implements an AG intersessional decision concerning cross (tangential) flow filteration equipment.

The rule makes corrections in four CCL entries that contain AG-listed items.  One entry, containing AG-listed genetic elements and genetically modified organisms, is amended to correct errors in the use of the terms “organism” and “microorganism.”  Another entry, containing AG-listed chemical manufacturing facilities and equipment, is amended to clarify the scope of that entry’s controls on certain valves containing nickel and nickel alloys and on agitators for use in reaction vessels or reactors.  Two other CCL entries are amended to clarify the license requirements that apply to technology for the “development” or “production” of AG-listed valves containing nickel and nickel alloys.  In addition, the rule amends the AG-based licensing provisions in the EAR to identify certain CCL entries that were inadvertently omitted when BIS amended these provisions on previous occasions. 

Finally, the rule updates the list of countries that are currently States Parties to the Chemical Weapons Convention (CWC) by adding six countries that recently became States Parties:  Andorra, Guatemala, Palau, Saint Vincent, and the Grenadines, Samoa, and Thailand.

10. Best Practices for Exporters/Re-Exporters and Trade Facilitation/Freight Forwarding Companies Regarding the Transit, Transshipment, and Reexport of Dual-Use Items; Correction.(68 FR 35381 on June 13, 2003)

Commentary:   The Bureau of Industry and Security (BIS) published a notice in the Federal Register of May 16, 2003 (63 FR 26567) requesting comments on the proposed “Best Practices for Exporters/Reexports and Trade Facilitation/Freight Forwarding Companies Regarding the Transit, Transshipment, and Reexport of Dual-Use Items.”  That notice contained an incorrect date within which comments were to be submitted.  The correct date for the submission of comments is July 16, 2003.

11. Export Administration Regulations:  Encryption Clarifications and Revisions.(68 FR 35783 on June 17, 2003)

Commentary:   The Bureau of Industry and Security (BIS) is amending the Export Administration Regulations (EAR) to clarify when encryption commodities and software may be given de minimis treatment, when short-range wireless devices incorporating encryption may be given mass market or retail treatment, and to provide guidance on when exporters are required to submit encryption review requests.  It also expands the authorizations according to which travelers departing the United States may take encryption for their personal use, and clarifies that specially designed medical equipment and software are not controlled as encryption or “information security” items under the EAR.  Finally this rule implements changes to the Wassenaar Arrangement List of dual-use items (agreed upon in the September 2002 meeting and finalized in December 2002) that eliminate from Export Control Classification Number (ECCN) 5A002 certain types of “Personalized smart cards” and equipment specially designed and limited to controlling access to copyright protected data.

Specifically, this rule amends §734.4(b) to clarify the de minimis eligibility of encryption items controlled for National Security (“NS”) or Anti-Terrorism (“AT”) reasons under the Export Administration Regulations (EAR), subject to the applicable notification or review requirements described in §740.13(e) and §742.15(b). As with other encryption items no longer subject to “EI” controls (such as items classified under Export Control Classification Numbers (ECCNs) 5A992, 5D992 or 5E992), this rule clarifies that ECCN 5D002 encryption source code that would be considered publicly available under §734.3(b)(3) of the EAR (and the corresponding object code) is eligible for de minimis treatment once exporters have complied with the applicable notification requirement that releases such ECCN 5D002 software from “EI” controls.

This rule also updates License Exception BAG and the Related

Control notes to ECCN 5A002 relative to the Wassenaar Arrangement List of dual-use items, and in several sections of the EAR clarifies existing instructions related to encryption commodities and software pre-loaded onto laptops, handheld devices, computers or other equipment. This rule also adds a “checklist” on encryption and other “information security” functions to Supplement 5 to part 742 of the EAR, to help exporters more fully consider and identify controlled encryption and “information security” components within their products, when making classification decisions and assessing whether an encryption review by BIS is required.

Consistent with the standing export control agreement among Wassenaar Arrangement member nations, this rule also adds a nota bene (“NB”) immediately following Note 1 in Category 5 part II that clarifies that commodities and software specially designed for medical end-use that incorporate encryption items listed in Category 5 part II are not controlled by Category 5, part II of the Commerce Control List. This rule thus clarifies that a commodity or software product that is specially designed for medical end-use is classified as EAR99, even if the medical product incorporates another product, part or component that would otherwise be classified as 5A002, 5D002, 5A992 or 5D992.

This rule expands the scope of License Exception BAG by allowing U.S. citizens or permanent resident aliens of the United States to export encryption commodities and software for their personal use to any destination except Country Group E:1. Persons other than U.S. citizens or permanent resident aliens of the United States (except nationals of countries listed in Country Group E:1 of Supplement No. 1 to part 740 who are not U.S. citizens or permanent resident aliens of the United States) may also take such commodities and software as accompanying baggage for their personal use to any destination except Country Group “unaccompanied baggage” by permitting shipments of personal use encryption commodities and software subject to “EI” controls to the same destinations that are permitted for CB, MT, NS and NP controlled items.

In the Related Control notes to ECCN 5A002, the previous restriction to “one-time” copy control of copyright protected audio/video data has been removed. Likewise, as is now the case for such playback audio/video data, software that is subject to the EAR but not specified on the Commerce Control List (i.e., items that are classified as EAR99) remains classified EAR99 when copy protected. Lastly, Related Control note (a) is amended and divided into two sub-paragraphs.

12.  Exports and Reexports to the Federal Republic of Yugoslavia: Lifting of UN Arms Embargo-Based Controls; Clarification of UN Arms Embargo-Based Controls on Rwanda. (68 FR 38599 on June 30, 2003)

Commentary: On November 25, 2002, the Bureau of Industry and Security (BIS) published a final rule that amended the Export Administration Regulations (EAR) by removing the special controls on the export and reexport of arms-related items imposed on July 14, 1998 on the Federal Republic Yugoslavia (Serbia and Montenegro) (FRY).  This rule corrects inadvertent errors in Category 6 – Sensors and Laser- of the Commerce Control list made by the November 25, 2002 rule. These errors appear in the License Requirements and License Exceptions Sections for Export Control Classification Numbers (ECCNs) 6E001 and 6E002.  These ECCNs have been revised in two final rules, Licensing Jurisdiction for “Space Qualified” Items and Telecommunications Items for Use on Board Satellites, published by BIS on September 23, 2002 (67 FR 58722) and Revisions and Clarifications to the Export Administration Regulations – Nuclear Nonproliferation Controls:  Nuclear Suppliers Group, published August 29, 2202 (67 FR 55594).

License Requirements for ECCNs 6E001 and 6E002.   Subsequent to the issuance of these two earlier rules, the FRY Rule omitted the September 23, 2002 rule's revision to the Reason for Control section of ECCNs 6E001 and 6E002 that reads as follows: RS applies to “technology” for equipment controlled by 6A002.a.1, .a.2, .a.3, .c, or .e, 6A003.b.3, or .b.4, or 6A008.j.1. In addition, the FRY Rule omitted the Non-Proliferation controls for “technology” for items controlled by ECCN 6D001 from the Reason for Control section of ECCN 6E001, as was revised by the August 29, 2002 rule. This document corrects the stated inadvertent omissions.

License Exceptions for ECCNs 6E001 and 6E002. This document also corrects two other inadvertent omissions made by the FRY Rule. The September 23, 2002 rule had revised the License Exceptions for ECCNs 6E001 and 6E002. The FRY rule omitted the revision in the License Exception section of ECCN 6E001, which noted that “technology” for commodities controlled by 6A002.e or 6A008.j.1, and technology for “software” defined in 6A008.j.1 and controlled by 6D001or 6D002 are not eligible for License Exception TSR. The FRY rule also did not include the revision of the License Exception section of ECCN 6E002 that noted that “technology” for commodities controlled by ECCNs 6A002.e or 6A008.j.1 is not eligible for License Exception TSR.

13. Revisions to the Unverified List—Guidance as to “Red Flags”(68 FR 44039 on July 25, 2003)

Commentary: The Bureau of Industry and Security (BIS) has removed Daqing Production Logging Institute from the Unverified List, and the “red flag” resulting from Daqing Production Logging Institute’s inclusion on the Unverified List is rescinded.

On June 14, 2002, BIS published a notice in the Federal Register that set forth a list of persons in foreign countries who were parties to past export transactions where pre-license checks (“PLC”) or post-shipment verifications (“PSV”) could not be conducted for reasons outside the control of the U.S. Government (“Unverified List”).  This notice advised exporters that the involvement of a listed person as a party to a proposed transaction constitutes a “red flag” as described in the guidance set forth in Supplement No. 3 to 15 CFR Part 732, requiring heightened scrutiny by the exporter before proceeding with such a transaction.  The notice also stated that, when warranted, BIS would remove persons from the Unverified List.  Recently a PSV was completed at the facilities of Daqing Production Logging Institute, No. 3 Fengshou Village, Sartu District, Daqing City, Heilongjiang, People’s Republic of China.  Accordingly, Daqing Production Logging Institute is removed from the Unverified List.

14.  Revisions to the Unverified List—Guidance as to “Red Flags” - correction(68 FR 47637 on August 11, 2003)

Commentary: The Bureau of Industry and Security (BIS) has published a correction in the notice document 03-19017 beginning on Page 44039 in the issue of Friday, July 25, 2003 making the following correction:  On Page 44039, in the third column, in the third full paragraph, in the first line “has not conducted” should read “has now conducted”.

15. Export Clearance – Conformance of Export Administration Regulations with Foreign Trade Statistics Regulations(68 FR 50470 on August 21, 2003)

Commentary: The Bureau of Industry and Security (BIS) has published a rule amending the Export Administration Regulations
(EAR) to add references to the Automated Export System (AES) and to conform the EAR to certain provisions of the Foreign Trade Statistics Regulations (FTSR) including provisions related to AES promulgated on July 17, 2003.  Specifically this rule amends the EAR by revising two section in Part 758 to conform more closely to the Foreign Trade Statistics Regulations (FTSR) and by revising one such to conform to terminology used elsewhere in the EAR.  This rule also amends Parts 732, 740, 744, 752, 754, 758, 770 and 772 to add references to AES in places where references to SEDs appear.  These amendments are needed because, without them, the EAR would appear to require that an SED be filed even when the FTSR requires that the filing take place via AES.  Additionally, in Parts 740 and 744 this rule replaces statements that an SED must be filed with the carrier with statements that the SED or AES must be filed in accordance with the requirements of the FTSR.  This rule replaces the phrase “U.S. Customs Service” with “Bureau of Customs and Border Protection” and, in one instance, with “Bureau of Customs and Border Protection or Bureau of Immigration and Customs Enforcement” to reflect the names of the agencies that currently perform the functions formerly performed by the U.S. Customs Service.

16. Export Administration Regulations:  Penalty Guidance in the Settlement of Administrative Enforcement Cases(68 FR 54402 on September 17, 2003)

Commentary: The Bureau of Industry and Security (BIS) is proposing to amend the Export Administration Regulations (EAR) by incorporating guidance on how BIS makes penalty determinations when settling administrative enforcement cases under Part 766 of the EAR, 15 CFR 730-799 (2003).  This guidance would appear in a new Supplement No. 1 to Part 766 of the EAR.  The proposed guidance identifies both general factors, such as destination for the export and degree of willfulness involved in violations, and specific mitigating and aggravating factors, which BIS typically takes into account in determining an appropriate penalty.  The proposed guidance also describes factors that BIS’ Office of Export Enforcement (OEE) typically considers in describing whether a violation should be addressed in a warning letter, rather than an administrative enforcement case.  The guidance would not apply to antiboycott matters arising under Part 760 of the EAR. Comments must be received by November 17, 2003.

17. Revisions to the Export Administration Regulations Based on the 2002 Missile Technology Control Regime Plenary Agreements(68 FR 54655 on September 18, 2003)

Commentary: BIS has published a rule amending the Commerce Control List (CCL) to reflect changes to the Missile Technology Control Regime (MTCR) Annex that were agreed to by MTCR member countries at the September 2002 Plenary in Warsaw, Poland.  BIS is also amending certain entries on the CCL to clarify the scope of and jurisdiction for controls on global navigation satellite receiving equipment.

Specifically, this rule amends Part 722 of the EAR to add the definitions for “Range (MTCR)” and “Payload (MTCR)” to the list of terms and revises the CCL to reflect changes to the MTCR Annex that were agreed to by MTCR members at the September 2002 Plenary session.  In addition, this rule amends certain entries on the CCL to clarify the scope of and jurisdiction for controls on global navigation satellite receiving equipment (Export Control Classifications Numbers (ECCNs) 7A005, 7A105 and 7A994).  The following ECCNs are amended as described:  1C111:  Mixed Oxides of Nitrogen added (MTCR Annex change); 7A005:  Cross-reference to 7A105 and 7A994 added (clarification); 7A013: Integrated Navigation Systems added (MTCR Annex change); 7A105:  Entry reformatted to clarify description of items covered (MTCR Annex change).  Cross-reference to 7A005 and 7A994 added (clarification); 7A994:  Related controls paragraph deleted (clarification); and 9A106:  Flight Control Servo valves added (MTCR Annex change).

18. Effects of Foreign Policy-Based Export Controls(68 FR 60050 on October 21, 2003)

Commentary: The Bureau of Industry and Security (BIS) is reviewing the foreign policy-based export controls in the Export Administration Regulations to determine whether they should be modified, rescinded or extended.  To help make these determinations, BIS is seeking comments on how existing foreign policy-based export controls have affected exporters and the general public.  Comments are due by November 21, 2003.

19. Addition of Kazakhstan to the Nuclear Suppliers Group (NSG), and other Revisions(68 FR 60288 on October 22, 2003)

Commentary: As a result of the admission of Kazakhstan to the Nuclear Suppliers Group (NSG), BIS has published a rule amending the Export Administration Regulations (EAR) to add Kazakhstan to Country Group A, Column A:4, which identifies the member countries of the NSG, and to the definition of “Nuclear Suppliers Group.”  The NSG member countries have agreed to establish export licensing procedures for the transfer of items identified on the Annex to the “Nuclear Related Dual-Use Equipment, Materials, and Related Technology List,” which is published by the International Atomic Energy Agency.  

20. Computer Technology and Software, and Microprocessor Technology Eligible for Export or Reexport Under License Exception(68 FR 60891 on October 24, 2003)

Commentary: BIS is proposing to expand the availability of license exceptions for exports and reexports of computer technology and software, and microprocessor technology on the Commerce Control List (CCL) of the Export Administration Regulations (EAR) under Export Classification Control Numbers (ECCNs) 3E002, 4D001 and 4E001. 

This proposed rule would remove License Exception TSR eligibility for certain computer technology and software under ECCNs 4D001 and 4E001, but would make this computer technology and software eligible for License Exception CTP (Section 740.7 of the EAR).  License Exception CTP currently only applies to computer hardware classified under ECCN 4A003.  The 22 countries that are currently eligible to receive technology and software for computers with unlimited CTP under License Exception TSR would continue to be eligible for the same, unlimited level of technology and software under License Exception CTP.  All of these 22 countries are in “Computer Tier 1” for purposes of License Exception CTP. Technology and software for computers with a CTP equal to or less than 150,000 MTOPS for export or reexport to Computer Tier 2 destinations other than these 22 countries would be eligible for License Exception CTP.  Technology and software for computers with a CTP equal to or less than 75,000 MTOPS would be eligible for License Exception CTP to “Computer Tier 3” destinations.  Exports and reexports to countries in Country Group E:1 (terrorists supporting countries) will continue to be ineligible for License Exception CTP. 

This rule also proposes to make technology for the development and production of microprocessors eligible for License Exception CIV.  The threshold for eligibility would be limited by CTP at a level that is yet to be determined.  License Exception CIV is available for exports and reexports of items that require a license for national security reasons only that are destined to civil end-users for civil end-uses in Country Group D:1, except North Korea.  CIV may not be used for exports and reexports to military end-users or to known military uses.  In addition to conventional military activities, military uses include any proliferation activities described in Part 744 of the EAR.  It should be noted that a license is also required for transfer of items exported under License Exception CIV to military end-users or end-uses within Country Group D:1 countries.

The goal of the proposed rule is to solicit public comments to assist BIS in evaluating the effect of the proposed amendments.  In addition, this proposed rule requests industry to suggest alternatives for a different method or parameter for controlling exports of computers and microprocessors, and the technology and software therefore. 

Parties submitting comments are asked to be as specific as possible. The Department encourages interested persons who wish to comment to do so at the earliest possible time.    The period for submission of comments will close November 24, 2003.

21. Mandatory Use of Simplified Network Application Processing System(68 FR 64009 on November 12, 2003)

Commentary: The Bureau of Industry and Security (BIS) is publishing a proposed rule that will amend the Export Administration Regulations (EAR) to implement a revised version of the Bureau of Industry and Security’s (BIS) Simplified Network Application Processing (SNAP+) system.

SNAP+ would permit submissions via the World Wide Web using a Web browser and would have the capability to “attach” images (as PDF files) of related documents to applications or requests. It would also incorporate security features that were not available when electronic filing of export license applications began in the mid 1980s. Accordingly, BIS is proposing to amend the Export Administration Regulations to require that all export license applications (except Special Comprehensive Licenses), reexport license applications, Classification Requests, encryption review requests, and notifications prior to shipments of food and agricultural commodities to Cuba under License Exception AGR, along with any supporting or related documents be submitted via SNAP+. Any supporting or related documents attached to the submission would have to be in PDF format and, if they contain text, would have to be text searchable.

BIS would consider requests for exceptions to the mandatory electronic filing rule and grant them in the following circumstances:

·A filer who has made no more than three submissions to BIS in the preceding twelve months;

·A filer who lacks access to the Internet;

·  BIS has rejected the filer's request or revoked its eligibility to file electronically;

·BIS has requested that the filer submit a paper document for a particular transaction; or

·BIS determines that urgent circumstances or circumstances beyond the filer's control require allowing paper filing in a particular case.

 

SNAP+ would eliminate the registration of individual users by paper communication with BIS. Instead, a person may begin the registration process on behalf of him or herself or may register an entity such as a corporation online. After submittal of the required information, the SNAP+ system would then generate a paper document called an electronic submission certification, which explains the major responsibilities of SNAP+ users, for the designated official to sign and submit to BIS. BIS would notify the designated official by e-mail of its approval or rejection of the application to use SNAP+.

BIS is also proposing to convert existing SNAP users to SNAP+ through the following process. BIS would send a letter to each existing SNAP user informing it of the date on which it will be converted to the new system. The letter will also inform the existing SNAP user that a person who knows the existing user's current SNAP company identification number must log onto the system to provide the name and contact information of the individuals who the existing user determines will be Organization Administrator and Designated Official in the SNAP+ system. Existing SNAP users will not be able to use SNAP on or after the conversion date until this step is taken. In addition, the letter will describe the roles of the Organization Administrator and Certifiers.

Comments on the proposed rule must be received by BIS no later than January 12, 2004.

22. Revisions and Clarifications to the Export Administration Regulations – Chemical and Biological Weapons Controls: Australia Group; Chemical Weapons Convention; Correction(68 FR 67030 on December 1, 2003)

Commentary: The Bureau of Industry and Security (BIS) published a final rule on Tuesday, June 10, 2003, that amended the Export Administration Regulations (EAR) to implement the understandings reached at the June 2002 plenary meeting of the Australia Group (AG).  The June 10, 2003, final rule contained errors in the List of Items Controlled for Export Control Classification Numbers (ECCNs) 2E001 and 2E002 on the Commerce Control List (CCL), as well as an error in the licensing policy provisions of the EAR that apply to items identified on the AG lists.  This published corrected final rule corrects those errors.

D23. December 2002 Wassenaar Arrangement Plenary Agreement Implementation:  Categories 1, 2, 3, 4, 5, 6, and 7 of the Commerce Control List, and Reporting Requirements(68 FR 68976 on December 10, 2003)

Commentary:  BIS has published a final rule which revises certain entries controlled for national security reasons in Categories 1, 2, 3, 4, 5 Part I (Telecommunications), 5 Part II (Information Security), 6, and 7 to conform with changes in the List of Dual-Use Goods and Technologies maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar Arrangement). The purpose of this final rule is to make the necessary changes to the Commerce Control List to implement revisions to the Wassenaar List that were agreed upon in the December 2002 meeting, to make necessary revisions to reporting requirements and License Exception GOV restrictions, and to add a statement of understanding for medical equipment.

Category 3 changes: ECCN 3A001 is amended by (a) adding a new paragraph 3A001.a.1.c that adds a new parameter for integrated circuits, designed or rated as radiation hardened, and adding a note for this paragraph; (b) revising the parameters of 3A001.a.5.a.2 and 3A001.a.5.a.3 for analog-to-digital and digital-to-analog converter integrated circuits; and (c) adding a new paragraph 3A001.a.5.a.4 to add a new parameter for analog-to-digital converter integrated circuits.  BIS is amending ECCN 3A991 by revising the parameters and reformatting 3A991.c for analog-to-digital converter integrated circuits, to continue controls for antiterrorism (AT) reasons for these commodities that were liberalized as a result of changes to the Wassenaar List of Dual-Use Goods and Technologies. BIS is amending ECCN 3B001 by revising the parameter for 3B001.f.1 b for minimum resolvable feature size from 0.5μm to 0.35μm for “stored program controlled” lithography equipment.  Accordingly, BIS is amending ECCNs 3E001 and 3E002 by revising the parameter in paragraph b.1 of the Note from 0.7μm to 0.5μm.    

Category 4 changes: ECCN 4A003 is amended by revising the “composite theoretical performance” (CTP) parameter in 4A003.b from 280,000 millions of theoretical operations per seconds (MTOPS) to 190,000 MTOPS. 

Category 5 Part I changes:  BIS is revising among other things, the text under ECCN 5B001 regarding equipment employing “common Channel signaling” in 5B001.5.  BIS is also revising ECCN 5D001 by correcting a paragraph citation in the CIV and TSR eligibility paragraphs of the License Exceptions section from “5A001.b.4” to read “5A001.b.5). 

Category 5 Part II changes: BIS is amending ECCN 5A002 by: (a) Moving and rearranging the text that describes what is not controlled in this entry from the Related Controls paragraph of the List of Items Controlled section to a Note in the beginning of the Item paragraph of the List of Items Controlled section; (b) Dividing the existing text in paragraph (a) of the note (regarding “personalized smart cards”) into sub-paragraph 1 and a N.B.; and (c) Moving the related control note in paragraph 2 of the Related Definitions paragraph of the List of Items Controlled section to a N.B. following 5A002.a.

For an extensive list of changes to the CCL of the EAR under this rule, please refer to the published rule cited above.