BIS Final Rule Revises CCL, Adds/Expands Unilateral U.S. Controls, Etc. to Conform to Wassenaar Changes (Part VI)

The Bureau of Industry and Security (BIS) has issued a final rule, effective September 7, 2006, which amends the Export Administration Regulations (EAR) at 15 CFR Parts 740, 743, 772, and 774 to implement changes made to the Wassenaar Arrangement's List of Dual-Use Goods and Technologies (Wassenaar List), and Statements of Understanding maintained and agreed to by the governments participating in the Wassenaar Arrangement.

Specifically, this final rule revises certain entries on the Commerce Control List (CCL) that are controlled for national security reasons in Categories 1, 2, 3, 5 Part I (Telecommunications), 5 Part II (Information Security), 6, 8, and 9, and definitions to conform with changes in the Wassenaar List.

This is Part VI of a multi-part series of summaries on this BIS final rule. Part VI focuses on the amendments affecting CCL Category 5 - Part 2 (Information Security) and CCL Category 6 (Sensors). See future issues of ITT for additional summaries.

Amendments to Category 5 - Part 2 - Information Security

ECCN 5A002. BIS' final rule amends Export Control Classification Number (ECCN) 5A002 by:

(a) Adding a sentence to the "Related Controls" paragraph of the List of Items Controlled section to note that 5A002 does not control commodities eligible for the Cryptography Note (Category 5 Part 2 Note 3).

(b) Adding the phrase "not controlled in 5A002.a.6." to 5A002.a.5 to avoid overlapping controls with the new parameters in 5A002.a.6.

(c) Adding new control parameters to 5A002.a.6, including adding networked identification code to the type of codes that could be generated using cryptographic techniques. Also adding control characteristics for systems using ultra-wideband modulation techniques, i.e., A bandwidth exceeding 500 MHz; or a "fractional bandwidth" of 20% or more.

BIS notes that following the Wassenaar Arrangement agreement reached on revised text for 5A001.b.3 and 5A001.b.4 in Category 5 Part 1, to control new ultra wideband techniques that had appeared on the market, agreement was reached by the Wassenaar Arrangement on consequential changes in 5A002.a.5 & 5A002.a.6.in Category 5 Part 2.

(d) Adding paragraph 5A002.a.9 to add controls for quantum cryptography because it represents advancement in cryptography that can improve information security in two important ways: (1) It may be used in conjunction with digital cryptography to securely distribute shared keys for a digital symmetric algorithm and (2) it may make for a fast and highly secure "one-time-pad" cipher. A Technical Note that describes quantum cryptography is also added to this paragraph.

BIS notes that this equipment under ECCN 5A002.a.9 is controlled for encryption items (EI) reasons, national security reasons (NS:1) and antiterrorism reasons (AT:1). Related software for the development, production, and use of this equipment is controlled for encryption items (EI) reasons, national security reasons (NS:1), and antiterrorism reasons (AT:1) under ECCN 5D002; related technology for the development, production, and use of this equipment is controlled for encryption items (EI) reasons, national security reasons (NS:1), and antiterrorism reasons (AT:1) under ECCN 5E002.

(e) Adding a new paragraph c.4 to the Note at the top of the items paragraph in the List of Items Controlled section of 5A002 to clarify that model-based simulation software that is specially designed and limited to protect libraries, design attributes, or associated data for the design of semiconductor devices or integrated circuits, is not controlled under the corresponding software entry ECCN 5D002. The Note describes software for which the underlying encryption functionality is for specific purposes such as protection of intellectual property, and the underlying encryption functionality (including the protected libraries, design attributes or associated data) is not directly accessible to the end-user.

(f) Moving an existing nota bene ("NB") so that it immediately follows the text of Note d to ECCN 5A002, to conform with the corresponding entry in the Wassenaar Arrangement's List of Dual-Use Goods and Technologies.

Amendments to Category 6 - Sensors

ECCN 6A006. The final rule amends ECCN 6A006 by:

(a) Revising the heading to add newly controlled "underwater electric field sensors,"

(b) Revising "6A006.c" to read "6A006.d" in the LVS paragraph in the License Exceptions section, because magnetic compensation systems, as well as compensation systems for underwater electric field sensors are now controlled under 6A006.d;

(c) Revising the "Related Controls" paragraph in the List of Items Controlled section to add an exemption from control for instruments controlled by 6A006 that are used for "fishery applications," such as research on fish reproduction.

(d) Redesignating 6A006.b (magnetic gradiometers) as 6A006.c;

(e) Adding a new paragraph 6A006.b to control Underwater Electric Field Sensors, because they now have civil applications, such as underwater exploration, salvage, and biological and medical sciences, and no longer are strictly used in military applications, such as detection of submarines and underwater mines.

ECCN 6D003. The final rule amends ECCN 6D003 by:

(a) Revising 6D003.f from reading "Magnetometers." to read "Magnetic and Electric Field Sensors" in conformance with new paragraph 6A006.b.

(b) Revising 6D003.f.1 and 6D003.f.2 by adding "and electric field" in conformance with new paragraph 6A006.b.

ECCN 6E003. The final rule amends ECCN 6E003 revising the title of 6E003.f from "Magnetometers" to read "Magnetic and Electric Field Sensors."

BIS notes that equipment under 6A006 is controlled for national security reasons (NS:2) and antiterrorism reasons (AT:1); Related software for magnetic and electric field sensors is controlled for national security reasons (NS:1) and antiterrorism reasons (AT:1) under ECCN 6D003; and related technology for magnetic and electric field sensors is controlled for national security reasons (NS:1) and antiterrorism reasons (AT:1) under ECCN 6E003.

(See ITT's Online Archives or 09/19/06, 09/21/06, 09/22/06, 09/25/06, and 09/26/06 news, 06091915, 06092120, 06092230, 06092530, and 06092625 for Parts I, II, III, IV, and V of BP summary.)

BIS final rule (D/N 060807211-6211-01, FR Pub 09/07/06) available at http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/06-7385.pdf