E8-27588. Request for Public Comments on the Prospect of Removing 7A Commodities From De Minimis Eligibility

AGENCY:

Bureau of Industry and Security, Department of Commerce.

ACTION:

Notice of Inquiry.

SUMMARY:

The Bureau of Industry and Security (BIS) is seeking public comment on the prospect of removing from de minimis eligibility commodities controlled for missile technology (MT) reasons under Category 7—Product Group A on the Commerce Control List except when the 7A commodities are incorporated as standard equipment in Federal Aviation Administration (FAA) (or national equivalent) certified civilian transport aircraft. If such a policy were implemented, foreign made items that incorporate U.S.-origin 7A commodities would be subject to the Export Administration Regulations, except when the 7A commodities are incorporated as standard equipment in FAA (or national equivalent) certified civilian transport aircraft. Specifically, BIS is seeking public input on the impact such a change would have on U.S. manufacturers of category 7A commodities, as well as the impact such a change would have on foreign manufacturers that incorporate U.S.-origin 7A commodities into their foreign-made products.

DATES:

Comments must be received no later than January 20, 2009.

ADDRESSES:

Written comments may be submitted via http://www.regulations.gov, by e-mail directly to BIS at [e-mail] or on paper to U.S. Department of Commerce, Bureau of Industry and Security, Regulatory Policy Division, Room H-2705, Washington DC 20230. Please input “7A/De minimis” in the subject line.

FOR FURTHER INFORMATION CONTACT:

Sharron Cook, Office of Exporter Services, Regulatory Policy Division, Bureau of Industry and Security at 202-482-2440, or fax [phone], or e-mail at [e-mail].

SUPPLEMENTARY INFORMATION:

Background

The term “de minimis” generally refers to matters that are of minor significance. The de minimis provisions of the Export Administration Regulations (EAR) promote U.S. export control objectives as set forth in the Export Administration Act of 1979, as amended, (EAA) while limiting U.S. jurisdiction over non-U.S. products containing a de minimis percentage, by value, of U.S. content. To prevent the diversion of controlled U.S. items and foreign-made items incorporating a significant amount of U.S. content, a foreign-made item that contains more than the de minimis amount of controlled U.S.-origin content by value is subject to the EAR, i.e., a license may be required from BIS for the export abroad to another foreign country or in-country transfer of the foreign-made item. Prior to March 1987, the EAR set no de minimis levels for U.S. content in foreign-made items; foreign-made items were subject to the EAR if they contained any amount of U.S.-origin content, no matter how small. A rule published March 23, 1987 (52 FR 9147) revised what were then called the “parts and components” provisions to establish thresholds at which the amount of U.S.-origin commodities in foreign-made items would warrant exercise of U.S. jurisdiction over the foreign-made item when located outside the United States. The rule was established to alleviate a major trade dispute with allies who strenuously objected to U.S. assertion of jurisdiction over all reexports of non-U.S. items that contained even small amounts of U.S. content. A major revision of the EAR in 1996 (61 FR 12714) introduced the term “de minimis” and established de minimis thresholds for software and technology. The most recent revisions to the de minimis rules occurred on October 1, 2008, when BIS published a rule to change the de minimis calculation for foreign produced hardware bundled with U.S.-origin software, clarify the definition of `incorporate' as it is applied to the de minimis rules, and to make certain other changes.

Commodities controlled by Category 7—Product Group A in the Commerce Control List are certain equipment and components related to navigation and avionics. Reviewing agencies have raised concerns that such commodities, when controlled for MT reasons, have the potential to provide a foreign product with unique military capabilities, even if the value of the commodity is below normal de minimis levels. Airline and national aviation safety controls help to minimize the risk of diversion for Category 7—Product Group A commodities installed in civilian aircraft. It is expected the commodities will remain in the aircraft and free from tampering with such safety controls. However, when the commodities are exported in less costly end items with no national aviation safety authority controls, there may be a higher risk of diversion.

Requests for Comments

BIS is seeking public comments on the expected impact on U.S. manufacturers of commodities controlled by Category 7—Product Group A, as well as the expected impact on foreign manufacturers that incorporate U.S.-origin 7A commodities into their foreign-made products, if BIS were to remove from de minimis eligibility commodities controlled for MT reasons under Category 7—Product Group A, except when the commodities are incorporated as standard equipment in FAA (or national equivalent) certified civilian transport aircraft. Specific estimates related to number of exports, revenue, jobs, etc. that would be affected would be very useful. Also, the impact such a change would have on decisions to incorporate U.S.-origin items in future foreign products would also be useful. Examples of commercial foreign products that incorporate commodities controlled by Category 7—Product Group A would be helpful as well. Comments that include rational argument in support of the position taken in the comment are likely to be more useful than comments that merely assert a position without such support.

Finally, BIS is interested in concrete information (URL addresses, technical specifications, etc.) about the availability of equivalent commodities from foreign sources.

Dated: November 14, 2008.

Matthew S. Borman,

Deputy Assistant Secretary for Export Administration.