BIS Final Rule Implements Revised Formula for Calculating Computer Performance (APP Replaces MTOPS) (Part IV - Final)

The Bureau of Industry and Security (BIS) has issued a final rule which amends the Export Administration Regulations (EAR) to implement the Wassenaar Arrangement's December 2005 agreement to revise the formula for calculating computer performance from Composite Theoretical Performance (CTP) measured in Millions of Theoretical Operations Per Second (MTOPS) to Adjusted Peak Performance (APP) measured in Weighted TeraFLOPS (Trillion Floating point Operations Per Second) (WT).

This is Part IV, the final partof a multi-part series of summaries on BIS' final rule and highlights changes to Supplement 2 to 15 CFR Part 748, conforming changes, changes to specific export control classification numbers (ECCNs), the addition of a definition for APP, etc.

BIS notes that its final rule is effective on April 24, 2006, with the exception of the movement of Bulgaria from Computer Tier 3 to Computer Tier 1 in 15 CFR 740.7, which will be effective June 3, 2006.

Supplement No. 2 to Part 748

This final rule clarifies the phrase "according to the principal function of the equipment," by replacing it with references to Notes in Category 5 part 1 and part 2, where the applicant can find information to guide them about Category 5 telecommunication and information security functions. In paragraph (c), the final rule deletes the phrase "certifiable multi-level security or certifiable user isolation functions" because this former 5A002 sub-item has been deleted.

The final rule also removes paragraph (c)(2), because Category 4 has not contained Advisory Notes for over a decade. In place of text that was in paragraph (c)(2), the final rule adds a paragraph describing the security safeguard plan requirement. The U.S. requires security safeguards for exports, reexports, and in-country transfers of high performance computers (HPCs) to ensure that they are used for peaceful purposes. BIS states that a person submitting a license application for an export, reexport, or in-country transfer of a HPC to or within a destination in Computer Tier 3 (see 15 CFR 740.7(c)(1)) or to Cuba, Iran, Libya, North Korea, Sudan, or Syria must include with the license application a security safeguard plan signed by the end-user, who may also be the ultimate consignee. This requirement also applies to exports, reexports, and in-country transfers of components or electronic assemblies to upgrade existing "computer" installations in those countries. A sample security safeguard plan is posted on BIS's webpage at http://www.bis.doc.gov/hpcs/SecuritySafeguardPlans.html.

In addition, this final rule makes conforming changes to the table "Information Collection Requirements Under the Paperwork Reduction Act: OMB Control Numbers" in Supplement No. 1 to 15 CFR Part 730 to change the reference to where the safeguard requirements are located in the EAR.

Section 750.4(b) Actions Not Included in Processing Time Calculations

On March 25, 1996, BIS published a final rule for the simplification of the EAR that contained the Acting Secretary of State's determination of December 28, 1993, that five categories of multilaterally controlled items would be controlled under section 6(j). License applications for certain items would be reviewed under the 6(j) procedures.

One category of items subject to the new 6(j) procedure was those subject to national security controls, except national security controlled digital computers with a CTP of 500 MTOPS or less. At the time, and until 1998, the NS control level for computers was 260 MTOPS (then it increased to 2,000 MTOPS). So until 1998, computers controlled for NS reasons were not subject to 6(j) requirements if they were between 260 and 500 MTOPS. Although the NS control level for computers was increased several times, this computer level in this section was repeatedly overlooked. This rule corrects this error by removing the exemption for computers with a CTP of 500 MTOPS from a Congressional 30-day notification requirement under section 6(j) of the Export Administration Act, as amended (EAA), prior to the issuance of the license for any digital computers destined to the military, police, intelligence or other sensitive end-users located in designated terrorist-supporting countries. This exemption has been overtaken by technological advancements, i.e., computers controlled for NS reasons with a CTP of 500 MTOPS no longer exist today. This final rule does not change the requirement for Congressional notification for all items controlled for national security reasons to end users set forth above. Computers classified by ECCN 4A003 are controlled for national security reasons when the APP exceeds 0.75 WT, as implemented by the final rule.

Conforming Changes

BIS' final rule makes numerous conforming changes with regard to (a) License Exception CTP being changed to License Exception APP; (b) references to the computer metric CTP, without reference to a specific MTOPS limit; (c) a change in computer metric changes from CTP to APP; (d) placement of the CTP formula; and (e) "computing elements."

Category 3--Electronics

The final rule moves the technical note on how to calculate the CTP from the end of Category 4 to the end of Category 3, because the implementation of APP removed all references to CTP in Category 4 and CTP only remains in Category 3.

ECCN 3A991 is amended by revising License Requirement Note 1 to: (1) spell out the acronym CTP, and (2) add a reference about where to find information on how to calculate CTP.

ECCNs 3E001 and 3E002 are amended by revising License Exception CIV text to spell out the acronym CTP, for clarification and to indicate that CTP is a defined term in 15 CFR 772.1.

Category 4--Computers

Category 4 is amended by adding the formula for APP after EAR99.

ECCN 4A001 is amended by: (a) removing HPC (XP) controls from the License Requirements section for reasons set forth above in this background section of the rule; and (b) adding in the License Requirement Note a reference to the paragraph (4A001.a.2) that triggers the Wassenaar reporting requirement in 15 CFR 743.1.

ECCN 4A003 is amended by: (a) removing the Missile Technology (MT) and HPC (XP) controls paragraph in the License Requirement section for reasons set forth above in the background section of this rule; (b) revising the parameter and value in 4A003.b from CTP to APP and from 190,000 MTOPS to 0.75 WT; and (c) revising the text and parameter in 4A003.c (electronic assemblies) from "computing elements (CE)" to "processors."

ECCN 4A994 is amended by: (a) revising the parameter and value in 4A994.b from CTP to APP and from 6 MTOPS to 0.00001 WT; (b) replacing the reference to CTP with APP in Note 1 to 4A994.c; and (c) revising the parameter and value in 4A994.f from CTP to APP and from 8.5 MTOPS to 0.00001 WT, because there is little difference between the APP in 4A994.b and this paragraph and BIS believes that it is easier to comply with regulations when numbers are harmonized.

ECCN 4D001 is amended by: (a) removing the HPC (XP) controls paragraph in the License Requirement section for reasons set forth above in the background section of this rule; (b) revising the parameter and value in 4D001.b.1 from CTP to APP and from 75,000 MTOPS to 0.04 WT; and (c) revising the text and parameter in 4D001.b.2 from "computing elements (CE)" to "processors" and the parameter CTP to APP.

ECCN 4D002 is amended by removing the HPC (XP) controls paragraph in the License Requirement section for reasons set forth above in the background section of this rule.

ECCN 4E001 is amended by: (a) removing the HPC (XP) controls paragraph in the License Requirement section for reasons set forth above in the background section of this rule; (b) revising the parameter and value in 4E001.b.1 from CTP to APP and from 75,000 MTOPS to 0.04 WT; and (c) revising the text and parameter in 4E001.b.2 from "computing elements (CE)" to "processors" and the parameter CTP to APP.

Definitions

This rule amends 772.1, Definitions of Terms as Used in the EAR, by adding the definition of "APP."

Other Revisions

The final rule also makes an editorial correction to 15 CFR 770.2(l)(2), Interpretation 12: Computers by removing reference to 4A003.d and 4A003.f, which are currently reserved and not in use.

(See ITT's Online Archives or 04/25/06, 04/27/06, and 04/28/06 news, 06042515, 06042720, and 06042845, for Parts I-III.)

BIS final rule (FR Pub 04/24/06, D/N 060404096-6096-01) available at http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/06-3647.pdf.