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

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 VIII of a multi-part series of summaries on this BIS final rule. Part VIII covers changes made with respect to regulations concerning License Exception GOV and License Exception ENC, etc. See future issues of ITT for additional summaries.

Amendments to 15 CFR 740.11 and Supplement No. 1 - License Exception GOV

BIS' final rule amends 15 CFR 740.11 (a)(2)(vi)(G) to add 9A011 as it relates to Export Control Classification Number (ECCN) 9D001 software, and to add a new paragraph (a)(2)(vi)(H) to cover software controlled by ECCN 9D002, specially designed or modified for the production'' of equipment controlled by ECCN 9A011. These items may not be exported or reexported for official international safeguard use by the International Atomic Energy Agency (IAEA) and the European Atomic Energy Community (EURATOM) under License Exception GOV to destinations other than Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom.

The final rule amends Supplement No.1 to 15 CFR 740.11 to:

(a) Add 6D001 (specially designed for the "production" or "development" of equipment in 6A008.1.3 or 6B008) and 6D003.a to paragraphs (a)(1)(vii)(D) and (b)(1)(vii)(D), which relate to 6E001 technology;

(b) Add ECCN 9A011 to (a)(1)(vi)(G) that relates to 9D001 software;

(c) Add a new paragraph (a)(1)(vi)(H) to cover software controlled by ECCN 9D002, specially designed or modified for the "production" of equipment controlled by ECCN 9A011;

(d) Add to paragraph (a)(1)(vii)(G) 9A011, 9D001 and 9D002 as they relate to the development and production of 9A011, and as they relate to ECCN 9E001; and

(e) Add a new paragraph (a)(1)(vii)(H) to cover technology controlled by ECCN 9E002 for the production of equipment in 9A011.

Therefore, BIS states that 6E001 technology for the development of software in ECCNs 6D001 (specially designed for the "production" or "development" of equipment in 6A008.1.3 or 6B008) and 6D003; 9D001 for the development of equipment controlled by 9A011; 9D002 specially designed or modified for the production of equipment controlled by 9A011, 9D001 or 9D002 for the development or production of 9A011; and 9E002 for the production of equipment in 9A011, which are listed on the Wassenaar Arrangement's Very Sensitive List, are no longer eligible for License Exception GOV when consigned to and for the official use of any agency of a cooperating government within the territory of any cooperating government, or when 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 of Supplement No. 1 to 15 CFR Part 740.

Amendments to 15 CFR 740.17 - License Exception ENC

The final rule amends the introductory paragraph and paragraphs (a), (b)(1), and (b)(2) to state that newly controlled quantum cryptography items described in 5A002.a.9 of the Commerce Control List (CCL) in Supplement No. 1 to 15 CFR Part 774 are eligible for License Exception ENC. Paragraph (a) of 15 CFR 740.17 authorizes certain exports, reexports, and technical assistance to countries listed in Supplement No. 3 to 15 CFR Part 740 under License Exception ENC. The countries in Supplement No. 3 to 15 CFR Part 740 represent the European Union's "license-free zone" and include: Austria, Australia, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland, and the United Kingdom. Paragraph (b) of 15 CFR 740.17 authorizes exports and reexports destined to U.S. subsidiaries under License Exception ENC and, for other end-users, exports and reexports to countries not listed in Supplement No. 3 to 15 CFR Part 740. (This rule renames this Paragraph (b) to make clear the scope of this paragraph.) Paragraph (b)(1) of 15 CFR 740.17 authorizes exports and reexports of encryption items for U.S. subsidiaries. Paragraph (b)(2) of 15 CFR 740.17 authorizes exports and reexports of encryption commodities and software to non-government end-users in countries not listed in Supplement No. 3 to 15 CFR Part 740 under License Exception ENC. Quantum cryptography items are not eligible for export or reexport to "government end-users" under License Exception ENC outside the countries listed in Supplement No. 3 to 15 CFR Part 740, because of the provisions of 15 CFR 740.17(b)(3)(i)(B) and 740.17(b)(2)(iii)(E). To receive written authorization from the BIS to export your encryption items under License Exception ENC, you must submit an encryption review request to BIS and the ENC Encryption Request Coordinator. For guidance on applying for authorization under License Exception ENC go to BIS's Web page http://www.bis.doc.gov/encryption/enc.htm.

Saving Clause

Shipments of items removed from license exception eligibility or eligibility for export without a license as a result of this regulatory action that were on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export, on September 7, 2006, pursuant to actual orders for export to a foreign destination, may proceed to that destination under the previous license exception eligibility or without a license so long as they have been exported from the U.S. before October 10, 2006. Any such items not actually exported before midnight, on October 10, 2006, require a license in accordance with this regulation.

(See ITT's Online Archives or 09/19/06, 09/21/06, 09/22/06, 09/25/06, 09/26/06, 09/27/06, and 09/28/06 news, 06091915, 06092120, 06092230, 06092530, 06092625, 06092730, and 06092825 for Parts I, II, III, IV, V, VI, and VII 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