BIS Final Rule Implements Numerous Wassenaar Changes, Adds/Expands Certain Export Controls

The Bureau of Industry and Security has issued a final rule, effective December 11, 2009, which revises the Export Administration Regulations to implement changes to the Wassenaar Arrangement's List of Dual Use Goods and Technologies (Wassenaar List) as agreed upon in the December 2008 Wassenaar Arrangement Plenary Meeting.

(The Wassenaar Arrangement advocates implementation of effective export controls on strategic items with the objective of improving regional and international security and stability. The Wassenaar List is maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technologies.)

This final rule revises the Commerce Control List (CCL) and definitions and terms used in the Export Administration Regulations, and adds and expands unilateral U.S. export controls and national security export controls on certain items to make them consistent with the amendments made to implement the Wassenaar Arrangement's decisions as follows:

New/Expanded NS Column 1 Controls

This rule imposes a license requirement pursuant to 15 CFR 742.4(a) for exports and reexports to all destinations, except Canada, of certain commodities (and related software and technology) described in Export Control Classification Number 5A002.a.7. This rule also imposes such a license requirement for certain software and technology controlled under ECCNs 5E001.c.6., .d, and .e and 6D003.c.

(These destinations have an "X" indicated in NS column 1 on the Commerce Country Chart of Supplement No. 1 to 15 CFR Part 738.) BIS states that the purpose of the controls is to ensure that these items do not make a contribution to the military potential of any other country or combination of countries that would prove detrimental to the national security of the U.S. For designated terrorism supporting countries or embargoed countries, the applicable licensing policies are found in 15 CFR Parts 742 and 746, and Supplement No. 1 to 15 CFR Part 736 for Syria.)

New/Expanded NS Column 2 Controls

This rule imposes a license requirement under 15 CFR 742.4(a) for exports and reexports of commodities (and related software and technology) described in ECCNs 1A004.d, 1A008, 3A001.b.10 and .h, 5A001.h, 6A001.c, and 6A008.j.3 to destinations other than Country Group A:1, cooperating countries (see Supplement No. 1 to 15 CFR Part 740), Bulgaria, Czech Republic, Estonia, Hungary, Iceland, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.

This NS column 2 license requirement applies to destinations that have an "X" indicated in NS column 2 on the Commerce Country Chart of Supplement No. 1 to 15 CFR Part 738. BIS states that the purpose of the controls is to ensure that these items do not make a contribution to the military potential of countries in Country Group D:1 that would prove detrimental to the national security of the U.S.

(For designated terrorism supporting countries or embargoed countries, the applicable licensing policies are found in 15 CFR Parts 742 and 746, and Supplement No. 1 to Part 736 for Syria.)

The licensing policy for national security controlled items exported or reexported to any country except a country in Country Group D:1 (see Supplement No. 1 to 15 CFR Part 740) is to approve license applications unless there is a significant risk that the items will be diverted to a country in Country Group D:1. The general policy for exports and reexports of items to Country Group D:1 is to approve license applications when BIS determines, on a case by case basis, that the items are for civilian use or would otherwise not make a significant contribution to the military potential of the country of destination that would prove detrimental to the national security of the U.S.

New/Expanded Anti-Terrorism (AT) Controls

This rule imposes a unilateral U.S. license requirement to export and reexport commodities (and related software and technology) controlled under ECCNs 1A004.d, 1A008, 3A001.b.10 and .h, 5A001.h, 5A002.a.7, 6A001.c, and 6A008.j.3 for AT reasons to Cuba, Iran, North Korea, Sudan and Syria, in addition to the national security controls imposed to implement the Wassenaar Arrangement's decisions.

This rule also imposes such a license requirement for certain software and technology controlled under ECCNs 5E001.c.6, .d, and .e, and 6D003.c.

BIS states that these unilateral export controls are necessary because under Section 6(j) of the Export Administration Act of 1979, a license is required for items that could make a significant contribution to the military potential of such country or that could enhance the ability of such country to support acts of international terrorism.

There is a general policy of denial for applications to export or reexport to terrorism supporting countries, as set forth in 15 CFR Part 742. In addition, certain of these countries are also subject to embargoes, as set forth in 15 CFR Part 746 and Supplement No. 1 to 15 CFR Part 736 for Syria. A license is also required for the export and reexport of these items to specially designated terrorists and foreign terrorist organizations, as set forth in 15 CFR Part 744; license applications to these parties are reviewed under a general policy of denial.

BIS Makes Additions/Revisions to Certain CCL Categories/ECCNs

BIS has added or amended various CCL Categories/ECCNs and added one new ECCN (A1008) to implement certain Wassenaar Arrangement revisions and/or provide a complete or more accurate description of controls. Highlights include:

Category 1 - Special Materials and Related Equipment, Chemicals, "Microorganisms," and Toxins. BIS' final rule revises the name of Category 1 from "Materials, Chemicals, "Microorganisms," and Toxins" to read "Special Materials and Related Equipment, Chemicals, "Microorganisms," and Toxins" to more clearly describe the scope of items within this category as it has evolved over recent years, (e.g., addition of explosive related items).

An annex "List of Explosives (see ECCNs 1A004 and 1A008)" is added to the end of Category 1 in order to clarify the controls in ECCNs 1A004 and 1A008. BIS also amends ECCNS 1A001, 1A002, 1A003, 1A004, 1A007, 1A008, 1B003, 1C008, 1C010, 1C018, 1D003, 1E001, 1C992, and 1E002.

Category 2 - Materials Processing. BIS' final rule amends ECCN 2A983.

Category 3 - Electronics. BIS' final rule amends Category 3 by removing the last sentence in the Nota Bene which appears at the beginning of Category 3 and states "If the integrated circuit is a silicon-based "microcomputer microcircuit" or microcontroller microcircuit described in 3A001.a.3 having an operand (data) word length of 8 bit or less, the status of the integrated circuit is determined in 3A001.a.3", because in 2005 the Wassenaar Arrangement removed microcircuits manufactured from a silicon based semiconductor from 3A001.a.3. BIS also amends ECCNs 3A001, 3A002, and 3B001.

Category 4 - Computers. BIS' final rule amends ECCNs 4D001, 4D003, and 4E001.

Category 5 Part 1 - Telecommunications. BIS' final rule amends ECCNs 5A001, 5B001, 5D001, and 5E001.

Category 5 Part 2 - Information Security. BIS' final rule amends ECCNs 5A002, 5B002, 5D002, and 5E002.

Category 6 - Sensors. BIS' final rule amends ECCNs 6A001, 6A004, 6A005, 6A006, 6A008, 6A996, 6D003, and 6E993.

Category 7 - Navigation and Avionics. BIS' final rule amends ECCN 7A003.

Category 8 - Marine. BIS' final rule amends 8A001 and 8A002.

Category 9 - Propulsion Systems, Space Vehicles and Related Equipment.BIS' final rule amends ECCN 9A012.

Additional Changes to Export Administration Regulations

BIS' final rule also amends the following EAR provisions:

15 CFR 740.17 - License Exception ENC. 15 CFR 740.17 "License Exception ENC" is amended by removing wireless "personal area network" (PAN) items from paragraph (b)(4) to harmonize with the addition of wireless PAN equipment to the decontrol Note in ECCN 5A002. These wireless PAN commodities and "software" are now classified under ECCNs 5A992 and 5D992, respectively, without any requirement for review or qualification as 'mass market' products.

Part 742 Control Policy: CCL-Based Controls - Regional Stability Controls. The rule revises 15 CFR 742.6 "Regional Stability" by amending the paragraphs that list the

ECCNs that are controlled for RS Column 1 (RS:1) and RS Column 2 (RS:2) to coincide with changes to regional stability controls made by this rule. This rule revises 15 CFR 742.6(a)(1) to add 6D003.c, because this software is related to commodities that are controlled for RS reasons.

ECCN 1A004.d, 1D003 (software to enable equipment to perform the functions of equipment controlled by 1A004.d), 1E001 (technology for the development, production, or use of 1A004.d) are added to 15 CFR 742.6(a)(4)(i) in order to maintain the RS:2 controls that were applied to this equipment when it was listed under ECCNs 2A983.b, 2D983, and 2E983.

Part 742 Control Policy: CCL-Based Controls - Encryption Items. 15 CFR 742.15, regarding "Encryption Items", is amended by removing wireless "personal area network (PAN)" equipment from paragraphs (b)(3)(i) and the entire entry for (b)(3)(ii) to harmonize with the addition of wireless PAN equipment to the decontrol Note in ECCN 5A002. These wireless PAN commodities and "software" are now classified under ECCNs 5A992 and 5D992, respectively, without any requirement for review or qualification as 'mass market' products.

Part 743 Special Reporting. ECCN 3A002.g.2 is revised in three places to read 3A002.g.1 in 15 CFR 743.1(c)(1)(iii), because in 2007 the WA moved the space qualified parameter for atomic frequency standards from paragraph 3A002.g.2 to 3A002.g.1 and in 2008 the WA harmonized the Sensitive List with the change made in 2007. WA reporting requirements for ECCN 5B001.a, regarding software and technology specially designed for the development or production of equipment, function, or features of equipment, are removed by this rule. The WA agreed to remove this software and technology from the Wassenaar Sensitive List, because, while the WA intended to control technology and software for ECCN 5A001 equipment, the WA did not intend to have ECCN 5B001 on the Wassenaar Sensitive List.

WA reporting requirements are added for ECCN 6A006.c.1, magnetic gradiometers using multiple magnetometers specified by ECCNs 6A006.a.1 or 6A006.a.2 (with a sensitivity lower (or better) than 2pT rms per square root Hz).

This rule amends Note 2 of the Notes to 15 CFR 743.1(c)(1)(vi) to harmonize the text in the Note with revisions made to 6A006.

Definitions in 15 CFR 772. 15 CFR 772.1 is amended by:

Adding a reference to Category 5, Part 1, to the following terms: "electronically steerable phased array antenna", and "local area network;"

Removing the reference to Category 5 from the following terms: "Program" and "source code;"

Revising the definitions for the following terms: "Bias (accelerometer)" and "Personalized smart card;"

Removing the term "Noise Level;" and

Adding the terms "Explosives", "Fusible", and "personal area network."

BIS to Implement Certain Agreements for Sensitive Items in a Separate Rule

The Wassenaar Agreement's that pertain to ECCNs 6A002, 6A003, and all related ECCNs will be implemented in a separate rule, because of the sensitivity of the items and complexity of procedures and controls for these items.

Task Force on Editorial Issues in a Separate Rule

According to BIS, the Wassenaar Arrangement Task Force on Editorial Issues (TFEI) made revisions, editorial in nature, to clarify or correct control text or remove extraneous text. The TFEI revisions (over 2,000) were agreed upon by the WA in December 2007. This rule implements only those TFEI revisions that coincide with the revisions to ECCNs affected by the 2008 WA agreements and the 2007 WA agreements to Category 6. Other TFEI revisions will be implemented in a separate rule.

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 December 11, 2009, 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 approximately February 9, 2010 (60 days after publication). Any such items not actually exported before midnight, on approximately February 9, 2010 (60 days after publication), require a license in accordance with this regulation.

BIS contact - General queries Sharron Cook (202) 482-2440 or scook@bis.doc.gov. See final rule for BIS contacts listed by ECCN category.

BIS final rule (D/N 0908041218-91220-01, FR Pub 12/11/09) available at http://edocket.access.gpo.gov/2009/pdf/E9-28806.pdf