1998 Export Administration Regulations

FINAL RULES PUBLISHED IN THE FEDERAL REGISTER DURING 1998
DEPARTMENT OF COMMERCE, BUREAU OF EXPORT ADMINISTRATION
EXPORT ADMINISTRATION REGULATIONS
(15 CFR Part 730 et seq.)

NOTE: CHANGES TO THE EXPORT ADMINISTRATION REGULATIONS LISTED BELOW ARE NUMBERED CONSECUTIVELY, BEGINNING IN JANUARY OF THE NEW YEAR.

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1. Implementation of Wassenaar Arrangement List of Dual-Use Items: Revision to the Commerce Control List and Report Under the Wassenaar Arrangement; (63 FR 2452 on January 15, 1998)

Commentary: When representatives of the thirty-three member countries gave final approval on July 12-13, 1996 in Vienna, Austria to establish the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, they agreed to implement national discretion export controls on all items in the List of Dual-Use Goods and Technologies. This interim rule makes changes to the Commerce Control List necessary to implement the Wassenaar List.

For example, the control level governing microprocessors classified under ECCN 3A001 has been increased from 80 million theoretical operations per second ("MTOPS") to 260 MTOPS. The control level governing digital computers classified under ECCN 4A003 has been increased from 260 MTOPS to 2,000 MTOPS. The control level for "communications channel controllers" on routers and switches has been increased from 64,000 bits per second to 2.1 million bits per second. The control level for "network access controllers" on routers and switches has been increased from 33 million bits per second to 156 million bits per second.

Nevertheless, most products that are released from multilateral export controls under Wassenaar remain subject to unilateral foreign policy controls and continue to require licenses for export to embargoed and terrorist countries. This creates unnecessary complexity for companies that must review numerous ECCNs and reclassify products as subject to "AT" controls, rather than simply defaulting to "EAR99".

Finally, the Wassenaar Implementing Regulation imposes new reporting requirements with respect to exports of certain products. Reports are required to be submitted to BXA semiannually for specified items controlled under the Wassenaar Arrangement exported under License Exceptions LVS, GBS, CIV, CTP, TSR and GOV.

2. Request for Comment on Written Assurances for Exports of Technical Data Under General License GTDR (to be Renamed, "Written Assurances for Exports of Technical Data Under License Exception TSR" (63 FR 3082 on January 21, 1998)

Commentary: The Bureau of Export Administration has requested comments on whether the written assurance requirements under License Exception TSR should be retained. This is a wonderful opportunity to file written comments to the effect that this burdensome requirement should be eliminated! Comments are due by March 23, 1998.

3. Report of Requests for Restrictive Trade Practices or Boycott – Single or Multiple Transactions (63 FR 3082 on January 21, 1998)

Commentary: The Bureau of Export Administration is requesting comments on ways to minimize the burden of compliance with the anti-boycott regulations. Comments are due by March 23, 1998.

4. Delivery Verification Procedure (63 FR 3083 on January 21, 1998)

Commentary: The Bureau of Export Administration is requesting comments on whether the delivery verification procedure can be streamlined. Comments are due by March 23, 1998.

5. Request for Comment on Special Comprehensive License Procedure (63 FR 3083 on January 21, 1998)

Commentary: The Bureau of Export Administration has requested comments on whether the Special Comprehensive License is responsive to exporters’ needs or could be streamlined. Since the SCL has been abandoned by all but the largest companies, this presents a good opportunity to make recommendations on how it could be reformed in order to appeal to a larger number of companies. Comments are due by March 23, 1998.

6. Request for Comment on Submission of Technical Data Letter of Explanation (63 FR 3084 on January 21, 1998)

Commentary: The Bureau of Export Administration is reviewing the requirement for a technical data letter of explanation in support of technology license applications. Comments are due by March 23, 1998.

7. Exports of High Performance Computers (63 FR 5448 on February 3, 1998)

Commentary: The Bureau of Export Administration is amending the Export Administration Regulations by revising the requirements for export and reexports of high performance computers in order to implement the National Defense Authorization Act ("NDAA"). In order to comply with the requirements of the NDAA, exporters and reexporters are required to submit "NDAA notices" for each transaction by completing the Multipurpose Application Form (BXA-748P) including all information required on that form for a license application, except for selecting "other" as the purpose of the application. Also, post-shipment verification of exports to Tier 3 countries of computers with a CTP greater than 2000 MTOPS is now required by the NDAA. All comments regarding these rules must be received on or before March 20, 1998.

8. Report on Unscheduled Unloading (63 FR 5778 on February 4, 1998)

Commentary: The Bureau of Export Administration has requested comments on ways to collect information regarding reports to BXA by carriers exporting controlled goods or technology when it is necessary to unload the cargo at a destination other than that shown on the Shipper’s Export Declaration or when directed to unload and/or return cargo. Comments are due by April 6, 1998.

9. Foreign Availability Procedures and Criteria (63 FR 5779 on February 4, 1998)

Commentary: The Bureau of Export Administration has requested comments on ways to minimize the burden of compliance with the regard to reports of availability of products in foreign markets to determine if similar U.S. products should be decontrolled. Comments are due by April 6, 1998.

10. Approval of Triangular Transactions Involving Commodities Covered by a U.S. Import Certificate (63 FR 5779 on February 4, 1998)

Commentary: As a result of an agreement between the U.S. and "free world" countries, the import certificate/delivery verification ("IC/DV") procedures were established. The IC/DV procedures provide a means to authorize imports to the U.S. to be transshipped to another destination. When this occurs, this is considered a "triangular" transaction. The Bureau of Export Administration is requesting comments on approving Triangular Transactions involving commodities on a U.S. Import Certificate. Comments are due by April 6, 1998.

11. Request for Comment on Customer Service Evaluation (63 FR 5780 on February 4, 1998)

Commentary: The Bureau of Export Administration is requesting comments on the use of a customer service survey that will be used to measure the quality, timeliness, and relevance of the counsel/information provided by BXA. Comments are due by April 6, 1998.

12. Short Supply Regulations, Petroleum Products (63 FR 5928 on February 5, 1998)

Commentary: The Bureau of Export Administration is reviewing ways to minimize the burden of the collection of information required for submission of documents to support export license application, or the retention of documents for shipments made under applicable License Exceptions of petroleum products derived from a naval petroleum reserve.

13. Implementation of The Wassenaar Arrangement List of dual-Use Items: Revisions to the Commerce Control List and Reporting Under the Wassenaar Arrangement (63 FR 7699 on February 17, 1998)

Commentary: In order to minimize the industry’s concerns about implementing the new licensing requirement provision of the interim rule by the original date of February 17, 1998, the Bureau of Export Administration has extended the date until April 15, 1998. This does not affect the reporting requirements of Section 743.1 of the Export Administration Regulations, and any item removed from License Exception or NLR eligibility as a result of the January 15 rule may be subject to reporting requirements.

14. Request for Comment on Statement of Ultimate Consignee and Purchaser (63 FR 8431 on February 19, 1998)

Commentary: The Bureau of Export Administration is reviewing ways to minimize the burden of the requirement for a Statement of Ultimate Consignee and Purchaser in support of export license applications where the country of ultimate destination is in Country Group Q, S, V, W, Y or Z. Comments are due by April 20, 1998.

15. Request for Comment on U.S. Industry Reporting Requirements for Compliance with the Chemical Weapons Treaty (63 FR 8432 on February 19, 1998)

Commentary: The Bureau of Export Administration is requesting comments on ways to minimize the burden of the reporting requirements for compliance with the Chemical Weapons Treaty. Comments are due by April 20, 1998.

16. Request for Comments on Exports of Parcels through the Postal Service (63 FR 8905 on February 23, 1998)

Commentary: The Bureau of Export Administration is reviewing the need to mark parcels to be exported with either a validated export license number or the General License symbol as appropriate. Comments are due by April 24, 1998.

17. Request for Comment on the Five-Year Retention Period for All Record of Export Transactions (63 FR 8905 on February 23, 1998)

Commentary: The Bureau of Export Administration is requesting comments on ways to minimize the burden of the recordkeeping requirements that corresponds with the five-year statute of limitations for criminal actions brought under the Export Administration Act of 1979 and predecessor acts, and the five-year statute for administrative compliance proceedings. Comments are due by April 24, 1998.

18. Request for Comment on the Destination Control Statement (63 FR 8906 on February 23, 1998)

Commentary: The Bureau of Export Administration is requesting comments on the use of a Destination Control Statement to serve as a notice to all foreign parties in an export transaction that further shipment to any country not authorized is prohibited. Comments are due by April 24, 1998.

19. Request for Comments on Procedures For Acceptance or Rejection of a Rated Order (63 FR 8906 on February 23, 1998)

Commentary: The Bureau of Export Administration is requesting comments on the procedures required for notification to the customer of acceptance or rejection of a priority rated order under the Defense Priority Allocation System (DPAS) within a specified period of time. Comments are due by April 24, 1998.

20. Request for Comments on the Procedure for Voluntary Self-Disclosure for Violations of the Export Administration Regulations (EAR) (63 FR 8907 on February 23, 1998)

Commentary: The Bureau of Export Administration is requesting comments regarding the procedures in which exporters provide self-disclosure narrating possible violations of the Export Administration Act. Comments are due by April 24, 1998.

21. Request for Comments on Import Certificates and End-User Certificates (63 FR 8907 on February 23, 1998)

Commentary: The Bureau of Export Administration is requesting comments on ways to minimize the burden of the reporting requirements for obtaining Import Certificates and End-User Certificates. Comments are due by April 24, 1998.

22. Request for Comments on Reporting of Telecommunications (63 FR 9503 on February 25, 1998)

Commentary: The Bureau of Export Administration is requesting comments on ways to minimize the burden of the reporting and recordkeeping requirements necessary for obtaining export licenses for telecommunication equipment to proscribed destinations. Comments are due by April 27, 1998.

23. Request for Comments on Reporting on the Multi-Purpose Application (63 FR 9504 on February 25, 1998)

Commentary: The Bureau of Export Administration is requesting comments on ways to minimize the burden associated with third party disclosures, certifications and notification requirements imposed on the public. Comments are due by April 27, 1998.

24. Request for Comments on the Export Controls of Supercomputers (To be Renamed, Export Controls of High Performance Computers) (63 FR 9504on February 25, 1998)

Commentary: The Bureau of Export Administration is requesting comments on ways to minimize the burden of the reporting requirements on the exporters of high performance computers. Comments are due by April 27, 1998.

25. Request for Comments on Procedures for Supporting Documentation (63 FR 9505 on February 25, 1998)

Commentary: The Bureau of Export Administration is requesting comments on procedures requiring exporters to retain supporting documentation for an export license for a period of five years as well as all other records that exporters had previously been required to retain for two years. Also, comments on procedures for returning unused or partially used import certificates or their equivalent, to the foreign importer are being requested. Comments are due by April 27, 1998.

26. Export Procedures for Non-parties to the Chemical Weapons Convention (CWC) and Export of Schedule 1 Chemical Proposed Collection; Comment Request (63 FR 10362 on March 3, 1998)

Commentary: The Bureau of Export Administration has requested comments on ways to collect information regarding the requirements of exporters to obtain an End-Use Certificate prior to export of all Schedule 2 and 3 chemicals to countries not party to the CWC (Chemical Weapons Convention). Comments are due by May 4, 1998.

27. National Defense Authorization Act; Proposed Collection; Comment Request (63 FR 10362 on March 3, 1998)

Commentary: In order to comply with the National Defense Authorization Act, exporters are required to provide a written report to BXA within 30 days of the export of post shipment verification of the export of high performance computers (with a CTP greater than 2,000 MTOPS) to Tier 3 countries. To simplify the process, BXA is developing a new form that will incorporate the relevant data elements and replace the written report, thereby standardizing the data format for the applicant, and enabling the use of information technology in the processing of the data. The Bureau of Export Administration has requested comments on ways to collect this information. Comments are due by May 4, 1998.

28. Digital Computer System Parameters; Proposed Collection; Comment Request (63 FR 11867 on March 11, 1998)

Commentary: The Bureau of Export Administration is requesting comments on the documentation that must be submitted in connection with the processing of licenses for the export of computers. Comments are due by May 11, 1998.

29. Request for Comment on International Import Certificate (63 FR 13389 on March 19, 1998)

Commentary: The Bureau of Export Administration has requested comments and recommendations for the proposed information collection of International Import Certificates (Form BXA-645P). Comments are due by April 18, 1998.

30. Request for Comment on Notification of Commercial Invoices That Do Not Contain a Destination Control Statement (63 FR 13621 on March 20, 1998)

Commentary: The Bureau of Export Administration has extended the deadline for comments on the proposed requirement that forwarding agents notify exporters if shipping documentation is missing the destination control statement. Comments are due on or before April 20, 1998.

31. Revision to ECCN 1C350 (Mixtures): Removal of Solvent Free Basis Calculation Requirement and Trace Quantity Exemption (63 FR 14028 on March 24, 1998)

Commentary: The Bureau of Export Administration has issued a final rule removing the Solvent Free Basis calculation requirement which eliminates the necessity of the "trace quantity" exemption. The trace quantity exemption permitted exports of mixtures of concentrations of no more than 10,000 parts by eight per million of certain controlled chemicals. Therefore, the "trace quantity" exemption is removed.

32. Request for Comment on Digital Computer System Parameters (63 FR 14422 on March 25, 1998)

Commentary: Identical to number 28 with the extension of the reporting date to May 26, 1998.

33. Request for Comment on Special Comprehensive License. (63 FR 17153 on April 8, 1998)

Commentary: The Bureau of Export Administration has extended the deadline for comments on whether the Special Comprehensive License is responsive to exporters’ needs or could be streamlined. Since the SCL has been abandoned by all but the largest companies, this presents a good opportunity to make recommendations on how it could be reformed in order to appeal to a larger number of companies. Comments are due by May 6, 1998.

34. Request for Comment on the President’s "E" Award for Excellence in Exporting. (63 FR 17153 on April 8, 1998)

Commentary: The Bureau of Export Administration has requested comments on the collection of information to determine eligibility for the "E" Award within established criteria. This is an ongoing process at the wishes of the applicant.

35. Foreign Trade Statistics Regulations; Reporting the Value of Foreign Military Sales Shipments (63 FR 18344 on April 15, 1998)

Commentary: The Bureau of the Census proposes amending the Foreign Trade Statistics Regulations by adding a section requiring exporters or their designated agents to include a foreign military sales indicator code on the Shipper’s Export Declaration (SED) form, Automated Export System (AES) Record Layout, and Automated Export Reporting Program (AERP) Record Layout.

36. Bureau of Export Administration, Critical Technology Assessment; U.S. Assistive Technologies Industry (63 FR 30182 on June 3, 1998)

Commentary: BXA is conducting an assessment of the domestic assistive technologies industry in order to determine the competitiveness of the U.S. industry and to facilitate the transfer of technologies from federal laboratories to firms in the industry.

37. National Defense Stockpile Market Impact Committee Request for Public Comments (63 FR 30183 on June 3, 1998)

Commentary: The National Defense Stockpile Market Impact committee seeks comments from the public concerning the potential market impact of the Department of Defense’s planned disposals of excess materials currently held in the National Defense Stockpile. The FY 1999 AMP materials under review are Graphite (A11), Columbium (Ferro), Bauxite (refractory, Jamaican, and Surinam), Tantalum (Carbide Powder), and Aluminum Oxide (Fused Crude). Comments are due by July 6, 1998.

38. Extension of the Approved Collection of Information Regarding Comments on Submission of Technical Data Letter of Explanation (63 FR 31716 on June 10, 1998)

Commentary: The Bureau of Export Administration has requested an extension for the collection of comments regarding the requirement for a technical data letter of explanation in support of technology license applications. Comments are due by July 10, 1998.

39. Defense Priorities and Allocations System (63 FR 31918 on June 11, 1998)

Commentary: Commentary: The Department of Commerce issued a rule to amend the Defense Priorities and Allocations System (DPAS) regulation by updating, modifying or clarifying a number of its provisions. The rule is effective July 13, 1998.

40. Exports of Humanitarian Goods and Services to Cuba (63 FR 32123 on June 12,1998

Commentary: In accordance with the March 20, 1998 announcement by the President, BXA is streamlining procedures to facilitate the export of humanitarian goods consistent with recent legislation that provides support for the Cuban people.

41. Request for Comments on the Procedure for Voluntary Self-Disclosure for Violations of the Export Administration Regulations (EAR) (63 FR 32638 on June 15, 1998)

Commentary: BXA has requested an extension for comments regarding the procedures in which exporters provide self-disclosure narrating possible violations of the Export Administration Act. Comments are due by July 15, 1998.

42. Foreign Availability Procedures and Criteria (63 FR 33036 on June 17, 1998)

Commentary: The Bureau of Export Administration has requested an extension for the collection of comments on ways to minimize the burden of compliance with the regard to reports of availability of products in foreign markets to determine if similar U.S. products should be decontrolled. Comments are due by July 17, 1998.

43. Request for Comment on Written Assurances for Exports of Technical Data Under License Exception TSR (63 FR 33036 on June 17, 1998)

Commentary: The Bureau of Export Administration has requested an extension for the request for comments on whether the written assurance requirements under License Exception TSR should be retained. This is a wonderful opportunity to file written comments to the effect that this burdensome requirement should be eliminated! Comments are due by July 17, 1998

44. Request for Comment on Notification of Commercial Invoices That Do Not Contain a Destination Control Statement (63 FR 13621 on March 20, 1998)

Commentary: The Bureau of Export Administration has requested an extension to the deadline for comments on the proposed requirement that forwarding agents notify exporters if shipping documentation is missing the destination control statement. Comments are due on or before July 25, 1998.

45. Exports to the Federal Republic of Yugoslavia (Serbia and Montenegro); Imposition of Foreign Policy Controls (63 FR 37767 on July 14, 1998)

Commentary: In accordance with the United Nations ban on the sale and supply of arms and related material of all types to the Federal Republic of Yugoslavia (Serbia and Montenegro), the Bureau of Export Administration has embargoed certain items on the Commerce Control List. No embargoed items may be exported to the Federal Republic of Yugoslavia (Serbia and Montenegro) under any License Exception, including shipments of limited value (LVS). License applications for such items are subject to a policy of denial.

46. Exports to the Federal Republic of Yugoslavia (Serbia and Montenegro); Imposition of Foreign Policy Controls (63 FR 39505 on July 23, 1998)

Commentary: The Bureau of Export Administration has published a correction to the rule that was published on July 14, 1998.

47. Additions to Entity List: Russian Entities (63 FR 40363 on July 29, 1998)

Commentary: The Bureau of Export Administration has added seven Russian entities that are under investigation by the Russian government for suspected export control violations involving weapons of mass destruction and missile technology to the Entity List. A license is now required for export and reexports of items subject to the EAR to the new Russian entities. This rule also adds a new §744.10 describing license requirements and review standards for export and reexports to such entities

.48. Additions to Entity List: Russian Entities (63 FR 41323 on August 3, 1998)

Commentary: The Bureau of Export Administration has published a correction to the addition of Russian entities that was published on July 29, 1998. In the publication, "Garfit" should read "Grafit".

49. Revisions to the Export Administration Regulations; Conforming Revisions to the Wassenaar Arrangement List of Dual-Use Items and Revisions to Antiterrorism Controls (63 FR 42225 on August 7, 1998)

Commentary: The Bureau of Export Administration has published an interim rule that amends the Export Administration Regulations (EAR) by making necessary conforming revisions throughout the text of the EAR, consistent with the January 15 revisions to the CCL. All items removed from national security controls as a result of the Wassenaar List of Dual-Use Goods and Technologies continue to be controlled for antiterrorism reasons. Consistent with this revision, various antiterrorism Export Control Classification Numbers (ECCNs) were enlarged to accommodate the items removed from national security controls. Comments on this rule must be received on or before September 8, 1998.

50. Shipper’s Export Declaration Requirements for Exports Valued Less Than $2,500 (63 FR 45698 on August 27, 1998)

Commentary: The Bureau of Export Administration has published a final rule amending the EAR by revising the Shipper’s Export Declaration (SED) provisions to expand the country scope of the $2,500 exemption for filing an SED with the Bureau of Census. No SED is required for any shipment, other than shipments made under a license or shipments to Cuba, Iran, Iraq, Libya, North Korea, Sudan or Syria, if the shipment is valued at $2,500 or less per Schedule B number.

51. Establishment of 24-Month Validity Period for Certain Reexport Authorizations and Revocation of Other Authorizations (63 FR 49425 on September 16, 1998)

Commentary: The Bureau of Export Administration ("BXA") has amended the Export Administration Regulations ("EAR") by issuing General Order No. 1 establishing a 24-month validity period for all reexport authorizations that do not contain any license validity period and revoking those that have been in effect for more than 24 months. This rule is effective immediately.

52. Encryption Items (63 FR 50516 on September 22, 1998)

Commentary: BXA has amended Sections 740.8 and 742.15 of the EAR to authorize the export of non-recovery general purpose encryption items, regardless of cryptographic strength, to banks and financial institutions in 45 countries under License Exception KMI. Previously, exporters had to submit Key Recovery Plans and obtain Encryption Licensing Arrangements ("ELA") in order to qualify for exports to banks. BXA also has amended Section 740.8 and 742.15 of the EAR to authorize the export of non-recovery financial specific encryption items, regardless of cryptographic strength, under License Exception KMI. Such a product may use encryption for the merchant’s identification, the customer’s identification and address, the merchandise purchased, and the payment mechanism. However, it may not allow for the encryption of data, text or other media except as directly related to these elements of the electronic transaction. In addition, BXA has revised a number of other provisions of the EAR in order to correct errors and omissions in the interim rule that was published on December 30, 1996 (61 FR 68572). These changes affect License Exceptions BAG, GOV, KMI, LVS, TMP, TSR and TSU. They change the procedures for submitting mass market software commodity classification requests and permit the amendment of ELAs to add new countries. Welcomed as these changes may be, they do not implement the new encryption policy announced on September 16 by the White House.

53. Request for Comments on Effects of Foreign Policy-Based Export Controls (63 FR 54638 on October 13, 1998)

Commentary: The Bureau of Export Administration ("BXA") is reviewing the foreign policy-based export controls in the Export Administration Regulations to determine whether they should be modified, rescinded or extended and is seeking comments on how existing foreign policy-based export control have affected exporters. Comments must be received by November 12, 1998.

54. Clarification of Reporting Requirements Under the Wassenaar Arrangement (63 FR 55017 on October 14, 1998)

Commentary: On January 15, 1998, BXA published an interim rule implementing the list of dual-use items and reporting requirements under the Wassenaar Arrangement. On February 17, 1998, BXA published an interim final rule that conformed the savings clause date for shipments of items removed from eligibility for export or reexport under a particular License Exception authorization or the designator NLR until April 15, 1998. The February 17 rule did not affect the reporting requirement provisions, and any item removed from License Exception or NLR eligibility as a result of the January 15 rule continues to be subject to the reporting requirements of the Wassenaar Arrangement. This interim rule clarifies: the reporting requirement obligations of items described on the Wassenaar Arrangements Annex 1 (Sensitive List) and Annex 2 (Very Sensitive List) of the List of Dual-Use Goods and Technologies, including clarification on the timing of the first report in accordance with the savings clause provision; the reporting requirements of computers controlled under Export Control Classification Number (ECCN) 4A003.b; the reporting requirement procedures under License Exception TSR; and that the reporting requirement provisions do not apply to reexports, release of technology or source code to foreign nationals in the United States (i.e. "deemed exports" to foreign nationals), or to items not controlled for National Security (NS) reasons. In addition, this rule revises the country scope for reporting requirements.

55. Exports of High Performance Computers; Post-shipment Verification Reporting Procedures (63 FR 63141 on November 12, 1998)

Commentary: The Bureau of Export Administration ("BXA") is amending the Export Administration Regulations ("EAR")(15 CFR 730-799) by revising the requirements for exports of high performance computers. This rule revises post-shipment verification (PSV) reporting procedures originally implemented as a result of the National Defense Authorization Act (NDAA) for the fiscal year 1988. This rule is effective November 12, 1998.

To address the volume of post-shipment verifications (PSVs) generated by the NDAA on high performance computer exports, BXA’s Export Enforcement has created the High Performance Computer (HPC) Team. This rule directs PSV report submission to the HPC team. Rather than submit PSV reports within 30 days of export, as was previously required, exporters may now submit the reports no later that the last day of the month following the month in which the export took place. As part of the commodity description, reports must specify model number, serial number, and composite theoretical performance ("CTP") in millions of theoretical operations per second ("MTOPS") for each item. Exporters may no longer submit reports by facsimile.

56. India and Pakistan Sanctions and Other Measures (63 FR 64322 on November 19, 1998)

Commentary: The Bureau of Export Administration ("BXA") is taking a number of sanctions measures consistent with the President’s directives of May 13^th and May 30^th. Consistent with the provisions of section 102(b)(2)(G) of the Arms Export Control Act, BXA is revising the Export Administration Regulations ("EAR") to codify sanctions against India and Pakistan by setting forth a licensing policy of denial for exports and reexports of items controlled for nuclear nonproliferation and missile technology reasons to India and Pakistan, with limited exceptions. This licensing policy was adopted in practice in existing regulations in June 1998. This rule also contains certain discretionary measures that are being taken. BXA is adding to the Entities List set forth in the EAR certain Indian and Pakistani government, parastatal, and private entities determined to be involved in nuclear or missile activities. In addition, Indian and Pakistani military entities are added to the Entity List in order to supplement the sanctions. BXA is adopting a licensing policy of a presumption of denial with respect to items specifically listed on the Commerce Control List to listed Indian and Pakistani military entities, with limited exceptions.

This rule will increase the number of license applications submitted for India and Pakistan. This rule is effective November 19, 1998. Comments on this rule must be received on or before January 19, 1999.

57. Correction to: India and Pakistan Sanctions and Other Measures (63 FR 65552 on November 27, 1998)

Commentary: The Bureau of Export Administration ("BXA") is correcting an inadvertent error in codification related to the Entity List, specifically the entity Wah Munitions Plant that was published on November 19, 1998. The corrected section is 1. On page 64341, in the third column of the Entity List table, in the row for Wah Munitions Plan, a.k.a. Explosives Factory, Pakistan Ordnance Factories ("POF"), correct the phrase, "For all items subject to the EAR have a classification other than EAR99." to read "For all items subject to the EAR."

58. Expansion of License Exception CIV Eligibility for "Microprocessors" controlled by ECCN 3A001 (63 FR 71580 on December 29, 1998)

Commentary: The Bureau of Export Administration ("BXA") has published an interim rule adjusting the License Exception CIV eligibility level for microprocessors controlled by Export Control Classification Number ("ECCN") 3A001 from a composite theoretical performance ("CTP") of equal to or less than 500 million theoretical operations per second ("MTOPS") to a CTP of equal to or less than 1200 MTOPS. License Exception CIV is available for exports and reexports to civil end-users for civil end-uses in Country Group D:1. BXA will continue to review the technical level for microprocessors. This rule is effective on January 1, 1999.

59. Encryption Items (63 FR 72156 on December 31, 1998)

Commentary: On September 16, 1998, the Clinton Administration announced that it would liberalize the export controls on encryption in important respects. This rule increases the decontrol limit from 40 to 56 bits for general purpose cryptographic products. It also extends favorable licensing treatment beyond U.S. subsidiaries and banks to include for the first time insurance companies, health and medical end-users and on-line merchants. Perhaps the most interesting an innovative aspect of the new regulations is that so-called "recoverable" products that allow law enforcement to obtain access to plaintext with the assistance of a network administrator may be exported to foreign commercial end-users in 43 countries.

These reforms represent a step in the right direction. However, the encryption export control debate is far from over. Unfortunately, the "fine print" in these complex regulations, such as the one-time technical review and reporting requirements, effectively remove much of the benefit that industry had expected to receive. The debate is likely to continue well into 1999, and beyond.