[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]



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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.

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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]
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