[Federal Register Volume 61, Number 33 (Friday, February 16, 1996)]
[Rules and Regulations]
[Pages 6111-6113]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3190]



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DEPARTMENT OF STATE
Bureau of Political Military Affairs

22 CFR Parts 123 and 126

[Public Notice 2294]


Amendment to the International Traffic in Arms Regulations

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: This rule would amend the International Traffic in Arms 
Regulations (ITAR) by establishing an exemption for the temporary 
export of cryptographic products for personal use. The effect of the 
change would be to ease the burden on U.S. citizens and lawful 
permanent residents who have the need to temporarily export 
cryptographic products when leaving the U.S. for brief periods of time.

EFFECTIVE DATE: February 16, 1996.

FOR FURTHER INFORMATION CONTACT:
Rose Biancaniello, Deputy Director for Licensing, Office of Defense 
Trade Controls, Department of State, (703) 875-6643 or FAX (703) 875-
6647.

SUPPLEMENTARY INFORMATION: The U.S. Government has since 1993, at the 
direction of the President, been reviewing the U.S. policy regarding 
the domestic use of, and export controls on, cryptographic technology. 
While U.S. national security and foreign policy compel maintaining 
appropriate export controls on cryptography, the Department of State 
has continued to reform the export control procedures applicable to 
those products incorporating cryptography which are controlled by the 
ITAR in Category XIII(b)(1). For example, on September 2, 1994, the 
Department published (at 59 FR 45621) a final rule change which created 
a new Section 124.15. The section provides for a new arrangement by 
which the Department of State may provide approval for category 
XIII(b)(1) cryptography products to be distributed by U.S. 
manufacturers directly to foreign end users without obtaining an 
individual license for each transaction.
    After extensive review, the Department of State has decided to 
further amend the regulations to provide for an exemption for the 
temporary export of cryptographic products for personal use. The 
exemption does not apply to other circumstances, for example, those in 
which a person contemplates sales, marketing or demonstration. Nor does 
the exemption apply to exports to destinations listed in Section 126.1 
of the ITAR which are prohibited by a United Nations Security Council 
Resolution or to which the export (or for which the issuance of a 

[[Page 6112]]
license for the export) would be prohibited by a U.S. statute (e.g., by 
Section 40 of the Arms Export Control Act, 22 U.S.C. 2780, to countries 
that have been determined to have repeatedly provided support for acts 
of international terrorism, i.e., Cuba, Iran, Iraq, Libya, North Korea, 
Sudan and Syria).
    This rule amends Part 123 to add a new Section 123.27 to reduce the 
burden on individual users of cryptographic products by providing an 
exemption for the temporary export for personal use of products covered 
by Category XIII(b)(1) when the product remains in the possession of 
the exporter or the possession of another U.S. citizen or lawful 
permanent resident traveling with him/her. For purposes of this 
exemption, a product is considered to be in the possession of the 
exporter if the exporter takes normal precautions to ensure the 
security of the product by locking the product in a hotel room, safe, 
or other comparably secure location; and, while in transit, the 
exporter keeps the product in his/her carry-on luggage or locked in 
baggage accompanying the exporter which has been checked with the 
carrier.
    This amendment involves a foreign affairs function of the United 
States and thus is excluded from the procedures of Executive Order 
12866 (58 FR 51735) and 5 U.S.C. 553 and 554.
    However, interested parties are invited to submit written comments 
to the Department of State, Director, Office of Defense Trade Controls, 
Attn: Regulatory Change, Personal Use Cryptographic Products, Room 200, 
SA-6, Washington, DC 20520-0602.
    This rule affects collection of information subject to the 
Paperwork Reduction Act (44 U.S.C. 3501 et seq), and will serve to 
reduce the burden on exporters by adding an exemption which will remove 
the current requirement for a license.

Paperwork Reduction Act

    The record-keeping requirement contained in section 123.27(b) has 
been approved by OMB and has a control number of 1405-0103. An agency 
may not conduct or sponsor, and a person is not required to respond to, 
a collection of information unless the collection of information 
displays a valid control number.

List of Subjects

22 CFR Part 123

    Arms and munitions, Exports, Reporting and recordkeeping 
requirements.

22 CFR Part 126

    Arms and munitions, Exports.

    Accordingly, for the reasons set forth in the preamble, title 22, 
chapter I, subchapter M, of the Code of Federal Regulations, is amended 
as set forth below:

PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

    1. The authority citation for part 123 continues to read as 
follows:

    Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22 
U.S.C. 2752, 2778); E.O. 11958, 42 FR 4311, 3 CFR 1977 Comp. 79; 22 
U.S.C. 2658.

    2. A new Sec. 123.27 is added to read as follows:


Sec. 123.27  Temporary export for personal use of Category XIII(b)(1) 
cryptographic products.

    (a) District Directors of Customs may permit a U.S. citizen or a 
U.S. person who is a lawful permanent resident as defined by 8 U.S.C. 
1101(a)(20) to temporarily export from the United States without a 
license not more than one each of any unclassified Category XIII(b)(1) 
cryptographic hardware product and not more than a single copy of each 
type of unclassified Category XIII(b)(1) cryptographic software product 
provided that:
    (1) The software product(s) are to be used only on a simultaneously 
temporarily exported Category XIII(b)(1) hardware product or a 
simultaneously exported item on the Commerce Control List (CCL); and
    (2) The cryptographic products covered by Category XIII(b)(1) are 
not destined for export to a destination listed in Sec. 126.1 of the 
ITAR (22 CFR 126.1) which is prohibited by a United Nations Security 
Council Resolution or to which the export (or for which the issuance of 
a license for the export) would be prohibited by a U.S. statute (e.g., 
by Section 40 of the Arms Export Control Act, 22 U.S.C. 2780, to 
countries that have been determined to have repeatedly provided support 
for acts of international terrorism--currently Cuba, Iran, Iraq, Libya, 
North Korea, Sudan and Syria); and
    (3)(i) The encryption products remain in the possession of the 
exporting person or the possession of another U.S. citizen or lawful 
permanent resident traveling with him/her, are for their exclusive use 
and not for copying, demonstration, marketing, sale, re-export or 
transfer of ownership or control. The export of cryptographic products 
identified in Category XIII(b)(1) in any other circumstances, for 
example, those in which a person contemplates sales, marketing, or 
demonstration must be licensed in accordance with policies and 
procedures established in this subchapter.
    (ii) Special definition. For purposes of paragraph (a)(3)(i) of 
this section, a product is considered to be in the possession of the 
exporter if:
    (A) The exporter takes normal precautions to ensure the security of 
the product by locking the product in a hotel room, safe, or other 
comparably secure location; and
    (B) While in transit, the exporter keeps the product in his/her 
carry-on luggage or locked in baggage accompanying the exporter which 
has been checked with the carrier; and
    (4) At the time of export from the U.S. and import into the U.S., 
the cryptographic products are with the individual's accompanying 
baggage or effects. They may not be exported or imported in 
unaccompanied baggage, mailed or transmitted by any other means (e.g., 
electronically); and, the cryptographic products must be returned to 
the U.S. at the completion of the stay abroad; and
    (5) The exporter, upon request of a U.S. Customs officer, will 
submit the products to inspection at the time of export and/or import.
    (b) Use of this exemption requires the exporter, in lieu of filing 
a Shippers' Export Declaration, to maintain, for a period of 5 years 
from the date of each temporary export, a record of that temporary 
export and the subsequent import. Included in this record must be a 
self certification that the individual complied with the conditions of 
paragraph (a) of this section and a self certification that he/she has 
no reason to believe that any of the temporarily exported cryptographic 
products were stolen, lost, copied, sold or otherwise compromised or 
transferred while abroad. The record should include the following 
information: A description of the unclassified cryptographic products; 
the countries entered, including the dates of entry and exit for each 
foreign country; and, the dates of temporary export from and subsequent 
import into the United States.
    (c) In any instance where a product exported under this exemption 
is stolen, lost, copied, sold or otherwise compromised or transferred 
while abroad, the exporting person must, within 10 days of his/her 
return to the United States, report the incident to the Department of 
State, Office of Defense Trade Controls, Washington, D.C. 20520-0602. 
Also, any person who knows or has reason to know that cryptographic 
products exported under 

[[Page 6113]]
this exemption are being transferred, exported, or used for any other 
activity which must be licensed or otherwise authorized in writing by 
the Department of State, should immediately inform the Department of 
State, Office of Defense Trade Controls, Washington D.C. 20520-0602.

PART 126--GENERAL POLICIES AND PROVISIONS

    1. The authority citation for part 126 continues to read as 
follows:

    Authority: Secs. 2, 38, 40, 42 and 71, Arms Export Control Act, 
Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791 and 
2797); E.O. 11958, 41 FR 4311; E.O. 11322, 32 FR 119; 22 U.S.C. 
2658; 22 U.S.C. 287c; E.O. 12918, 59 FR 28205.

    2. Section 126.1(a) is amended by designating the three sentences 
of the undesignated paragraph as the third, fourth and fifth sentences 
of paragraph (a) and by adding a new sixth sentence at the end of 
paragraph (a) to read as follows:


Sec. 126.1  Prohibited exports and sales to certain countries.

    (a) * * * With regard to Sec. 123.27 the exemption does not apply 
with respect to articles originating in or for export to countries 
prohibited by a United Nations Security Council Resolution or to which 
the export (or for which the issuance of a license for the export) 
would be prohibited by a U.S. statute (e.g., by Section 40 of the Arms 
Export Control Act, 22 U.S.C. 2780, to countries that have been 
determined to have repeatedly provided support for acts of 
international terrorism, i.e., Cuba, Iran, Iraq, Libya, North Korea, 
Sudan and Syria).
* * * * *
    Dated: November 17, 1995.
Lynn E. Davis,
Under Secretary for Arms Control and International Security Affairs.
[FR Doc. 96-3190 Filed 2-15-96; 8:45 am]
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