[Federal Register Volume 60, Number 32 (Thursday, February 16, 1995)] [Rules and Regulations] [Pages 8933-8936] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 95-3984] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Office of Foreign Assets Control 31 CFR Part 500 Foreign Assets Control Regulations; North Korean Travel and Financial Transactions; Information and Informational Materials AGENCY: Office of Foreign Assets Control, Treasury. ACTION: Final rule; amendments. ----------------------------------------------------------------------- SUMMARY: The Treasury Department is amending the Foreign Assets Control Regulations (the ``Regulations'') consistent with commitments undertaken in the October 21, l994 U.S.-Democratic People's Republic of Korea (``North Korea'') Framework Agreement. In addition, the Regulations are also being amended to bring them into conformity with recent amendments to the Trading with the Enemy Act. EFFECTIVE DATE: February 14, 1995. FOR FURTHER INFORMATION CONTACT: Steven I. Pinter, Chief of Licensing (tel.: 202/622-2480), or William B. Hoffman, Chief Counsel (tel.: 202/ 622-2410), Office of Foreign Assets Control, Department of the Treasury, Washington, D.C. 20220. SUPPLEMENTARY INFORMATION: Electronic Availability This document is available as an electronic file on The Federal Bulletin Board the day of publication in the Federal Register. By modem dial 202/512-1387 or call 202/512-1530 for disks or paper copies. This file is available in Postscript, WordPerfect 5.1 and ASCII. Background On October 21, 1994, the United States and North Korea agreed, in the context of broader negotiations, to begin reducing barriers to trade and investment. Based on these mutual commitments, the Regulations are being amended by (1) adding a new Sec. 500.580 to authorize the clearing through the U.S. banking system of U.S. dollar transactions in which North Korea or a national thereof has an interest; (2) adding a new Sec. 500.581 to authorize transactions related to the operation of certain U.S. and North Korean diplomatic missions in the United States and North Korea; (3) amending Sec. 500.563 to authorize all U.S. persons' transactions with respect to travel to, from, and within North Korea, including removal of restrictions on group travel and travel service providers (including travel agents, carriers, ticket agents and commercial and noncommercial organizations that promote or arrange travel) and removal of the prior $200 per diem ceiling on expenditures; (4) amending Sec. 500.566, regarding the authorization of travel-related transactions by North Korean nationals in the United States; (5) amending Sec. 500.579 to authorize the case-by-case unblocking of certain funds which came into the possession or control of U.S. banking institutions through wire transfer instructions or check remittances in which North Korea or a national thereof has or has had an interest, provided no funds are transferred directly to the Government of North Korea, entities controlled by the Government of North Korea, or to persons in North Korea; and (6) removing Sec. 500.564, regarding reimbursment of travel costs by foreign subsidiaries, and Sec. 500.569, regarding group travel to North Korea, as no longer necessary. Section 500.582 is added to the Regulations to provide a statement of licensing policy noting that specific licenses may be issued for the [[Page 8934]] importation into the United States of North Korean-origin magnesite or magnesia, because the absence of North Korea as a supplier subjects U.S. importers to unreasonably high prices due to otherwise limited foreign sources. Section 500.583 is added to the Regulations to provide that specific licenses may be issued to authorize transactions necessary to establish offices in North Korea of U.S. news organizations and for offices in the United States of North Korean news organizations. Finally, Sec. 500.584 is added to the Regulations to provide that specific licenses may be issued to authorize U.S. persons to participate in certain types of energy sector projects in North Korea with respect to the replacement of existing nuclear reactors with light-water reactor power plants. Section 525(b) of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995, Pub. L. No. 103-236, 108 Stat. 474 (the ``FRAA''), amended section 5(b)(4) of the Trading with the Enemy Act, 50 U.S.C. App. 5(b)(4) (``TWEA''), to expand the list of items defined as categories of informational materials to include compact discs, CD ROMs, artworks, and news wire feed. In addition, section 5(b)(4) of TWEA, as amended, exempts from the authority granted to the President pursuant to TWEA the authority to regulate or prohibit, directly or indirectly, the exportation or importation, whether commercial or otherwise, of information or informational materials regardless of format or medium of transmission, except exportations that would be controlled pursuant to national security, nonproliferation, or antiterrorism provisions of the Export Administration Act of 1979, 50 U.S.C. App. 2401-2420, or espionage provisions of 18 U.S.C. chapter 37. Section 500.571 of the Regulations is being amended to reflect the exemption from regulation of all transmissions of noncontrolled information over existing telecommunications circuits, including current settlement of telecommunications fees between the United States and North Korea. Note: The FRAA exemption applies to transmissions of information, not telecommunications facilities and equipment used to transmit information. Exportation from the United States of equipment to enhance gateway-to-gateway telecommunications service with North Korea is subject to licensing requirements of the Department of Commerce, in conjunction with the general license in Sec. 500.533 of the Regulations. Exportation or reexportation of such equipment to North Korea from a third country by a U.S. person requires a specific license from FAC and may also be subject to Commerce Department licensing provisions set forth in the Export Administration Regulations, 15 CFR parts 768-799. Section 500.206 is amended to reflect the FRAA exemption that applies to transactions concerning exportation and importation of information and informational materials. The definition of the term ``informational materials'' contained in Sec. 500.332 is amended to conform the section to amended section 5(b)(4) of TWEA. Conforming amendments are also made to Sec. 500.550, which authorizes transactions related to the importation and exportation of information and informational materials. Because the Regulations involve a foreign affairs function, Executive Order 12866 and the provisions of the Administrative Procedure Act, 5 U.S.C. 553, requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date, are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act, 5 U.S.C. 601-612, does not apply. List of Subjects in 31 CFR Part 500 Administrative practice and procedure, Banks, Banking, Cambodia, Exports, Fines and penalties, Finance, Foreign investment in the United States, Foreign trade, Imports, Information and informational materials, International organizations, North Korea, Reporting and recordkeeping requirements, Securities, Services, Travel restrictions, Trusts and estates, Vietnam. For the reasons set forth in the preamble, 31 CFR part 500 is amended as set forth below: PART 500--FOREIGN ASSETS CONTROL REGULATIONS 1. The authority citation for part 500 continues to read as follows: Authority: 50 U.S.C. App. 1-44; E.O. 9193, 7 FR 5205, 3 CFR, 1938-1943 Comp., p. 1174; E.O. 9989, 13 FR 4891, 3 CFR, 1943-1948 Comp., p. 748. Subpart B--Prohibitions 2. The section heading and paragraphs (a) and (b) of Sec. 500.206 are revised to read as follows, the words ``information or'' are added before the words ``informational materials'' in each place they appear in paragraph (c) of Sec. 500.206, and the word ``synchronization'' and the comma following it are removed from Example #4 of Sec. 500.206: Sec. 500.206 Exemption of information and informational materials. (a) The importation from any country and the exportation to any country of information or informational materials as defined in Sec. 500.332, whether commercial or otherwise, regardless of format or medium of transmission, are exempt from the prohibitions and regulations of this part. (b) All transactions of common carriers incident to the importation or exportation of information or informational materials, including mail, between the United States and any foreign country designated under Sec. 500.201, are exempt from the prohibitions and regulations of this part. * * * * * Subpart C--General Definitions 3. Section Sec. 500.332 is revised to read as follows: Sec. 500.332 Information and informational materials. (a) For purposes of this part, the term informational materials includes, without limitation: (1) Publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds. (2) To be considered informational materials, artworks must be classified under chapter subheading 9701, 9702, or 9703 of the Harmonized Tariff Schedule of the United States. (b) The terms information and informational materials with respect to U.S. exports do not include items: (1) that would be controlled for export pursuant to section 5 of the Export Administration Act of 1979, 50 U.S.C. App. 2401-2420 (1979) (the ``EAA''), or section 6 of the EAA to the extent that such controls promote the nonproliferation or antiterrorism policies of the United States, including ``software'' that is not ``publicly available'' as these terms are defined in 15 CFR Parts 779 and 799.1 (1994); or (2) with respect to which acts are prohibited by 18 U.S.C. chapter 37. Subpart E--Licenses, Authorizations, and Statements of Licensing Policy 4. The section heading and paragraph (a) of Sec. 500.550 are revised to read as follows, and the words ``information or'' are added before the words ``informational materials'' in each place they appear in the first sentence of paragraph (b) of Sec. 500.550: [[Page 8935]] Sec. 500.550 Transactions related to information and informational materials. (a) All financial and other transactions directly incident to the importation or exportation of information or informational materials as defined in Sec. 500.332 of this part are authorized. * * * * * 5. The section heading and text of Sec. 500.563 are revised to read as follows: Sec. 500.563 Transactions incident to travel to and within North Korea. (a) All transactions of persons subject to U.S. jurisdiction, including travel service providers, ordinarily incident to travel to, from, and within North Korea and to maintenance within North Korea are authorized. This authorization extends to transactions with North Korean carriers and those involving group tours, payment of living expenses, the acquisition of goods in North Korea for personal use, and normal banking transactions involving currency drafts, charge, debit or credit cards, traveler's checks, or other financial instruments negotiated incident to personal travel. (b) The purchase of merchandise in North Korea by persons subject to U.S. jurisdiction, and importation as accompanied baggage, is limited to goods with a foreign market value not to exceed $100 per person for personal use only. Such merchandise may not be resold. This authorization may be used only once in every six consecutive months. As provided in Sec. 500.206 of this part, information and informational materials are exempt from this restriction. (c) This section does not authorize any debit to a blocked account. Sec. 500.564 [Reserved] 6. Section 500.564 is removed and reserved. 7. Paragraph (b) of Sec. 500.566 is removed, paragraph (c) is redesignated as paragraph (b), and the section heading and the introductory text of paragraph (a) and paragraph (a)(1) are revised to read as follows: Sec. 500.566 Certain transactions authorized on behalf of North Korean nationals incident to their travel and maintenance expenses. (a) Except as provided in paragraph (b) of this section, the following transactions are authorized by or on behalf of a national of North Korea who enters the United States on a visa issued by the Department of State: (1) All transactions ordinarily incident to travel to, from, and within the United States are authorized, including the importation into the United States of accompanied baggage for personal use; * * * * * Sec. 500.569 [Reserved] 8. Section 500.569 is removed and reserved. Sec. 500.571 [Amended] 9. Section 500.571 is amended by removing the word ``Vietnam'' and adding the words ``North Korea'' wherever it appears. 10. Section 500.579 is amended by designating the current text as paragraph (a), and by adding the following paragraph (b) to the end of the section to read as follows: Sec. 500.579 Authorization for release of certain blocked transfers by banking institutions subject to U.S. jurisdiction. * * * * * (b) Specific licenses may be issued authorizing the return to the remitting party of funds that were blocked by banking institutions subject to the jurisdiction of the United States pursuant to this part because of an interest of North Korea or a national thereof and that came into the banking institution's possession or control by wire transfer or check remittance, provided that no funds are released to the Government of North Korea, any entity controlled by the Government of North Korea, or any person located in, controlled from, or organized under the laws of North Korea. 11. Section 500.580 is added to read as follows: Sec. 500.580 Authorization of U.S. dollar clearing transactions involving North Korea. Banking institutions organized under the laws of or located in the United States are authorized to process the transfer of funds in which North Korea or a national thereof has an interest. Persons subject to U.S. jurisdiction who are originators or ultimate beneficiaries of funds transfers, however, including U.S. banking institutions that are themselves originators or beneficiaries, may not initiate or receive such transfers if the underlying transactions to which they relate are prohibited pursuant to this part. 12. Section 500.581 is added to read as follows: Sec. 500.581 Financial transactions related to diplomatic missions authorized. All financial transactions related to activities of North Korean diplomatic missions in the United States and U.S. diplomatic missions in North Korea are authorized, with the exception of transactions involving the North Korean mission to the United Nations in New York, which are subject to approval by specific license. 13. Section 500.582 is added to read as follows: Sec. 500.582 Importation of North Korean-origin magnesite and magnesia. Specific licenses may be issued authorizing the importation into the United States of North Korean-origin magnesite or magnesia. 14. Section 500.583 is added to read as follows: Sec. 500.583 News organization offices. (a) Specific licenses may be issued authorizing all transactions necessary for the establishment and operation of news bureaus in North Korea by U.S. organizations whose primary purpose is the gathering and dissemination of news to the general public. (b) Transactions that will be authorized include but are not limited to those incident to the following: (1) leasing office space and securing related goods and services; (2) hiring North Korean nationals to serve as support staff; (3) purchasing North Korean-origin goods for use in the operation of the office; and (4) paying fees related to the operation of the office in North Korea. (c) Specific licenses may be issued authorizing transactions necessary for the establishment and operation of news bureaus in the United States by North Korean organizations whose primary purpose is the gathering and dissemination of news to the general public. (d) The number assigned to a specific license issued pursuant to this section should be referenced in all import documents, and in all funds transfers and other banking transactions through banking institutions organized or located in the United States, in connection with the licensed transactions to avoid the blocking of goods imported from North Korea and the interruption of the financial transactions with North Korea. 15. Section 500.584 is added to read as follows: Sec. 500.584 Energy sector projects in North Korea. Specific licenses may be issued to permit persons subject to U.S. jurisdiction to participate in certain energy sector projects in North Korea in connection with that country's transition to light-water reactor (``LWR'') power plants. Transactions that may be licensed include those related to LWR [[Page 8936]] power plant design, site preparation, excavation, delivery of essential nonnuclear components including turbines and generators, building construction, the disposition of spentnuclear fuel, and the provision of heavy oil to North Korea for heating and electricity generation pending completion of the first LWR unit. Dated: February 7, 1995. R. Richard Newcomb, Director, Office of Foreign Assets Control. Approved: February 8, 1995. John Berry, Deputy Assistant Secretary (Enforcement). [FR Doc. 95-3984 Filed 2-14-95; 9:15 am] BILLING CODE 4810-25-F