02-5562. Revisions to License Exception CTP: Implementation of Presidential Announcement of January 2, 2002

AGENCY:

Bureau of Export Administration, Commerce.

ACTION:

Final rule.

SUMMARY:

The Bureau of Export Administration (BXA) is amending the Export Administration Regulations (EAR) by revising License Exception CTP to reflect rapid technological advances in computing capability. This rule implements the President's decision to revise U.S. export controls on high performance computers (HPCs), announced January 2, 2002. All HPCs continue to be eligible for export to a Computer Tier 1 country under License Exception CTP. Beginning March 3, 2002, HPCs controlled by Export Control Classification Number (ECCN) 4A003 with a CTP up to 190,000 Millions of Theoretical Operations per Second (MTOPS) can be exported to Computer Tier 3 countries under License Exception CTP without advance notification. This revision also applies to electronic assemblies and specially designed components controlled by ECCN 4A003. This rule also moves Latvia from Computer Tier 3 to Computer Tier 1, effective May 2, 2002. Finally, this rule adds Australia, New Zealand, Norway, Switzerland, and Turkey to the list of countries eligible for exports and reexports of software and technology for computers with unlimited CTP under License Exception TSR. The President's action will promote our national security, enhance the effectiveness of our export control system and ease unnecessary regulatory burdens on both government and industry.

DATES:

This rule is effective March 6, 2002.

FOR FURTHER INFORMATION CONTACT:

Tanya Hodge Mottley in the Office of Strategic Trade and Foreign Policy Controls, Bureau of Export Administration, at [phone].

SUPPLEMENTARY INFORMATION:

Background

The 1998 National Defense Authorization Act (NDAA) provides that the President must submit a report to Congress 60 days before raising the CTP level above which exporters must notify the Department of Commerce before exporting a computer to a Tier 3 country under License Exception CTP. License Exception CTP authorizes exports and reexports of computers, electronic assemblies, and specially designed components controlled by ECCN 4A003 to Computer Tier countries as provided by 740.7 of the EAR. On January 2, 2002, the President announced significant changes to U.S. export control policy for High Performance Computers (HPCs). This new policy was necessary to reflect rapid advancements in computer hardware, as well as identify any risk posed by HPC exports to certain end-users and countries. This policy strengthens America's high tech competitiveness, while maintaining export controls to protect U.S. national security. On January 2, 2002, the President also sent a report to Congress announcing this change.

This rule implements the President's decision to increase License Exception CTP eligibility for the export of HPCs, electronic assemblies, and specially designed components controlled by ECCN 4A003 to countries in Computer Tier 3 from 85,000 Millions of Theoretical Operations per Second (MTOPS) to 190,000 MTOPS, to reflect the widespread availability of computers. This change will become effective on March 3, 2002. Advance notification and post-shipment verification reporting provided for in the NDAA, as amended, are not required for computers that are eligible for License Exception CTP since March 20, 2001, and will not be required as a result of this rule. Beginning March 3, 2002, the advance notification level and the upper limit for License Exception CTP will be 190,000 MTOPS, so separate advance notification will not be required. However, provisions in § 742.12(b)(3)(iv) of the EAR continue to require post-shipment verification reporting for licensed exports and reexports of computers above 190,000 MTOPS, and for licensed exports of items used to enhance previously exported or reexported computers, where the CTP will be greater than 190,000 MTOPS.

This rule also implements the President's decision to remove Latvia from Computer Tier 3 and places it in Computer Tier 1. Pursuant to the NDAA, a decision to move a country from Computer Tier 3 to Computer Tier 1 is not effective until 120 days after the Congress receives a report justifying such a removal. The President included a justification in his January 2, 2002 report to Congress. Therefore, Latvia will be moved from Tier 3 to Tier 1 effective May 2, 2002.

To implement the President's decision, this rule makes the following specific amendments to the EAR.

1. This rule revises the Export Administration Regulations by modifying computer exports under License Exception CTP, as follows:

(A) Raising the CTP limit for computers eligible for License Exception CTP for exports and reexports to Computer Tier 3 destinations from “85,000 MTOPS” to “190,000 MTOPS”, effective March 3, 2002; and

(B) Moving Latvia from Tier 3 to Tier 1, effective May 2, 2002.

2. This rule revises the Export Administration Regulations by modifying computer exports under section 742.12, “High Performance Computers,” as follows:

(A) Raising the XP control CTP level for computers that require a license to export or reexport to a country in Computer Tier 3 from 85,000 MTOPS to 190,000 MTOPS, effective March 3, 2002; and

(B) Raising the CTP level for computers that require a NDAA post shipment verification report to export or reexport to a country in Computer Tier 3 from 85,000 MTOPS to 190,000 MTOPS, effective March 3, 2002.

Other Revisions

In addition to implementing provisions from the President's January 2, 2002 announcement, this rule amends the EAR to correct an inadvertent omission. This rule adds Australia, New Zealand, Norway, Switzerland, and Turkey to the list of countries eligible for exports and reexports of software and technology for computers with unlimited CTP under License Exception TSR, to correct an inadvertent omission of countries that were either a member or designated a cooperating country of the Coordinating Committee for Multilateral Export Controls (CoCoM), these are identified in Country Group A:1 or by footnote number 1 of Supplement No. 1 to part 740 of the EAR.

To harmonize other sections of the EAR that are affected by the President's decisions, this rule raises the eligibility level for computers in License Exception GOV from a CTP greater than 85,000 MTOPS to a CTP greater than 190,000 MTOPS, effective March 3, 2002. This rule also raises the CTP limit from 85,000 MTOPS to 190,000 MTOPS for computers containing U.S.-origin controlled semiconductors (other than memory circuits) classified under ECCN 3A001 that are eligible for becoming “not subject to the EAR” under the de minimis procedures of 734.4 of the EAR when destined to Computer Tier 3, while keeping the limit at 28,000 MTOPS for computers containing U.S.-origin controlled semiconductors (other than memory circuits) classified under ECCN 3A001 or high speed interconnect devices (ECCN 4A994.j) when destined to Computer Tier 4 countries, effective March 3, 2002.

This rule makes the following specific amendments to the Commerce Control List, in Category 4—Computers:

4D001—Amended by:

(1) Reformatting the eligibility text of License Exception TSR; and

(2) Adding Australia, New Zealand, Norway, Switzerland, and Turkey to License Exception TSR eligibility.

4E001—Amended by:

(1) Reformatting the eligibility text of License Exception TSR; and

(2) Adding Australia, New Zealand, Norway, Switzerland, and Turkey to License Exception TSR eligibility.

Although the Export Administration Act expired on August 20, 2001, Executive Order 13222 of August 17, 2001 (66 FR 44025, August 22, 2001) continues the Regulations in effect under the International Emergency Economic Powers Act.

Rulemaking Requirements

1. This final rule has been determined to be not significant for purposes of Executive Order 12866.

2. Notwithstanding any other provision of law, no person is required to respond to nor be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB Control Number. This regulation involves collections previously approved by the Office of Management and Budget under control numbers 0694-0088, “Multi-Purpose Application,” which carries a burden hour estimate of 45 minutes per manual submission and 40 minutes per electronic submission. Miscellaneous and recordkeeping activities account for 12 minutes per submission. Information is also collected under OMB control number 0694-0107, “National Defense Authorization Act,” Advance Notifications and Post-Shipment Verification Reports, which carries a burden hour estimate of 15 minutes per report. This rule also involves collections of information under OMB control number 0694-0073, “Export Controls of High Performance Computers” and OMB control number 0694-0093, “Import Certificates and End-User Certificates.”

3. This rule does not contain policies with Federalism implications as that term is defined in Executive Order 13132.

4. The provisions of the Administrative Procedure Act requiring notice of proposed rule making, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military or foreign affairs function of the United States (see 5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rule making and an opportunity for public comment be given for this rule. Because a notice of proposed rule making and opportunities for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., are inapplicable.

Therefore, this regulation is issued in final form. Although there is no formal comment period, public comments on this regulation are welcome on a continuing basis. Comments should be submitted to Office of Exporter Services, Bureau of Export Administration, Department of Commerce, P.O. Box 273, Washington, D.C. 20044.

List of Subjects

15 CFR Part 734

• Administrative practice and procedure
• Exports, and Foreign trade

15 CFR Part 740

• Administrative practice and procedure
• Exports
• Foreign trade
• Reporting and record keeping requirements

15 CFR Parts 742 and 774

• Exports
• Foreign trade

Accordingly, parts 734, 740, 742, and 774 of the Export Administration Regulations (15 CFR Parts 730-799) are amended as follows:

1. The authority citation for 15 CFR part 734 continues to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 61 FR 54079, 3 CFR, 1996 Comp. p. 219; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, August 22, 2001; Notice of November 9, 2001, 66 FR 56965, November 13, 2001.

2. The authority citation for 15 CFR part 740 continues to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; Sec. 901-911, Publ. L. 106-387; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, August 22, 2001.

3. The authority citation for 15 CFR part 742 continues to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 18 U.S.C. 2510 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; Sec. 901-911, Publ. L. 106-387; Sec. 221, Publ. L. 107-56; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, August 22, 2001; Notice of November 9, 2001, 66 FR 56965, November 13, 2001.

4. The authority citation for 15 CFR part 774 continues to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 10 U.S.C. 7420; 10 U.S.C. 7430(e); 18 U.S.C. 2510 et seq.; 22 U.S.C. 287c, 22 U.S.C. 3201 et seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42 U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; 50 U.S.C. app. 5; Sec. 901-911, Publ. L. 106-387; Sec. 221, Publ. L. 107-56; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, August 22, 2001.

PART 734—[AMENDED]

5. Part 734 is amended by revising the phrase “85,000 MTOPS” to read “190,000 MTOPS” in § 734.4(a).

PART 740—[AMENDED]

6. Section 740.7 is amended by:

(a) Adding a sentence to the end of paragraphs (c)(1) and (d)(1), to read as follows;

(b) Revising the phrase “equal to 85,000 MTOPS” to read “equal to 190,000 MTOPS” in paragraph (d)(2).

§ 740.7

Computers (CTP).

* * * * *

(c) Computer Tier 1. (1) Eligible countries. * * * As of May 2, 2002, Latvia is a Computer Tier 1 country.

* * * * *

(d) Computer Tier 3. (1) Eligible countries. * * * As of May 2, 2002, Latvia is moved to Computer Tier 1.

* * * * *

§ 740.11

[Amended]

7. Section 740.11 is amended by revising the number “85,000” to read “190,000” in paragraphs (a)(2)(ii), (a)(2)(iii), and (c)(2)(i).

8. Supplement No. 1 to part 740.11 is amended by revising the number “85,000” to read “190,000” in paragraphs (a)(1)(ii), (a)(1)(iii), (b)(1)(ii), and (b)(1)(iii).

PART 742—[AMENDED]

§ 740.12

[Amended]

9. Section 742.12 is amended by revising the phrase “where the CTP is greater than 85,000 MTOPS” to read “where the CTP is greater than 190,000 MTOPS” in paragraph (b)(3)(iv)(A).

PART 743—[AMENDED]

§ 743.1

[Amended]

10. Section 743.1 is amended by revising the phrase, “having a CTP level of greater than 85,000 MTOPS” to read “having a CTP level of greater than 190,000 MTOPS” in the note to paragraph (c)(2).

* * * * *

PART 774—[AMENDED]

11. In Supplement No. 1 to part 774 (the Commerce Control List), Category 4—Computers is amended by revising the “License Exceptions” section of Export Control Classification Number (ECCNs) 4D001 and 4E001, to read as follows:

4D001 “Software” specially designed or modified for the “development”, “production” or “use” of equipment or “software” controlled by 4A001 to 4A004, or 4D (except 4D980, 4D993 or 4D994).

* * * * *

License Exceptions

CIV: N/A

TSR: (a) N/A for:

(1) “Software” controlled for MT reasons;

(2) “Software” for equipment or “software” requiring a license; or

(3) “Software” described by TSR paragraph (b)(1)(ii) of this License Exception section, when exported or reexported to a destination not included in TSR paragraph (b)(1)(i) of this License Exception section.

(b) Yes for:

(1) “Software”:

(i) Exported or reexported to Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, or the United Kingdom; and

(ii) Specially designed for the “development” or “production” of any of the following:

(A) “Digital” computers controlled by 4A003.b and having a CTP exceeding than 33,000 MTOPS; or

(B) “Electronic assemblies” controlled by 4A003.c and capable of enhancing performance by aggregation of “computing elements” so that the CTP of the aggregation exceeds 33,000 MTOPS; and

(2) All other “software” not described in TSR paragraphs (a) or (b)(1) of this License Exception section.

* * * * *

4E001 “Technology” according to the General Technology Note, for the “development”, “production” or “use” of equipment or “software” controlled by 4A (except 4A980, 4A993 or 4A994) or 4D (except 4D980, 4D993, 4D994).

* * * * *

License Exceptions

CIV: N/A

TSR: (a) N/A for:

(1) “Technology” controlled for MT reasons; or

(2) “Technology” described by TSR paragraph (b)(2)(ii) of this License Exception, when exported or reexported to a destination not included in TSR paragraph (b)(2)(i) of this License Exception.

(b) Yes for:

(1) “ Technology” directly related to hardware eligible for export or reexport under a License Exception;

(2) “Technology”:

(i) Exported or reexported to Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, or the United Kingdom; and

(ii) For the “development” or “production” of any of the following:

(A) “Digital” computers controlled by 4A003.b and having a CTP exceeding 33,000 MTOPS;

(B) “Electronic assemblies” controlled by 4A003.c and capable of enhancing performance by aggregation of “computing elements” so that the CTP of the aggregation exceeds 33,000 MTOPS; or

(C) “Software” controlled by 4D001 and specially designed for the “development” or “production” of equipment listed in TSR paragraphs (b)(2)(ii)(A) or (b)(2)(ii)(B) of this License Exception section; and

(3) All other “technology” not described in TSR paragraphs (a), (b)(1), or (b)(2) of this License Exception section.

Dated: March 5, 2002.

James J. Jochum,

Assistant Secretary for Export Administration.