Details of BIS Wassenaar Final Rule Changes (Category 5 Parts I and II)

The Bureau of Industry and Security has issued a final rule, effective May 20, 2011, which revises the Export Administration Regulations to implement the changes made to the Wassenaar Arrangement's¹ List of Dual Use Goods and Technologies maintained and agreed to by governments participating in the Wassenaar Arrangement’s December 2010 Plenary Meeting.

This is Part III of a multi-part series of summaries of the changes made to harmonize the Export Administration Regulations with the changes made to the Wassenaar List at the 2010 Plenary. Part III covers the changes made to various Export Control Classification Numbers (ECCNs) in Commodity Control List (CCL) Category 5 (Parts I and II). See future issues for summaries of the remaining changes.

Category 5 Part I -- Telecommunications

Category 5 Part 1 is amended by adding a second Nota Bene (N.B.2.) after Note 1 at the beginning of the category to close a potential loophole in relation to items incorporating or using cryptography or other ‘‘information security’’ functionality, including encryption, ‘‘cryptanalysis’’ and ‘‘cryptographic activation.’’ Note 1 could be read to require that all telecommunications items should only be classified using Category 5 Part 1 even if they incorporate or use cryptography or other ‘‘information security’’ functionality, when, in fact, the control status of ‘‘information security’’ items is determined using Category 5 Part 2 .

The second Nota Bene clarifies that any item that is designed for telecommunications and incorporates or uses cryptography should also be classified using Category 5 Part 2.

ECCN 5A001 is amended by:

• Replacing the text in paragraph 5A001.c with the text in paragraph 5A001.c.1 ‘‘Optical fiber communication cables, optical fibers and accessories, as follows:’’. Also, adding an ‘‘and’’ between ‘‘length’’ and ‘‘specified’’ in the new 5A001.c (former 5A001.c.1). The Nota Bene (N.B. 1) that reads ‘‘For underwater umbilical cables, and connectors thereof, see 8A002.a.3.’’ is moved from 5A001.c.2 to after 5A001.c, revised by removing the phrase ‘‘, and connectors thereof’’ and relabeled from ‘‘N.B. 1’’ to ‘‘N.B.’’ 5A001.c.2, the exclusion Note and Nota Bene 2 that follows it are deleted, because they no longer serve a purpose.

• Replacing ‘‘electronic’’ with ‘‘radio frequency (RF) transmitting’’ and replacing ‘‘Radio Controlled Improvised Explosive Devices (RCIED)’’ with ‘‘Improvised Explosive Devices (IEDs)’’ in paragraph 5A001.h to clarify the text. Also, adding a new reference to ECCN 5A001.f in the Nota Bene of 5A001.h to reference 5A001.f and Category XI of the ITAR where radio transmission equipment is controlled. In addition, 5A001.h is moved from NS Column 2 controls to NS Column 1 controls because Radio Frequency (RF) transmitting equipment designed or modified for prematurely activating or preventing the initiation of Improvised Explosive Devices (IEDs) are now listed on the Wassenaar Arrangement’s Very Sensitive List. License Exceptions LVS, GBS, and CIV are no longer available, for 5A001.h items because they have been added to the Wassenaar Arrangement’s Very Sensitive List.

ECCN 5D001 is amended by revising the License Exceptions section by removing License Exception CIV eligibility for ‘‘software’’ controlled by 5D001.a and specially designed for the ‘‘development’’ or ‘‘production’’ of items controlled by 5A001.h; and removing License Exception TSR eligibility for exports and reexports to destinations outside of Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, Portugal, Spain, Sweden, or the United Kingdom of ‘‘software’’ controlled by 5D001.a and specially designed for the ‘‘development’’ or ‘‘production’’ of items controlled by 5A001.h. ‘‘Software’’ controlled by 5D001.a and specially designed for the ‘‘development’’ or ‘‘production’’ of items controlled by 5A001.h are on the Wassenaar Arrangement’s Very Sensitive List.

ECCN 5E001 is amended by:

• Removing License Exception TSR eligibility for exports or reexports to destinations outside of Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, Portugal, Spain, Sweden, or the United Kingdom of ‘‘technology’’ controlled by 5E001.a for the ‘‘development’’ or ‘‘production’’ of items controlled by 5A001.h; or‘‘software’’ controlled by 5D001.a that is specially designed for the ‘‘development’’ or ‘‘production’’ of equipment, functions or features controlled by 5A001.h.

• Adding a new Note for 5E001.b.4 to exclude ‘‘technology’’ for the ‘‘development’’ of civil cellular radiocommunications systems from control under 5E001, because this technology is commercial and does not warrant national security controls.

• Raising the frequency parameter from 6.0 GHz to 6.8 GHz for technology for the ‘‘development’’ and ‘‘production’’ of Microwave Monolithic Integrated Circuit (MMIC) power amplifiers specially designed for telecommunications in 5E001.d.1 and d.2, because a primary segment of the high power amplifier market is for commercial satellite communications (TV and Internet traffic) and meteorological radar within the standard ITU bands. The prevalent bands for commercial satellite communications are 5.7GHz to 6.7 GHz and 13.75GHz to 14.5GHz.

Category 5 Part II -- Information Security

ECCN 5A002 is amended by:

• Revising the EI paragraph in the License Requirements section to add paragraph 5A002.b.
• Revising Note 1 in the Related Controls paragraph of the List of Items Controlled section to add paragraph (j) to the first sentence, as paragraph (j) has been added to the decontrol Note of ECCN 5A002.
• Replacing a period with a semicolon in paragraph (a)(2) of the Note at the beginning of the Items paragraph of the List of Items Controlled section to correct the punctuation.
• Removing ‘‘or’’ from paragraph .g and removing the period at the end of paragraph .i and adding in its place ‘‘; or’’ in the Note at the beginning of the Items paragraph of the List of Items Controlled section.
• Adding a new paragraph .j to the decontrol notes in ECCN 5A002 for equipment where the encryption cannot be used or can only be made useable by means of ‘‘cryptographic activation,’’ as specified, as well as adding a new Nota Bene (N.B.) to reference 5A002.a for equipment that has undergone ‘‘cryptographic activation.’’ This new note is added to clarify the treatment of equipment with dormant cryptography.
• Adding a new control paragraph 5A002.b to control systems, equipment, application specific electronic assemblies, modules and integrated circuits, designed or modified to enable an item to achieve or exceed the controlled performance levels for functionality specified by 5A002.a that would not otherwise be enabled. This addition is made to address the issue of mechanisms that are used to upgrade the cryptographic functionality of equipment to performance levels specified by 5A002.a, when the equipment would not be controlled under 5A002.a (i.e., would not perform controlled cryptographic functions) without these upgrades. These changes are intended to clarify existing policy regarding the treatment of products with dormant cryptography. They are not a new control on these products.

ECCN 5D002 is amended by:

• Revising the EI control paragraph by removing the phrase ‘‘5D002.a or c.1’’ and adding in its place ‘‘5D002.a,.c.1, or .d’’ in the License Requirements section.
• Adding a new paragraph 5D002.d to control ‘‘software’’ designed or modified to enable an item to achieve or exceed the controlled performance levels for functionality specified by 5A002.a that would not otherwise be enabled. This addition is made to address the issue of mechanisms that are used to upgrade the cryptographic functionality of equipment or ‘‘software’’ to performance levels specified by 5A002.a (note: 5D002 ‘‘software’’ is classified according to performance levels specified by 5A002), when the equipment or ‘‘software’’ would not be controlled under 5A002.a or 5D002 (i.e., would not perform controlled cryptographic functions) without these upgrades.

ECCN 5E002 is amended by:

• Moving the text of the Heading to 5E002.a and adding in its place ‘‘Technology’’ as follows:’’
• Revising the EI control paragraph in the License Requirement section by removing the phrase ‘‘ECCNs 5A002 or 5D002.a or 5D002.c’’ and adding in its place ‘‘ECCNs 5A002 or 5D002’’ to succinctly indicate what is EI controlled under ECCN 5E002.
• Removing the text following the Items paragraph, which states ‘‘The list of items controlled is contained in the ECCN heading’’ and adding in its place a control paragraph 5E002.a to control ‘‘technology’’ according to the General Technology Note for the ‘‘development,’’ ‘‘production’’ or ‘‘use’’ of equipment specified by 5A002 or 5B002 or ‘‘software’’ specified by 5D002.a or 5D002.c. Prior to the addition of a new ‘‘technology’’ control paragraph to address the issue of ‘‘cryptographic activation,’’ ECCN 5E002 did not have any specified control paragraphs. The 5E002 Heading text in place prior to this rule is now the text of the new paragraph 5E002.a.
• Adding a control paragraph 5E002.b to control ‘‘technology’’ to enable an item to achieve or exceed the controlled performance levels for functionality specified by 5A002.a that would not otherwise be enabled. This addition is made to address the issue of mechanisms that are used to upgrade the cryptographic functionality of equipment or ‘‘software’’ to performance levels specified by 5A002.a, when the equipment or ‘‘software’’ would not be controlled under 5A002.a or 5D002 (i.e., would not perform controlled cryptographic functions) without these upgrades.

Savings 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 May 20, 2011, 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 July 19, 2011. Any such items not actually exported before midnight, on July 19, 2011 require a license in accordance with this regulation.

See future issues of ITT for additional details on the Wassenaar changes being implemented by BIS.

(See ITT’s Online Archives or 05/20/11 news, 11052022, BP summary announcing the publication of BIS’ final rule.

See ITT’s Online Archives or 05/23/11 news, 11052305, for BP summary of Part I of multi-part series of summaries.

See ITT’s Online Archives or 05/24/11 news, 11052403, for BP summary of Part II of multi-part series of summaries.)

(BIS final rule, D/N 110124056-1119-01, FR Pub 05/20/11)