[Federal Register Volume 61, Number 234 (Wednesday, December 4, 1996)]
[Rules and Regulations]
[Pages 64272-64286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30502]


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DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Parts 732, 736, 740, 742, 744, 746, 748, 750, 752, 758, and 
770

[Docket No. 961122325-6325-01]
RIN 0694-AB51


Revisions to the Export Administration Regulations: License 
Exceptions

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Final rule.

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SUMMARY: This final rule revises the Export Administration Regulations 
(EAR) by reorganizing those License Exceptions that are referenced on 
the Commerce Control List. These License Exceptions had been bundled 
together in a single section, bearing a group symbol to be used for 
export clearance purposes. This rule splits the list-based License 
Exceptions into separate sections, each with its own clearance symbol. 
This rule makes conforming changes throughout the EAR. Finally, this 
rule makes corrections and clarifications to certain sections of the 
EAR affected by the changes to the License Exceptions.

DATES: This rule is effective December 4, 1996.

FOR FURTHER INFORMATION CONTACT: Hillary Hess, Office of Exporter 
Services, Bureau of Export Administration, Telephone: (202) 482-2440.

SUPPLEMENTARY INFORMATION:

Background

    On March 25, 1996, the Bureau of Export Administration (BXA) 
published an interim rule that revised the entire EAR (61 FR 12714). 
Prior to that date, on May 11, 1995, BXA had published a proposed 
version of this comprehensive revision (60 FR 25267), and public 
comments on that proposed rule significantly helped shape the interim 
rule. Public comments on the proposed rule indicated that the number of 
License Exceptions was too high and generally supported combining 
similar License Exceptions. In response to these comments, BXA 
consolidated single License Exceptions into ``groupings.'' Exporters 
used the grouping symbol as a certification on their shipping 
documents; each single License Exception also bore a symbol, for 
optional use in recordkeeping and ease of distinguishing among separate 
sets of provisions.
    Public comments on the interim rule, however, generally contained 
objections to the consolidation of those License Exceptions found on 
the Commerce Control List (CCL). These License Exceptions included the 
following: Limited Value Shipments (LVS), Shipments to Group B 
Countries (GBS), Civil End-users (CIV), Technology and Software under 
Restriction (TSR), and Computers (CTP); they were consolidated into the 
``list-based'' License Exception section and exporters shipping under 
any of the five used the grouping symbol ``LST'' for export clearance 
purposes. Many exporters with automated processes found that using a 
grouping symbol added an additional step to their programs; others 
simply found using the grouping more cumbersome. While groupings of the 
other, more transaction-based License Exceptions did not elicit the 
same objections, exporters indicated that having additional acronyms 
for optional recordkeeping use, but not for export clearance, was more 
confusing than convenient.
    Consequently, this rule splits or ``debundles'' the list-based 
License

[[Page 64273]]

Exceptions, putting each in its own section. Each License Exception 
symbol for export clearance documents matches that on the CCL (i.e., 
LVS); the grouping symbol ``LST'' disappears. Other groupings remain 
unchanged, except that this rule removes any acronyms that are not used 
for clearance purposes. This rule also drops the term ``grouping'' in 
favor of calling each section a License Exception. Specific sets of 
terms and conditions, formerly referred to as ``License Exceptions,'' 
are termed ``provisions.'' Any references throughout the EAR to meeting 
all terms and conditions of License Exceptions should be understood to 
mean meeting all applicable terms and conditions.
    A License Exception may contain one, two, or more sets of terms and 
conditions; and to use a given License Exception you must meet all the 
terms and conditions of one such set. For example, if you meet all the 
terms and conditions of paragraph 740.5(a) of the EAR for One-for-One 
Replacement of Parts, you may export or reexport under that paragraph 
even though you do not meet all the terms and conditions of paragraph 
740.5(b) of the EAR for Servicing and Replacement. The correct symbol 
for use on a required SED in this case is RPL. As an additional 
example, if you meet all the terms and conditions of paragraph 740.8(d) 
of the EAR for the General Software Note and mass market software, you 
may export or reexport under that paragraph even though you do not meet 
all the terms and conditions of paragraph 740.8(a) of the EAR for 
Operation Technology and Software, paragraph 740.8(b) of the EAR for 
Sales Technology, or paragraph 740.8(c) of the EAR for Software 
Updates.
    Finally, this rule makes certain corrections and clarifications to 
sections of the EAR affected by the changes to the License Exceptions 
part. This rule clarifies certain provisions on the availability of 
License Exceptions LVS, GBS, CIV, and TSR. This rule removes Laos and 
Cambodia from Computer Tier 2 and adds them to Computer Tier 3 in 
License Exception CTP; adds Hong Kong, New Zealand, and Taiwan to the 
list of countries that are defined as ``cooperating'' for purposes of 
License Exception GOV; changes Country Group A:4 to A:1, Iceland, or 
New Zealand in License Exception TMP; adds Iceland to the list of 
countries eligible to receive operation and sales technology and 
software even when that technology or software pertains to otherwise 
restricted nuclear end-uses in Sec. 744.2; and adds CTP to the list of 
those License Exceptions requiring a Destination Control Statement in 
Sec. 758.6. This rule also corrects certain cross-references that were 
incorrect in the March 25 rule.
    Although the Export Administration Act (EAA) expired on August 20, 
1994, the President invoked the International Emergency Economic Powers 
Act and continued in effect, to the extent permitted by law, the 
provisions of the EAA and the EAR in Executive Order 12924 of August 
19, 1994, as extended by the President's notice of August 15, 1995 (60 
FR 42767) and August 14, 1996 (61 FR 42527).

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 shall a person 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 currently valid OMB Control Number. This rule 
involves collections of information subject to the Paperwork Reduction 
Act of 1980 (44 U.S.C. 3501 et seq.). These collections have been 
approved by the Office of Management and Budget under control numbers 
0694-0023, 0694-0029, and 0694-0088.
    3. This rule does not contain policies with Federalism implications 
sufficient to warrant preparation of a Federalism assessment under 
Executive Order 12612.
    4. The provisions of the Administrative Procedure Act (5 U.S.C. 
553) requiring notice of proposed rulemaking, the opportunity for 
public participation, and a delay in effective date, are inapplicable 
because this regulation involves a military and foreign affairs 
function of the United States. Section 13(b) of the EAA, cite, does not 
require that this rule be published in proposed form because this rule 
does not impose a new control. Further, no other law requires that a 
notice of proposed rulemaking and an opportunity for public comment be 
given for this rule. Because a notice of proposed rulemaking and an 
opportunity 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 Hillary 
Hess, Regulatory Policy Division, Office of Exporter Services, Bureau 
of Export Administration, Department of Commerce, P.O. Box 273, 
Washington, DC 20044.

List of Subjects

15 CFR Parts 732, 740, 748, 750, 752 and 758

    Administrative practice and procedure, Exports, Foreign trade, 
Reporting and recordkeeping requirements.

15 CFR Parts 736, 742 and 770

    Exports, Foreign trade.

15 CFR Part 744

    Exports, Foreign trade, Reporting and recordkeeping requirements.

15 CFR Part 746

    Embargoes, Exports, Foreign trade, Reporting and recordkeeping 
requirements.

    Accordingly, the Export Administration Regulations (15 CFR parts 
730-799A) are amended as follows:
    1. The authority citation for 15 CFR part 732 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Notice of August 
15, 1995 (60 FR 42767, August 17, 1995); and Notice of August 14, 
1996 (61 FR 42527).

    2. The authority citation for 15 CFR part 736 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 12938, 59 
FR 59099, 3 CFR, 1994 Comp., p. 950; Notice of August 15, 1995 (60 
FR 42767, August 17, 1995; and Notice of August 14, 1996 (61 FR 
42527).

    3. 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.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Notice of August 
15, 1995 (60 FR 42767, August 17, 1995); and Notice of August 14, 
1996 (61 FR 42527).

    4. 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; 
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. 12924, 59 FR 43437, 3 CFR, 
1994 Comp., p. 917; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 
950; Notice of August 15, 1995 (60 FR 42767, August 17, 1995); and 
Notice of August 14, 1996 (61 FR 42527).

    5. The authority citation for 15 CFR part 744 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 3201 et seq.;

[[Page 64274]]

42 U.S.C. 2139a; 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. 12924, 59 
FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 12938, 59 FR 59099, 3 CFR, 
1994 Comp., p. 950; Notice of August 15, 1995 (60 FR 42767, August 
17, 1995); and Notice of August 14, 1996 (61 FR 42527).

    6. The authority citation for 15 CFR part 746 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
22 U.S.C. 287c; 22 U.S.C. 6004; E.O. 12918, 59 FR 28205, 3 CFR, 1994 
Comp., p. 899; E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; 
Notice of August 15, 1995 (60 FR 42767, August 17, 1995); and Notice 
of August 14, 1996 (61 FR 42527).

    7. The authority citation for 15 CFR part 748 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Notice of August 
15, 1995 (60 FR 42767, August 17, 1995); and Notice of August 14, 
1996 (61 FR 42527).

    8. The authority citation for 15 CFR part 750 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Notice of August 
15, 1995 (60 FR 42767, August 17, 1995); E.O. 12981, 60 FR 62981; 
and Notice of August 14, 1996 (61 FR 42527).

    9. The authority citation for 15 CFR part 752 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Notice of August 
15, 1995 (60 FR 42767, August 17, 1995); and Notice of August 14, 
1996 (61 FR 42527).

    10. The authority citation for 15 CFR part 758 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Notice of August 
15, 1995 (60 FR 42767, August 17, 1995); and Notice of August 14, 
1996 (61 FR 42527).

    11. The authority citation for 15 CFR part 770 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Notice of August 
15, 1995 (60 FR 42767, August 17, 1995); and Notice of August 14, 
1996 (61 FR 42527).

PART 732--[AMENDED]


Sec. 732.2  [Amended]

    12. In Sec. 732.2, paragraph (f)(1)(ii) is amended by revising the 
reference to ``License Exception TSR at Sec. 740.3(d) of the EAR'' to 
read ``License Exception TSR in Sec. 740.6 of the EAR''.


Sec. 732.3  [Amended]

    13. In Sec. 732.3, paragraph (f)(1)(ii) is amended by revising the 
reference to ``License Exception TSR described Sec. 740.19 of the EAR'' 
to read ``License Exception TSR in Sec. 740.6 of the EAR''.
    14. Section 732.4 is amended by revising paragraph (b)(3)(iii) to 
read as follows:


Sec. 732.4  Steps regarding License Exceptions.

* * * * *
    (b) * * *
    (3) * * *
    (iii) License Exceptions TMP, RPL, BAG, AVS, GOV, and TSU authorize 
exports notwithstanding the provisions of the CCL. List-based License 
Exceptions (LVS, GBS, CIV, TSR, and CTP) are available only to the 
extent specified on the CCL. Part 740 of the EAR provides authorization 
for reexports only to the extent each License Exception expressly 
authorizes reexports. License Exception APR authorizes reexports only.
* * * * *
    15. Section 732.5 is amended by revising paragraph (a)(2) to read 
as follows:


Sec. 732.5  Steps regarding Shipper's Export Declaration, Destination 
Control Statements, recordkeeping, license applications, and other 
requirements.

    (a) * * *
    (2) License Exception symbol. You must enter on any required SED 
the letter code (e.g., LVS, TMP) of the License Exceptions under which 
you are exporting. In the case of License Exceptions LVS, GBS, and CIV, 
the ECCN of the item being exported must also be entered when an SED is 
required. Please refer to Sec. 758.3 of the EAR for detailed 
information on use of SEDs.
* * * * *

PART 736--[AMENDED]

    16. Section 736.2 is amended by revising paragraphs 
(b)(3)(ii)(A)(1) and (b)(3)(ii)(B)(1) to read as follows:


Sec. 736.2  General prohibitions and determination of applicability.

* * * * *
    (b) * * *
    (3) * * *
    (ii) * * *
    (A) * * *
    (1) They are the direct product of technology or software that 
requires a written assurance as a supporting document for a license or 
as a precondition for the use of License Exception TSR in Sec. 740.6 of 
the EAR, and
* * * * *
    (B) * * *
    (1) Such plant or component is the direct product of technology 
that requires a written assurance as a supporting document for a 
license or as a precondition for the use of License Exception TSR in 
Sec. 740.6 of the EAR, and
* * * * *

PART 740--[AMENDED]

    17. Part 740 is amended:
    a. By revising Sec. 740.1, paragraphs (c) and (d) (1)
    b. By revising Sec. 740.2, paragraphs (a)(5) and (a)(6);
    c. By revising Sec. 740.3;
    d. By redesignating Secs. 740.4 through 740.11 as Secs. 740.8 
through 740.15;
    e. By adding new Secs. 740.4 through 740.7;
    f. By revising newly designated Secs. 740.8 through 740.12.


Sec. 740.1  Introduction.

* * * * *
    (c) License Exception symbols. Each License Exception bears a three 
letter symbol that will be used for export clearance purposes (see 
paragraph (d) of this section).
    (d) Shipper's Export Declaration--(1) Clearing exports under 
License Exceptions. You must enter on any required Shipper's Export 
Declaration (SED) the letter code (e.g., LVS, TMP) of the License 
Exception(s) under which you are exporting. In the case of License 
Exceptions LVS, GBS, and CIV, the ECCN of the item being exported must 
also be entered. Please refer to Sec. 758.3 of the EAR for the use of 
SEDs.
* * * * *


Sec. 740.2  Restrictions on all License Exceptions.

    (a) * * *
    (5) The item is for surreptitious interception of wire or oral 
communications controlled under ECCN 5A980, unless you are a U.S. 
Government agency (see Sec. 740.10(b)(2)(ii) of this part, Governments 
(License Exception GOV)).
    (6) The commodity you are shipping is a specially designed crime 
control and detection instrument or equipment as described in 
Sec. 742.7 of the EAR and you are not shipping to Iceland, New Zealand, 
or countries listed in Country Group A:1 (see Supplement No. 1 to part 
740), unless the shipment is authorized under License Exception BAG, 
Sec. 740.13(e) of this part (shotguns and shotgun shells).
* * * * *


Sec. 740.3  Shipments of Limited Value (LVS).

    (a) Scope. License Exception LVS authorizes the export and reexport 
in a single shipment of eligible commodities as identified by ``LVS - 
$(value limit)'' on the CCL.

[[Page 64275]]

    (b) Eligible Destinations. This License Exception is available for 
all destinations in Country Group B (see Supplement No. 1 to part 740), 
provided that the net value of the commodities included in the same 
order and controlled under the same ECCN entry on the CCL does not 
exceed the amount specified in the LVS paragraph for that entry.
    (c) Definitions--(1) Order. The term ``order'' as used in this 
Sec. 740.3 means a communication from a person in a foreign country, or 
that person's representative, expressing an intent to import 
commodities from the exporter. Although all of the details of the order 
need not be finally determined at the time of export, terms relating to 
the kinds and quantities of the commodities to be exported, as well as 
the selling prices of these commodities, must be finalized before the 
goods can be exported under License Exception LVS.
    (2) Net value: for LVS shipments. The actual selling price of the 
commodities that are included in the same order and are controlled 
under the same entry on the CCL, less shipping charges, or the current 
market price of the commodities to the same type of purchaser in the 
United States, whichever is the larger. In determining the actual 
selling price or the current market price of the commodity, the value 
of containers in which the commodity is being exported may be excluded. 
The value for LVS purposes is that of the controlled commodity that is 
being exported, and may not be reduced by subtracting the value of any 
content that would not, if shipped separately, be subject to licensing. 
Where the total value of the containers and their contents must be 
shown on Shipper's Export Declarations under one Schedule B Number, the 
exporter, in effecting a shipment under this License Exception, must 
indicate the ``net value'' of the contained commodity immediately below 
the description of the commodity.
    (3) Single shipment. All commodities moving at the same time from 
one exporter to one consignee or intermediate consignee on the same 
exporting carrier even though these commodities will be forwarded to 
one or more ultimate consignees. Commodities being transported in this 
manner will be treated as a single shipment even if the commodities 
represent more than one order or are in separate containers.
    (d) Additional eligibility requirements and restrictions--(1) 
Eligible orders. To be eligible for this License Exception, orders must 
meet the following criteria:
    (i) Orders must not exceed the applicable ``LVS'' dollar value 
limits. An order is eligible for shipment under LVS when the ``net 
value'' of the commodities controlled under the same entry on the CCL 
does not exceed the amount specified in the ``LVS'' paragraph for that 
entry. An LVS shipment may include more than one eligible order.
    (ii) Orders may not be split to meet the applicable LVS dollar 
limits. An order that exceeds the applicable LVS dollar value limit may 
not be misrepresented as two or more orders, or split among two or more 
shipments, to give the appearance of meeting the applicable LVS dollar 
value limit. However an order that meets all the LVS eligibility 
requirements, including the applicable LVS dollar value limit, may be 
split among two or more shipments.
    (iii) Orders must be legitimate. Exporters and consignees may not, 
either collectively or individually, structure or adjust orders to meet 
the applicable LVS dollar value limits.
    (2) Restriction on annual value of LVS orders. The total value of 
exports per calendar year to the same ultimate or intermediate 
consignee of commodities classified under a single ECCN may not exceed 
12 times the LVS value limit for that ECCN; however, there is no 
restriction on the number of shipments provided that value is not 
exceeded. This annual value limit applies to shipments to the same 
ultimate consignee even though the shipments are made through more than 
one intermediate consignee. There is no restriction on the number of 
orders that may be included in a shipment, except that the annual value 
limit per ECCN must not be exceeded.
    (3) Orders where two or more LVS dollar value limits apply. An 
order may include commodities that are controlled under more than one 
entry on the CCL. In this case, the net value of the entire order may 
exceed the LVS dollar value for any single entry on the CCL. However, 
the net value of the commodities controlled under each ECCN entry shall 
not exceed the LVS dollar value limit specified for that entry.

    Example to paragraph (d)(3): An order includes commodities 
valued at $8,000. The order consists of commodities controlled under 
two ECCN entries, each having an LVS value limit of $5000. 
Commodities in the order controlled under one ECCN are valued at 
$3,500 while those controlled under the other ECCN are valued at 
$4,500. Since the net value of the commodities controlled under each 
entry falls within the LVS dollar value limits applicable to that 
entry, the order may be shipped under this License Exception.

    (4) Prohibition against evasion of license requirements. Any 
activity involving the use of this License Exception to evade license 
requirements is prohibited. Such devices include, but are not limited 
to, the splitting or structuring of orders to meet applicable LVS 
dollar value limits, as prohibited by paragraphs (d)(1) (ii) and (iii) 
of this section.
    (e) Reexports. Commodities may be reexported under this License 
Exception, provided that they could be exported from the United States 
to the new country of destination under LVS.


Sec. 740.4  Shipments to Country Group B countries (GBS).

    License Exception GBS authorizes exports and reexports to Country 
Group B (see Supplement No. 1 to part 740) of those commodities 
controlled to the ultimate destination for national security reasons 
only and identified by ``GBS--Yes'' on the CCL.


Sec. 740.5  Civil end-users (CIV).

    License Exception CIV authorizes exports and reexports controlled 
to the ultimate destination for national security reasons only and 
identified by ``CIV--Yes'' on the CCL, provided the items are destined 
to civil end-users for civil end-uses in Country Group D:1. (See 
Supplement No. 1 to part 740.) CIV may not be used for exports and 
reexports to military end-users or to known military uses. Such exports 
and reexports will continue to require a license. In addition to 
conventional military activities, military uses include any 
proliferation activities described and prohibited by part 744 of the 
EAR. A license is also required for transfer to military end-users or 
end-uses in eligible countries of items exported under CIV.


Sec. 740.6  Technology and software under restriction (TSR).

    (a) Scope. License Exception TSR permits exports and reexports of 
technology and software controlled to the ultimate destination for 
national security reasons only and identified by ``TSR--Yes'' in 
entries on the CCL, provided the software or technology is destined to 
Country Group B. (See Supplement No. 1 to part 740.) A written 
assurance is required from the consignee before exporting or 
reexporting under this License Exception.
    (1) Required assurance for export of technology. You may not export 
or reexport technology under this License Exception until you have 
received from the importer a written assurance that, without a BXA 
license or License Exception, the importer will not:

[[Page 64276]]

    (i) Reexport or release the technology to a national of a country 
in Country Groups D:1 or E:2; or
    (ii) Export to Country Groups D:1 or E:2 the direct product of the 
technology, if such foreign produced direct product is subject to 
national security controls as identified on the CCL (See General 
Prohibition Three, Sec. 736.2(b)(3) of the EAR); or
    (iii) If the direct product of the technology is a complete plant 
or any major component of a plant, export to Country Groups D:1 or E:2 
the direct product of the plant or major component thereof, if such 
foreign produced direct product is subject to national security 
controls as identified on the CCL or is subject to State Department 
controls under the U.S. Munitions List (22 CFR part 121).
    (2) Required assurance for export of software. You may not export 
or reexport software under this License Exception until you have 
received from the importer a written assurance that, without a BXA 
license or License Exception, the importer will neither:
    (i) Reexport or release the software or the source code for the 
software to a national of a country in Country Groups D:1 or E:2; nor
    (ii) Export to Country Groups D:1 or E:2 the direct product of the 
software, if such foreign produced direct product is subject to 
national security controls as identified on the CCL. (See General 
Prohibition Three, Sec. 736.2(b)(3) of the EAR).
    (3) Form of written assurance. The required assurance may be made 
in the form of a letter or any other written communication from the 
importer, or the assurance may be incorporated into a licensing 
agreement that specifically includes the assurances. An assurance 
included in a licensing agreement is acceptable only if the agreement 
specifies that the assurance will be honored even after the expiration 
date of the licensing agreement. If such a written assurance is not 
received, License Exception TSR is not applicable and a license is 
required. The license application must include a statement explaining 
why assurances could not be obtained.
    (4) Other License Exceptions. The requirements in this License 
Exception do not apply to the export of technology or software under 
other License Exceptions, or to the export of technology or software 
included in an application for the foreign filing of a patent, provided 
the filing is in accordance with the regulations of the U.S. Patent 
Office.
    (b) [Reserved]


Sec. 740.7  Computers (CTP).

    (a) Scope. License Exception CTP authorizes exports and reexports 
of computers and specially designed components therefor, exported or 
reexported separately or as part of a system, and related equipment 
therefor when exported or reexported with these computers as part of a 
system, for consumption in Computer Tier countries as provided by this 
section. You may not use this License Exception to export or reexport 
items that you know will be used to enhance the CTP beyond the 
eligibility limit allowed to your country of destination. When 
evaluating your computer to determine License Exception CTP 
eligibility, use the CTP parameter to the exclusion of other technical 
parameters for computers classified under ECCN 4A003, except of 
parameters specified as Missile Technology (MT) concerns, 4A003.e 
(equipment performing analog-to-digital conversions exceeding the 
limits in ECCN 3A001.a.5), and graphic accelerators or graphic 
coprocessors exceeding a ``3-D vector rate'' of 10,000,000. This 
License Exception does not authorize export or reexport of such graphic 
accelerators or coprocessors, or of computers controlled for MT 
reasons.
    (b) Computer Tier 1--(1) Eligible countries. The countries that are 
eligible to receive exports and reexports under this License Exception 
are Australia, Austria, Belgium, Denmark, Finland, France, Germany, 
Greece, the Holy See, Iceland, Ireland, Italy, Japan, Liechtenstein, 
Luxembourg, Mexico, Monaco, Netherlands, New Zealand, Norway, Portugal, 
San Marino, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.
    (2) Eligible Computers. The computers eligible for License 
Exception CTP are those with a CTP greater than 2,000 MTOPS.
    (c) Computer Tier 2--(1) Eligible countries. The countries that are 
eligible to receive exports under this License Exception include 
Antigua and Barbuda, Argentina, Bahamas, Barbados, Bangladesh, Belize, 
Benin, Bhutan, Bolivia, Botswana, Brazil, Brunei, Burkina Faso, Burma, 
Burundi, Cameroon, Cape Verde, Central Africa, Chad, Chile, Colombia, 
Congo, Costa Rica, Cote d'Ivoire, Cyprus, Czech Republic, Dominica, 
Dominican Republic, Ecuador, El Salvador, Equatorial Guinea, Eritrea, 
Ethiopia, Fiji, Gabon, Gambia (The), Ghana, Grenada, Guatemala, Guinea, 
Guinea-Bissau, Guyana, Haiti, Honduras, Hong Kong, Hungary, Indonesia, 
Jamaica, Kenya, Kiribati, Korea (Republic of), Lesotho, Liberia, 
Madagascar, Malawi, Malaysia, Maldives, Mali, Malta, Marshall Islands, 
Mauritius, Micronesia (Federated States of), Mozambique, Namibia, 
Nauru, Nepal, Nicaragua, Niger, Nigeria, Palau, Panama, Papua New 
Guinea, Paraguay, Peru, Philippines, Poland, Rwanda, St. Kitts & Nevis, 
St. Lucia, St. Vincent and Grenadines, Sao Tome & Principe, Senegal, 
Seychelles, Sierra Leone, Singapore, Slovak Republic, Slovenia, Solomon 
Islands, Somalia, South Africa, Sri Lanka, Surinam, Swaziland, Taiwan, 
Tanzania, Togo, Tonga, Thailand, Trinidad and Tobago, Tuvalu, Uganda, 
Uruguay, Venezuela, Western Sahara, Western Samoa, Zaire, Zambia, and 
Zimbabwe.
    (2) Eligible computers. The computers eligible for License 
Exception CTP are those having a Composite Theoretical Performance 
(CTP) greater than 2000, but equal to or less than 10,000 Millions of 
Theoretical Operations Per Second (MTOPS).
    (d) Computer Tier 3--(1) Eligible countries. The countries that are 
eligible to receive exports and reexports under this License Exception 
are Afghanistan, Albania, Algeria, Andorra, Angola, Armenia, 
Azerbaijan, Bahrain, Belarus, Bosnia & Herzegovina, Bulgaria, Cambodia, 
China (People's Republic of), Comoros, Croatia, Djibouti, Egypt, 
Estonia, Georgia, India, Israel, Jordan, Kazakhstan, Kuwait, 
Kyrgyzstan, Laos, Latvia, Lebanon, Lithuania, Macedonia (The Former 
Yugoslav Republic of), Mauritania, Moldova, Mongolia, Morocco, Oman, 
Pakistan, Qatar, Romania, Russia, Saudi Arabia, Serbia & Montenegro, 
Tajikistan, Tunisia, Turkmenistan, Ukraine, United Arab Emirates, 
Uzbekistan, Vanuatu, Vietnam, and Yemen.
    (2) Eligible computers. The computers eligible for License 
Exception CTP are those having a Composite Theoretical Performance 
(CTP) greater than 2,000 Millions of Theoretical Operations Per Second 
(MTOPS), but less than or equal to 7,000 MTOPS.
    (3) Eligible exports. Only exports and reexports to permitted end-
users and end-uses located in countries in Computer Tier 3. License 
Exception CTP does not authorize exports and reexports to Computer Tier 
3 for military end-users and end-uses and nuclear, chemical, 
biological, or missile end-users and end-uses defined in part 744 of 
the EAR. Exports and reexports under this License Exception may not be 
made to known military end-users or to known military end-uses or known 
proliferation end-uses or end-users defined in part 744 of the EAR. 
Such exports and reexports will continue to require a license and will 
be considered on a case-by-case basis. Retransfers to

[[Page 64277]]

military end-users or end-uses and defined proliferation end-users and 
end-uses in eligible countries are strictly prohibited without prior 
authorization.
    (e) Restrictions. (1) Computers eligible for License Exception CTP 
may not be accessed either physically or computationally by nationals 
of Cuba, Iran, Iraq, Libya, North Korea, Sudan or Syria, except that 
commercial consignees described in Sec. 742.12 of the EAR are 
prohibited only from giving such nationals user-accessible 
programmability.
    (2) Computers, software and specially designed technology eligible 
for License Exception CTP may not be reexported/retransferred without 
prior authorization from BXA i.e., a license, a permissive reexport, 
another License Exception, or ``No License Required''. This restriction 
must be conveyed to the consignee, via the Destination Control 
Statement, see Sec. 758.6 of the EAR.
    (f) Recordkeeping requirements. In addition to the recordkeeping 
requirements in part 762 of the EAR, you must keep records of each 
export under License Exception CTP. These records will be made 
available to the U.S. Government on request. The records must include 
the following information:
    (1) Date of shipment;
    (2) Name and address of the end-user and each intermediate 
consignee;
    (3) CTP of each computer in shipment;
    (4) Volume of computers in shipment;
    (5) Dollar value of shipment; and
    (6) End-use.


Sec. 740.8  Temporary imports, exports, and reexports (TMP).

    This License Exception authorizes various temporary exports and 
reexports; exports and reexports of items temporarily in the United 
States; and exports and reexports of beta test software.
    (a) Temporary exports and reexports. (1) Scope. You may export and 
reexport commodities and software for temporary use abroad (including 
use in international waters) subject to the conditions and exclusions 
described in paragraph (a)(4) of this section. Commodities and software 
shipped as temporary exports or reexports under the provisions of this 
paragraph (a) must be returned to the country from which they were 
exported as soon as practicable but, except in circumstances described 
in this section, no later than one year from the date of export. This 
requirement does not apply if the commodities and software are consumed 
or destroyed in the normal course of authorized temporary use abroad or 
an extension or other disposition is permitted by the EAR or in writing 
by BXA.
    (2) Eligible commodities and software. The following commodities 
and software are eligible to be shipped under this paragraph (a):
    (i) Tools of trade. Usual and reasonable kinds and quantities of 
commodities and software for use by employees of the exporter in a 
lawful enterprise or undertaking of the exporter. Eligible commodities 
and software may include, but are not limited to, such equipment as is 
necessary to commission or service goods, provided that the equipment 
is appropriate for this purpose and that all goods to be commissioned 
or serviced are of foreign origin, or if subject to the EAR, have been 
legally exported or reexported. The commodities and software must 
remain under the effective control of the exporter or the exporter's 
employee. The shipment of commodities and software may accompany the 
individual departing from the United States or may be shipped 
unaccompanied within one month before the individual's departure from 
the United States, or at any time after departure. No tools of the 
trade may be taken to Country Group E:2, and only equipment necessary 
to commission or service goods may be taken as tools of trade to 
Country Group D:1. (See Supplement No. 1 to part 740.)
    (ii) Kits consisting of replacement parts. Kits consisting of 
replacement parts may be exported or reexported to all destinations, 
except Country Group E:2 (see Supplement No. 1 to part 740), provided 
that:
    (A) The parts would qualify for shipment under paragraph 
(a)(2)(ii)(C) of this section if exported as one-for-one replacements;
    (B) The kits remain under effective control of the exporter or an 
employee of the exporter; and
    (C) All parts in the kit are returned, except that one-for-one 
replacements may be made in accordance with the requirements of License 
Exception RPL and the defective parts returned (see ``parts'', 
Sec. 740.9(a) of this part).
    (iii) Exhibition and demonstration in Country Group B. Commodities 
and software for exhibition or demonstration in Country Group B (see 
Supplement No. 1 to part 740) may be exported or reexported under this 
provision provided that the exporter maintains ownership of the 
commodities and software while they are abroad and provided that the 
exporter, an employee of the exporter, or the exporter's designated 
sales representative retains effective control over the commodities and 
software while they are abroad. The commodities and software may not be 
used for their intended purpose while abroad, except to the minimum 
extent required for effective demonstration. The commodities and 
software may not be exhibited or demonstrated at any one site more than 
120 days after installation and debugging, unless authorized by BXA. 
However, before or after an exhibition or demonstration, pending 
movement to another site, return to the United States or the foreign 
reexporter, or BXA approval for other disposition, the commodities and 
software may be placed in a bonded warehouse or a storage facility 
provided that the exporter retains effective control over their 
disposition. The export documentation for this type of transaction must 
show the U.S. exporter as ultimate consignee, in care of the person who 
will have control over the commodities and software abroad.
    (iv) Inspection and calibration. Commodities to be inspected, 
tested, calibrated or repaired abroad.
    (v) Containers. Containers for which another License Exception is 
not available and that are necessary for export of commodities. 
However, this ``containers'' provision does not authorize the export of 
the container's contents, which, if not exempt from licensing, must be 
separately authorized for export under either a License Exception or a 
license.
    (vi) Broadcast material. (A) Video tape containing program material 
recorded in the country of export to be publicly broadcast in another 
country.
    (B) Blank video tape (raw stock) for use in recording program 
material abroad.
    (vii) Assembly in Mexico. Commodities to be exported to Mexico 
under Customs entries that require return to the United States after 
processing, assembly, or incorporation into end products by companies, 
factories, or facilities participating in Mexico's in-bond 
industrialization program (Maquiladora), provided that all resulting 
end-products (or the commodities themselves) are returned to the United 
States.
    (viii) News media. (A) Commodities necessary for news-gathering 
purposes (and software necessary to use such commodities) may accompany 
``accredited'' news media personnel (i.e., persons with credentials 
from a news gathering or reporting firm) to Country Groups D:1 or E:2 
(see Supplement No. 1 to part 740) if the commodities:
    (1) Are retained under ``effective control'' of the exporting news 
gathering firm;

[[Page 64278]]

    (2) Remain in the physical possession of the news media personnel. 
The term physical possession for purposes of this paragraph 
(a)(2)(viii), news media, is defined as maintaining effective measures 
to prevent unauthorized access (e.g., securing equipment in locked 
facilities or hiring security guards to protect the equipment); and
    (3) Are removed with the news media personnel at the end of the 
trip.
    (B) When exporting under this paragraph (a)(2)(viii) from the 
United States, the exporter must send a copy of the packing list or 
similar identification of the exported commodities, to: U.S. Department 
of Commerce, Bureau of Export Administration, Office of Enforcement 
Support, Room H4069, 14th Street and Constitution Avenue, N.W., 
Washington, DC 20230, or any of its field offices, specifying the 
destination and estimated dates of departure and return. The Office of 
Export Enforcement (OEE) may spot check returns to assure that the 
temporary exports and reexports provisions of this License Exception 
are being used properly.
    (C) Commodities or software necessary for news-gathering purposes 
that accompany news media personnel to all other destinations shall be 
exported or reexported under paragraph (a)(2)(i), tools of trade, of 
this section if owned by the news gathering firm, or if they are 
personal property of the individual news media personnel. Note that 
paragraphs (a)(2)(i), tools of trade and (a)(2)(viii), news media, of 
this section do not preclude independent ``accredited'' contract 
personnel, who are under control of news gathering firms while on 
assignment, from utilizing these provisions, provided that the news 
gathering firm designate an employee of the contract firm to be 
responsible for the equipment.)
    (3) Special restrictions--(i) Destinations. (A) No commodity or 
software may be exported to Country Group E:2 (see Supplement No. 1 to 
part 740) except as permitted by paragraph (a)(2)(viii), news media, of 
this section;
    (B) No commodity or software may be exported to Country Group D:1 
(see Supplement No. 1 to part 740) except:
    (1) Commodities and software exported under paragraph (a)(2)(viii), 
news media, of this section;
    (2) Commodities and software exported under paragraph (a)(2)(i), 
tools of trade, of this section; and
    (3) Commodities exported as kits of replacement parts, consistent 
with the requirements of paragraph (a)(2)(ii) of this section.
    (C) These destination restrictions apply to temporary exports to 
and for use on any vessel, aircraft or territory under ownership, 
control, lease, or charter by any country in Country Group D:1 or E:2, 
or any national thereof. (See Supplement No. 1 to part 740.)
    (ii) Ineligible commodities or software. Commodities or software 
that will be used outside of Country Group A:1 (see Supplement No. 1 to 
part 740), Iceland, or New Zealand, either directly or indirectly in 
any sensitive nuclear activity as described in Sec. 744.2 of the EAR 
may not be exported or reexported to any destination under the 
temporary exports and reexports provisions of this License Exception.
    (iii) Use or disposition. No commodity or software may be exported 
or reexported under this paragraph (a) if:
    (A) An order to acquire the commodity or software has been received 
before shipment;
    (B) The exporter has prior knowledge that the commodity or software 
will stay abroad beyond the terms described in this paragraph (a); or
    (C) The commodity or software is for lease or rental abroad.
    (4) Return or disposal of commodities and software. All commodities 
and software exported or reexported under these provisions must, if not 
consumed or destroyed in the normal course of authorized temporary use 
abroad, be returned as soon as practicable but no later than one year 
after the date of export, to the United States or other country from 
which the commodities and software were so exported, or shall be 
disposed of or retained in one of the following ways:
    (i) Permanent export or reexport. If the exporter or the reexporter 
wishes to sell or otherwise dispose of the commodities or software 
abroad, except as permitted by this or other applicable License 
Exception, the exporter must request authorization by submitting a 
license application to BXA at the address listed in part 748 of the 
EAR. (See part 748 of the EAR for more information on license 
applications.) The request should comply with all applicable provisions 
of the EAR covering export directly from the United States to the 
proposed destination. The request must also be supported by any 
documents that would be required in support of an application for 
export license for shipment of the same commodities or software 
directly from the United States to the proposed destination. BXA will 
advise the exporter of its decision.
    (ii) Use of a license. An outstanding license may also be used to 
dispose of commodities or software covered by the provisions of this 
paragraph (a), provided that the outstanding license authorizes direct 
shipment of the same commodity or software to the same new ultimate 
consignee in the new country of destination.
    (iii) Authorization to retain abroad beyond one year. If the 
exporter wishes to retain a commodity or software abroad beyond the 12 
months authorized by paragraph (a) of this section, the exporter must 
request authorization by submitting Form BXA-748P, Multipurpose 
Application, 90 days prior to the expiration of the 12 month period. 
The request must be sent to BXA at the address listed in part 748 of 
the EAR and should include the name and address of the exporter, the 
date the commodities or software were exported, a brief product 
description, and the justification for the extension. If BXA approves 
the extension request, the exporter will receive authorization for a 
one-time extension not to exceed six months. BXA normally will not 
allow an extension for commodities or software that have been abroad 
more than 12 months, nor will a second six month extension be 
authorized. Any request for retaining the commodities or software 
abroad for a period exceeding 18 months must be made in accordance with 
the requirements of paragraph (a)(4)(i) of this section.
    (5) Reexports. Commodities and software legally exported from the 
United States may be reexported to a new country(ies) of destination 
under this paragraph (a) provided its terms and conditions are met and 
the commodities and software are returned to the country from which the 
reexport occurred.
    (b) Exports of items temporarily in the United States: Scope. The 
provisions of this paragraph (b) describe the conditions for exporting 
foreign-origin items temporarily in the United States. The provisions 
include the export of items moving in transit through the United 
States, imported for display at a U.S. exhibition or trade fair, 
returned because unwanted, or returned because refused entry.

    Note 1 to paragraph (b) of this section: A commodity withdrawn 
from a bonded warehouse in the United States under a ``withdrawal 
for export'' customs entry is considered as ``moving in transit''. 
It is not considered as ``moving in transit'' if it is withdrawn 
from a bonded warehouse under any other type of customs entry or if 
its transit has been broken for a processing operation, regardless 
of the type of customs entry.
    Note 2 to paragraph (b) of this section: Items shipped on board 
a vessel or aircraft and passing through the United States from one 
foreign country to another may be exported without a license 
provided that (a)

[[Page 64279]]

while passing in transit through the United States, they have not 
been unladen from the vessel or aircraft on which they entered, and 
(b) they are not originally manifested to the United States.)

    (1) Items moving in transit through the United States. Subject to 
the following conditions, the provisions of paragraph (b)(1) of this 
section authorize export of items moving in transit through the United 
States under a Transportation and Exportation (T.& E.) customs entry or 
an Immediate Exportation (I.E.) customs entry made at a U.S. Customs 
Office.
    (i) Items controlled for national security, nuclear proliferation, 
missile technology, or chemical and biological weapons reasons may not 
be exported to Country Group D:1, 2, 3, or 4 (see Supplement No. 1 to 
part 740), respectively, under this paragraph (b)(1).
    (ii) Items may not be exported to Country Group E:2 under this 
paragraph (b)(1).
    (iii) The following may not be exported in transit from the United 
States under Sec. 740.8(b)(1):
    (A) Commodities shipped to the United States under an International 
Import Certificate, Form BXA-645P;
    (B) Chemicals controlled under ECCN 1C350; or
    (C) Horses for export by sea (refer to short supply controls in 
part 754 of the EAR).
    (iv) The provisions of paragraph (b)(1) apply to all shipments from 
Canada moving in transit through the United States to any foreign 
destination, regardless of the nature of the commodities or software or 
their origin. For such shipments the customs office at the U.S. port of 
export will require a copy of Form B-13, Canadian Customs Entry, 
certified or stamped by Canadian customs authorities, except where the 
shipment is valued at less than $50.00. (In transit shipments 
originating in Canada that are exempt from U.S. licensing, or made 
under a U.S. license or other applicable U.S. License Exception do not 
require this form.) The commodity or software description, quantity, 
ultimate consignee, country of ultimate destination, and all other 
pertinent details of the shipment must be the same on a required Form 
B-13, as on Commerce Form 7513, or when Form 7513 is not required, must 
be the same as on Customs Form 7512. When there is a material 
difference, a corrected Form B-13 authorizing the shipment is required.
    (2) Items imported for display at U.S. exhibitions or trade fairs. 
Subject to the following conditions, the provisions of this paragraph 
(b)(2) authorize the export of items that were imported into the United 
States for display at an exhibition or trade fair and were either 
entered under bond or permitted temporary free import under bond 
providing for their export and are being exported in accordance with 
the terms of that bond.
    (i) Items may be exported to the country from which imported into 
the United States. However, items originally imported from Cuba or 
North Korea may not be exported unless the U.S. Government had licensed 
the import from that country.
    (ii) Items may be exported to any destination other than the 
country from which imported except:
    (A) Items imported into the United States under an International 
Import Certificate;
    (B) Exports to Country Group E:2 (see Supplement No. 1 to part 
740); or
    (C) Exports to Country Group D:1, 2, 3, or 4 (see Supplement No. 1 
to part 740) of items controlled for national security, missile 
technology, chemical and biological weapons reasons, or nuclear 
proliferation, respectively.
    (3) Return of unwanted shipments. A foreign-origin item may be 
returned to the country from which it was imported if its 
characteristics and capabilities have not been enhanced while in the 
United States. No foreign-origin items may be returned to Cuba, Libya, 
or North Korea.
    (4) Return of shipments refused entry. Shipments of items refused 
entry by the U.S. Customs Service, the Food and Drug Administration, or 
other U.S. Government agency may be returned to the country of origin, 
except to:
    (i) A destination in Cuba, Libya, or North Korea; or
    (ii) A destination from which the shipment has been refused entry 
because of the Foreign Assets Control Regulations of the Treasury 
Department, unless such return is licensed or otherwise authorized by 
the Treasury Department, Office of Foreign Assets Control (31 CFR part 
500).
    (c) Exports of beta test software. (1) Scope. The provisions of 
paragraph (c) authorize exports and reexports to eligible countries of 
beta test software intended for distribution to the general public.
    (2) Eligible countries. The countries that are eligible to receive 
exports and reexports are all countries except those in Country Group 
E:2.
    (3) Eligible software. All software that is controlled by the CCL 
(part 774 of the EAR), and under Commerce licensing jurisdiction, is 
eligible for export and reexport, subject to the restrictions in this 
paragraph (c).
    (4) Conditions for use. Any beta test software program may be 
exported or reexported to eligible countries if all of the conditions 
under this section are met:
    (i) The software producer intends to market the software to the 
general public after completion of the beta testing, as described in 
the General Software Note found in Supplement No. 2 to part 774 of the 
EAR;
    (ii) The software producer provides the software to the testing 
consignee free-of-charge or at a price that does not exceed the cost of 
reproduction and distribution; and
    (iii) The software is designed for installation by the end-user 
without further substantial support from the supplier.
    (5) Importer Statement. Prior to shipping any eligible software, 
the exporter or reexporter must obtain the following statement from the 
testing consignee, which may be included in a contract, non-disclosure 
agreement, or other document that identifies the importer, the software 
to be exported, the country of destination, and the testing consignee.

    We certify that this beta test software will only be used for 
beta testing purposes, and will not be rented, leased, sold, 
sublicensed, assigned, or otherwise transferred. Further, we certify 
that we will not transfer or export any product, process, or service 
that is the direct product of the beta test software.

    (6) Use limitations. Only testing consignees that provide the 
importer statement required by paragraph (c)(5) of this section may 
execute any software received.
    (7) Return or disposal of software. All beta test software exported 
must be destroyed abroad or returned to the exporter within 30 days of 
the end of the beta test period as defined by the software producer or, 
if the software producer does not define a test period, within 30 days 
of completion of the consignee's role in the test. Among other methods, 
this requirement may be satisfied by a software module that will 
destroy the software and all its copies at or before the end of the 
beta test period.


Sec. 740.9  Servicing and replacement of parts and equipment (RPL). 
This License Exception authorizes exports and reexports associated with 
one-for-one replacement of parts or servicing and replacement of 
equipment.

    (a) Parts--(1) Scope. The provisions of this paragraph (a) 
authorize the export and reexport of one-for-one replacement parts for 
previously exported equipment.
    (2) One-for-one replacement of parts. (i) The term ``replacement 
parts'' as

[[Page 64280]]

used in this section means parts needed for the immediate repair of 
equipment, including replacement of defective or worn parts. (It 
includes subassemblies but does not include test instruments or 
operating supplies). (The term ``subassembly'' means a number of 
components assembled to perform a specific function or functions within 
a commodity. One example would be printed circuit boards with 
components mounted thereon. This definition does not include major 
subsystems such as those composed of a number of subassemblies.) Items 
that improve or change the basic design characteristics, e.g., as to 
accuracy, capability, performance or productivity, of the equipment 
upon which they are installed, are not deemed to be replacement parts. 
For kits consisting of replacement parts, consult Sec. 740.8(a)(2)(ii) 
of this part.
    (ii) Parts may be exported only to replace, on a one-for-one basis, 
parts contained in commodities that were: legally exported from the 
United States; legally reexported; or made in a foreign country 
incorporating authorized U.S.-origin parts. The conditions of the 
original U.S. authorization must not have been violated. Accordingly, 
the export of replacement parts may be made only by the party who 
originally exported or reexported the commodity to be repaired, or by a 
party that has confirmed the appropriate authority for the original 
transaction.
    (iii) The parts to be replaced must either be destroyed abroad or 
returned promptly to the person who supplied the replacement parts, or 
to a foreign firm that is under the effective control of that person.
    (3) Exclusions. (i) No replacement parts may be exported to repair 
a commodity exported under a license if that license included a 
condition that any subsequent replacement parts must be exported only 
under a license.
    (ii) No parts may be exported to be held abroad as spare parts or 
equipment for future use. Replacement parts may be exported to replace 
spare parts that were authorized to accompany the export of equipment, 
as those spare parts are utilized in the repair of the equipment. This 
will allow maintenance of the stock of spares at a consistent level as 
parts are used.
    (iii) No parts may be exported to any destination except Iceland, 
New Zealand, or the countries listed in Country Group A:1 (see 
Supplement No. 1 to part 740) if the item is to be incorporated into or 
used in nuclear weapons, nuclear explosive devices, nuclear testing 
related to activities described in Sec. 744.2(a) of the EAR, the 
chemical processing of irradiated special nuclear or source material, 
the production of heavy water, the separation of isotopes of source and 
special nuclear materials, or the fabrication of nuclear reactor fuel 
containing plutonium, as described in Sec. 744.2(a) of the EAR.
    (iv) No replacement parts may be exported to Cuba, Iran, Iraq, 
Sudan, Syria, Libya, or North Korea (countries designated by the 
Secretary of State as supporting acts of international terrorism) if 
the commodity to be repaired is an ``aircraft'' (as defined in part 772 
of the EAR) or national security controlled commodity.
    (v) The conditions described in this paragraph (a)(3) relating to 
replacement of parts do not apply to reexports to a foreign country of 
parts as replacements in foreign-origin products, if at the time the 
replacements are furnished, the foreign-origin product is eligible for 
export to such country under any of the License Exceptions in this part 
or the exceptions in Sec. 734.4 of the EAR.
    (4) Reexports. Parts exported from the United States may be 
reexported to a new country of destination, provided that the 
restrictions described in paragraphs (a)(2) and (3) of this section are 
met. A party reexporting U.S.-origin one-for-one replacement parts 
shall ensure that the commodities being repaired were shipped to their 
present location in accordance with U.S. law and continue to be legally 
used, and that either before or promptly after reexport of the 
replacement parts, the replaced parts are either destroyed or returned 
to the United States, or to the foreign firm in Country Group B (see 
Supplement No. 1 to part 740) that shipped the replacement parts.
    (b) Servicing and replacement--(1) Scope. The provisions of this 
paragraph (b) authorize the export and reexport of items that were 
returned to the United States for servicing and the replacement of 
defective or unacceptable U.S.-origin commodities and software.
    (2) Commodities and software sent to a United States or foreign 
party for servicing.
    (i) Definition. ``Servicing'' as used in this section means 
inspection, testing, calibration or repair, including overhaul and 
reconditioning. The servicing shall not have improved or changed the 
basic characteristics, e.g., as to accuracy, capability, performance, 
or productivity of the commodity or software as originally authorized 
for export or reexport.
    (ii) Return of serviced commodities and software. When the serviced 
commodity or software is returned, it may include any replacement or 
rebuilt parts necessary to its repair and may be accompanied by any 
spare part, tool, accessory, or other item that was sent with it for 
servicing.
    (iii) Commodities and software imported from Country Group D:1 
except the PRC. Commodities and software legally exported or reexported 
to a consignee in Country Group D:1 (except the People's Republic of 
China (PRC)) (see Supplement No. 1 to part 740) that are sent to the 
United States or a foreign party for servicing may be returned to the 
country from which it was sent, provided that both of the following 
conditions are met:
    (A) The exporter making the shipment is the same person or firm to 
whom the original license was issued; and
    (B) The end-use and the end-user of the serviced commodities or 
software and other particulars of the transaction, as set forth in the 
application and supporting documentation that formed the basis for 
issuance of the license have not changed.
    (iv) Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria. No 
repaired commodity or software may be exported or reexported to Cuba, 
Iran, Iraq, Libya, North Korea, Sudan, or Syria.
    (3) Replacements for defective or unacceptable U.S.-origin 
equipment.
    (i) Subject to the following conditions, commodities or software 
may be exported or reexported to replace defective or otherwise 
unusable (e.g., erroneously supplied) items.
    (A) The commodity or software to be replaced must have been 
previously exported or reexported in its present form under a license 
or authorization granted by BXA.
    (B) No commodity or software may be exported or reexported to 
replace equipment that is worn out from normal use, nor may any 
commodity or software be exported to be held in stock abroad as spare 
equipment for future use.
    (C) The replacement item may not improve the basic characteristic, 
e.g., as to accuracy, capability, performance, or productivity, of the 
equipment as originally approved for export or reexport under a license 
issued by BXA.
    (D) No shipment may be made to Cuba, Iran, Iraq, Libya, North 
Korea, Sudan, or Syria, or to any other destination to replace 
defective or otherwise unusable equipment owned or controlled by, or 
leased or chartered to, a national of any of those countries.
    (ii) Special conditions applicable to exports to Country Group B 
and Country Group D:1. (See Supplement No. 1 to part 740.) In addition 
to the general conditions in paragraph (b)(3)(i) of this section, the 
following conditions apply

[[Page 64281]]

to exports or reexports of replacements for defective or unacceptable 
U.S.-origin commodities or software to a destination in Country Group B 
or Country Group D:1:
    (A) By making such an export or reexport, the exporter represents 
that all the requirements of this paragraph (b) have been met and 
undertakes to destroy or return the replaced parts as provided in 
paragraph (b)(3)(ii)(C) of this section.
    (B) The defective or otherwise unusable equipment must be replaced 
free of charge, except for transportation and labor charges. If 
exporting to the countries listed in Country Group D:1 (except the 
PRC), the exporter shall replace the commodity or software within the 
warranty period or within 12 months of its shipment to the ultimate 
consignee in the country of destination, whichever is shorter.
    (C) The commodity or software to be replaced must either be 
destroyed abroad or returned to the United States, or to a foreign firm 
in Country Group B that is under the effective control of the U.S. 
exporter, or to the foreign firm that is providing the replacement part 
or equipment. The destruction or return must be effected before, or 
promptly after, the replacement item is exported from the United 
States.
    (D) A party reexporting replacements for defective or unacceptable 
U.S.-origin equipment must ensure that the commodities or software 
being replaced were shipped to their present location in accordance 
with U.S. law and continue to be legally used.


Sec. 740.10  Governments and international organizations (GOV).

    This Licenses Exception authorizes exports and reexports for 
international nuclear safeguards; U.S. government agencies or 
personnel, and agencies of cooperating governments.
    (a) International safeguards--(1) Scope. You may export and 
reexport commodities or software to the International Atomic Energy 
Agency (IAEA) and the European Atomic Energy Community (Euratom), and 
reexports by IAEA and Euratom for official international safeguard use, 
as follows:
    (i) Commodities or software consigned to the IAEA at its 
headquarters in Vienna, Austria, or field offices in Toronto, Ontario, 
Canada or Tokyo, Japan for official international safeguards use. The 
IAEA is an international organization that establishes and administers 
safeguards designed to ensure that special nuclear materials and other 
related nuclear facilities, equipment, and material are not diverted 
from peaceful purposes to non-peaceful purposes.
    (ii) Commodities or software consigned to the Euratom Safeguards 
Directorate in Luxembourg, Luxembourg for official international 
safeguards use. Euratom is an international organization of European 
countries with headquarters in Luxembourg. Euratom establishes and 
administers safeguards designed to ensure that special nuclear 
materials and other related nuclear facilities, equipment, and material 
are not diverted from peaceful purposes to non-peaceful purposes.
    (iii) Commodities consigned to IAEA or Euratom may be reexported to 
any country for IAEA or Euratom international safeguards use provided 
that IAEA or Euratom maintains control of or otherwise safeguards the 
commodities and returns the commodities to the locations described in 
paragraphs (a)(1)(i) and (a)(1)(ii) of this section when they become 
obsolete, are no longer required, or are replaced.
    (iv) Commodity or software shipments may be made by commercial 
companies under direct contract with IAEA or Euratom, or by Department 
of Energy National Laboratories as directed by the Department of State 
or the Department of Energy.
    (v) The monitoring functions of IAEA and Euratom are not subject to 
the restrictions on prohibited safeguarded nuclear activities described 
in Sec. 744.2(a)(3) of the EAR.
    (vi) When commodities or software originally consigned to IAEA or 
Euratom are no longer in IAEA or Euratom official safeguards use, such 
commodities may only be disposed of in accordance with the regulations 
in the EAR.
    (2) Exclusions. No computers with a CTP greater than 10,000 MTOPS 
may be exported or reexported to countries listed in Computer Tiers 3 
or 4. See Sec. 742.12 of the EAR for a complete list of the countries 
within Computer Tiers 3 and 4.
    (b) Governments--(1) Scope. The provisions of paragraph (b) 
authorize exports and reexports of the items listed in paragraph (b)(2) 
of this section to personnel and agencies of the U.S. Government or 
agencies of cooperating governments.
    (2) Eligibility--(i) Items for personal use by personnel and 
agencies of the U.S. Government. This provision is available for items 
in quantities sufficient only for the personal use of members of the 
U.S. Armed Forces or civilian personnel of the U.S. Government 
(including U.S. representatives to public international organizations), 
and their immediate families and servants. Items for personal use 
include household effects, food, beverages, and other daily 
necessities.
    (ii) Items for official use by personnel and agencies of the U.S. 
Government. This provision is available for items consigned to and for 
the official use of any agency of the U.S. Government.
    (iii) Items for official use within national territory by agencies 
of cooperating governments. This provision is available for all items 
consigned to and for the official use of any agency of a cooperating 
government within the territory of any cooperating government, except:
    (A) Computers with a CTP greater than 10,000 MTOPS when destined 
for Argentina, Hong Kong, South Korea, Singapore, or Taiwan;
    (B) Items identified on the Commerce Control List as controlled for 
missile technology (MT), chemical and biological warfare (CB), or 
nuclear nonproliferation (NP) reasons; or
    (C) Regional stability items controlled under Export Control 
Classification Numbers (ECCNs) 6A002, 6A003, 6D102, 6E001, 6E002, 
7D001, 7E001, 7E002, and 7E101, as described in Sec. 742.6(a)(1) of the 
EAR.
    (iv) Diplomatic and consular missions of a cooperating government. 
This provision is available for all items consigned to and for the 
official use of a diplomatic or consular mission of a cooperating 
government located in any country in Country Group B (see Supplement 
No. 1 to part 740), except:
    (A) Computers with a CTP greater than 10,000 MTOPS when destined 
for Argentina, Hong Kong, South Korea, Singapore, or Taiwan;
    (B) Items identified on the Commerce Control List as controlled for 
missile technology (MT), chemical and biological warfare (CB), or 
nuclear nonproliferation (NP) reasons; or
    (C) Regional stability items controlled under Export Control 
Classification Numbers (ECCNs) 6A002, 6A003, 6D102, 6E001, 6E002, 
7D001, 7E001, 7E002, and 7E101, as described in Sec. 742.6 (a)(1) of 
the EAR.
    (3) Definitions. (i) ``Agency of the U.S. Government'' includes all 
civilian and military departments, branches, missions, government-owned 
corporations, and other agencies of the U.S. Government, but does not 
include such national agencies as the American Red Cross or 
international organizations in which the United States participates 
such as the Organization of American States. Therefore, shipments may 
not be made to these non-government national or international agencies, 
except as provided in paragraph (b)(2)(i) of this

[[Page 64282]]

section for U.S. representatives to these organizations.
    (ii) ``Agency of a cooperating government'' includes all civilian 
and military departments, branches, missions, and other governmental 
agencies of a cooperating national government. Cooperating governments 
are the national governments of countries listed in Country Group A:1 
(see Supplement No. 1 to part 740) and the national governments of 
Argentina, Austria, Finland, Hong Kong, Ireland, Korea (Republic of), 
New Zealand, Singapore, Sweden, Switzerland, and Taiwan.


Sec. 740.11  Gift parcels and humanitarian donations (GFT).

    (a) Gift parcels.--(1) Scope. The provisions of paragraph (a) 
authorize exports and reexports of gift parcels by an individual 
(donor) addressed to an individual, or a religious, charitable or 
educational organization (donee) located in any destination for the use 
of the donee or the donee's immediate family (and not for resale). The 
gift parcel must be provided free of charge to the donee. However, 
payment by the donee of any handling charges or of any fees levied by 
the importing country (e.g., import duties, taxes, etc.) is not 
considered to be a cost to the donee for purposes of this definition of 
``gift parcel.''

    Note to paragraph (a) of this section: A gift parcel, within the 
context of this paragraph (a), does not include multiple parcels 
exported in a single shipment for delivery to individuals residing 
in a foreign country. Such multiple gift parcels, if subject to the 
General Prohibitions described in Sec. 734.2(b) of the EAR, must be 
licensed by BXA. (See Supplement No. 2 to part 748 of the EAR for 
licensing of multiple gift parcels).

    (2) Commodity, value and other limitations.--(i) Eligible 
commodities. The eligible commodities are as follows:
    (A) The commodity must not be controlled for chemical and 
biological weapons (CB), missile technology (MT), national security 
(NS), or nuclear proliferation (NP) (see Commerce Control List, part 
774 of the EAR); and
    (B) The commodity must be of a type and in quantities normally 
given as gifts between individuals.
    (1) For Cuba, the only commodities that may be included in a gift 
parcel are the following items: food, vitamins, seeds, medicines, 
medical supplies and devices, hospital supplies and equipment, 
equipment for the handicapped, clothing, personal hygiene items, 
veterinary medicines and supplies, fishing equipment and supplies, 
soap-making equipment, and in addition receive-only radio equipment for 
reception of commercial/civil AM/FM and short wave publicly available 
frequency bands, and batteries for such equipment.
    (2) For all other destinations, eligible commodities include all 
items described in paragraph (a)(2)(i)(B)(1) of this section as well as 
all other items normally sent as gifts. Gold bullion, gold taels, and 
gold bars are prohibited as are items intended for resale or reexport.

    Example to paragraph (a) of this section. A watch or piece of 
jewelry is normally sent as a gift. However, multiple watches, 
either in one package or in subsequent shipments, would not quality 
for such gift parcels because the quantity exceeds that normally 
given between individuals. Similarly, a sewing machine or bicycle, 
within the dollar limits of this License Exception, may be an 
appropriate gift. However, subsequent shipments of the same item to 
the same donee would not be a gift normally given between 
individuals.

    (3) For purposes of paragraph (a)(2)(i)(B) of this section, 
clothing is appropriate, except that export of military wearing apparel 
to Country Group D:1 or E:2 under this License Exception is 
specifically prohibited, regardless of whether all distinctive U.S. 
military insignia, buttons, and other markings are removed.
    (ii) Import requirements. The commodities must be acceptable in 
type and quantity by the recipient country for import as gifts. 
Commodities exceeding the import limits may not be included in gift 
parcels.
    (iii) Frequency. Except for gift parcels of food to Cuba, not more 
than one gift parcel may be sent from the same donor to the same donee 
in any one calendar month. Parties seeking authorization to exceed this 
limit due to compelling humanitarian concerns (e.g., gifts of medicine 
to relatives) should submit a license application (BXA-748P) with 
complete justification.
    (iv) Value. The combined total domestic retail value of all 
commodities included in a gift parcel may not exceed $400, except for 
gift parcels to Cuba where the value of non-food items may not exceed 
$200. There is no dollar value limit on food contained in a gift parcel 
to Cuba.
    (3) How to export gift parcels. (i) A gift parcel must be sent 
directly to the donee by the individual donor, or for such donor by a 
commercial or other gift-forwarding service or organization. Each gift 
parcel must show, on the outside wrapper, the name and address of the 
donor, as well as the name and address of the donee, regardless of 
whether sent by the donor or by a forwarding service.
    (ii) Each parcel must have the notation ``GIFT--Export License Not 
Required'' written on the addressee side of the package and the symbol 
``GFT'' written on any required customs declaration.
    (b) Humanitarian donations.--(1) Scope. The provisions of paragraph 
(b) authorize exports by groups or organizations of donations to meet 
basic human needs when those groups or organizations have experience in 
maintaining a verifiable system of distribution that ensures delivery 
to the intended beneficiaries.
    (2) Basic human needs. Basic human needs are defined as those 
requirements essential to individual well-being: health, food, 
clothing, shelter, and education. These needs are considered to extend 
beyond those of an emergency nature and those that meet direct needs 
for mere subsistence.
    (3) Eligible donors. Eligible donors are U.S. charitable 
organizations that have an established record of involvement in 
donative programs and experience in maintaining and verifying a system 
of distribution to ensure delivery of commodities and software to the 
intended beneficiaries. Eligible distribution arrangements may consist 
of any one or more of the following:
    (i) A permanent staff maintained in the recipient country to 
monitor the receipt and distribution of the donations to the intended 
beneficiaries;
    (ii) Periodic spot-checks in the recipient country by members of 
the exporter's staff; or
    (iii) An agreement to utilize the services of a charitable 
organization that has a monitoring system in place.
    (4) Donations. To qualify for export under the provisions of this 
paragraph (b), the items must be provided free of charge to the 
beneficiary. The payment by the beneficiary, however, of normal 
handling charges or fees levied by the importing country (e.g., import 
duties, taxes, etc.) is not considered to be a cost to the beneficiary 
for purposes of this paragraph (b).
    (5) Ineligible commodities and software. The following commodities 
and software are not eligible:
    (i) Commodities and software controlled for national security, 
chemical or biological weapons, and nuclear nonproliferation, missile 
technology or crime control reasons (see Supplement No. 1 to part 774 
of the EAR);
    (ii) Exports for large-scale projects of the kind associated with 
comprehensive economic growth, such as dams and hydroelectric plants; 
or
    (iii) Exports to Cuba of medical items excluded by Sec. 746.2(a)(3) 
of the EAR.

[[Page 64283]]

    (6) Eligible items. Eligible commodities and software are those 
listed in Supplement No. 2 to part 740.
    (7) Additional recordkeeping requirements. In addition to the 
recordkeeping requirements in part 762 of the EAR, donors must keep 
records containing the following information:
    (i) The donor organization's identity and past experience as an 
exporter of goods to meet basic human needs;
    (ii) Past and current countries to which the donative programs have 
been and are being directed, with particular reference to donative 
programs in embargoed destinations;
    (iii) Types of projects and commodities involved in the donative 
programs;
    (iv) Specific class(es) of beneficiaries of particular donated 
goods intended to be exported under this License Exception; and
    (v) Information concerning the source of funding for the donative 
programs and the projected annual value of exports of humanitarian 
donations.


Sec. 740.12  Technology and software--unrestricted (TSU). This License 
Exception authorizes exports and reexports of operation technology and 
software; sales technology and software; software updates (bug fixes); 
and ``mass market'' software subject to the General Software Note

    (a) Operation technology and software.--(1) Scope. The provisions 
of paragraph (a) permit exports and reexports of operation technology 
and software. ``Operation technology'' is the minimum technology 
necessary for the installation, operation, maintenance (checking), and 
repair of those products that are lawfully exported or reexported under 
a license, a License Exception, or NLR. The ``minimum necessary'' 
operation technology does not include technology for development or 
production and includes use technology only to the extent required to 
ensure safe and efficient use of the product. Individual entries in the 
software and technology subcategories of the CCL may further restrict 
the export or reexport of operation technology.
    (2) Provisions and destinations.--(i) Provisions. Operation 
software may be exported or reexported provided that both of the 
following conditions are met:
    (A) The operation software is the minimum necessary to operate 
equipment authorized for export or reexport; and
    (B) The operation software is in object code.
    (ii) Destinations. Operation software and technology may be 
exported or reexported to any destination to which the equipment for 
which it is required has been or is being legally exported or 
reexported.
    (b) Sales technology--(1) Scope. The provisions of paragraph (b) 
authorize exports and reexports of sales technology. ``Sales 
technology'' is data supporting a prospective or actual quotation, bid, 
or offer to sell, lease, or otherwise supply any item.
    (2) Provisions and destinations--(i) Provisions. Sales technology 
may be exported or reexported provided that:
    (A) The technology is a type customarily transmitted with a 
prospective or actual quotation, bid, or offer in accordance with 
established business practice; and
    (B) Neither the export nor the reexport will disclose the detailed 
design, production, or manufacture technology, or the means of 
reconstruction, of either the quoted item or its product. The purpose 
of this limitation is to prevent disclosure of technology so detailed 
that the consignee could reduce the technology to production.
    (ii) Destinations. Sales technology may be exported or reexported 
to any destination.

    Note: Neither this section nor its use means that the U.S. 
Government intends, or is committed, to approve a license 
application for any commodity, plant, software, or technology that 
may be the subject of the transaction to which such quotation, bid, 
or offer relates. Exporters are advised to include in any 
quotations, bids, or offers, and in any contracts entered into 
pursuant to such quotations, bids, or offers, a provision relieving 
themselves of liability in the event that a license (when required) 
is not approved by the Bureau of Export Administration.

    (c) Software updates. The provisions of paragraph (c) authorize 
exports and reexports of software updates that are intended for and are 
limited to correction of errors (``fixes'' to ``bugs'') in software 
lawfully exported or reexported (original software). Such software 
updates may be exported or reexported only to the same consignee to 
whom the original software was exported or reexported, and such 
software updates may not enhance the functional capacities of the 
original software. Such software updates may be exported or reexported 
to any destination to which the software for which they are required 
has been legally exported or reexported.
    (d) General Software Note: ``mass market'' software--(1) Scope. The 
provisions of paragraph (d) authorize exports and reexports of ``mass 
market'' software subject to the General Software Note (see Supplement 
No. 2 to part 774 of the EAR; also referenced in this section).
    (2) Provisions and destinations--(i) Destinations. The ``mass 
market'' provisions of this paragraph (d) for software are available to 
all destinations except Cuba, Iran, Libya, North Korea, Sudan, and 
Syria.
    (ii) Provisions. ``Mass market'' treatment is available for 
software that is generally available to the public by being:
    (A) Sold from stock at retail selling points, without restriction, 
by means of:
    (1) Over the counter transactions;
    (2) Mail order transactions; or
    (3) Telephone call transactions; and
    (B) Designed for installation by the user without further 
substantial support by the supplier.
    17a. The introductory text of newly designated Sec. 740.14 is 
revised to read as follows:


Sec. 740.14  Aircraft and vessels (AVS).

    This License Exception authorizes departure from the United States 
of foreign registry civil aircraft on temporary sojourn in the United 
States and of U.S. civil aircraft for temporary sojourn abroad; the 
export of equipment and spare parts for permanent use on a vessel or 
aircraft; and exports to vessels or planes of U.S. or Canadian registry 
and U.S. or Canadian Airlines' installations or agents. Generally, no 
License Exception symbol is necessary for export clearance purposes; 
however, when necessary, the symbol ``AVS'' may be used.
* * * * *

PART 742--[AMENDED]

    18. Section 742.4 is amended by revising the last sentence of 
paragraph (a) to read as follows:


Sec. 742.4  National security.

    (a) License requirements. * * * License Exception GBS is available 
for the export and reexport of certain national security controlled 
items to Country Group B (see Sec. 740.4 and Supplement No. 1 to part 
740 of the EAR).
* * * * *
    19. In Sec. 742.12(a)(1), the reference in the fourth sentence to 
``Sec. 743.3(e)'' is revised to read ``Sec. 740.7''.
    20. Section 742.12 is amended by revising the last sentence of 
paragraph (a)(2) to read as follows:


Sec. 742.12  High performance computers.

    (a) * * *
    (2) * * * Countries included in Computer Tiers 1, 2, and 3 are 
listed in License Exception CTP in Sec. 740.7 of the EAR. Computer Tier 
4 consists of Cuba,

[[Page 64284]]

Iran, Iraq, Libya, North Korea, Sudan, and Syria.
* * * * *

PART 744--[AMENDED]

    21. Section 744.2 is amended by revising paragraph (c) to read as 
follows:


Sec. 744.2  Restrictions on certain nuclear end-uses.

* * * * *
    (c) Exceptions. Despite the prohibitions described in paragraphs 
(a) and (b) of this section, you may export technology subject to the 
EAR under the operation technology and software or sales technology and 
software provisions of License Exception TSU (see Sec. 740.12 (a) and 
(b)), but only to and for use in countries listed in Country Group A:1 
(see Supplement No. 1 to part 740 of the EAR), Iceland and New Zealand. 
Notwithstanding the provisions of part 740 of the EAR, the provisions 
of Sec. 740.12 (a) and (b) will only overcome general prohibition five 
for countries listed in Country Group A:1, Iceland and New Zealand.

PART 746--[AMENDED]

    21. Section 746.2 is amended by revising paragraph (a)(1) to read 
as follows:


Sec. 746.2  Cuba.

    (a) * * *
    (1) License Exceptions. You may export without a license if your 
transaction meets all the applicable terms and conditions of any of the 
following License Exceptions. To determine the scope and eligibility 
requirements, you will need to turn to the sections or specific 
paragraphs of part 740 of the EAR (License Exceptions). Read each 
License Exception carefully, as the provisions available for embargoed 
countries are generally narrow.
    (i) Temporary exports and reexports (TMP) by the news media (see 
Sec. 740.8(a)(2)(viii) of the EAR).
    (ii) Operation technology and software (TSU) for legally exported 
commodities (see Sec. 740.12(a) of the EAR).
    (iii) Sales technology (TSU) (see Sec. 740.12(b) of the EAR).
    (iv) Software updates (TSU) for legally exported software (see 
Sec. 740.12(c) of the EAR).
    (v) Parts (RPL) for one-for-one replacement in certain legally 
exported commodities (see Sec. 740.9(a) of the EAR).
    (vi) Baggage (BAG) (see Sec. 740.13 of the EAR).
    (vii) Governments and international organizations (GOV) (see 
Sec. 740.10 of the EAR).
    (viii) Gift parcels and humanitarian donations (GFT) (see 
Sec. 740.11 of the EAR).
    (ix) Items in transit (TMP) from Canada through the U.S. (see 
Sec. 740.8(b)(1)(iv) of the EAR).
    (x) Aircraft and vessels (AVS) for certain aircraft on temporary 
sojourn (see Sec. 740.14(a) of the EAR).
* * * * *
    23. Section 746.3 is amended by revising paragraph (a)(1) to read 
as follows:


Sec. 746.3  Iraq.

    (a) * * *
    (1) License Exceptions. You may export or reexport without a 
license if your transaction meets all the applicable terms and 
conditions of one of the following License Exceptions. Read each 
License Exception carefully, as the provisions available for embargoed 
countries are generally narrow.
    (i) Baggage (BAG) (See Sec. 740.13 of the EAR).
    (ii) Governments and international organizations (GOV) (See 
Sec. 740.10 of the EAR).
* * * * *
    24. Section 746.4 is amended by revising paragraph (b) to read as 
follows:


Sec. 746.4  Libya.

* * * * *
    (b) License requirements. 
    (1) Exports. OFAC and BXA both require a license for virtually all 
exports (including transshipments) to Libya. Except as noted in 
paragraph (b) of this section or specified in OFAC regulation, you may 
not use any BXA License Exception or other BXA authorization to export 
or transship to Libya. You will need a license from OFAC for all direct 
exports and transshipments to Libya except those eligible for the 
following BXA License Exceptions:
    (i) Baggage (BAG) (see Sec. 740.13 of the EAR).
    (ii) Governments and international organizations (GOV) (see 
Sec. 740.11 of the EAR).
    (iii) Gift parcels (GFT) (see Sec. 740.11(a) of the EAR).
    (2) Reexports. You will need a license from BXA to reexport any 
U.S.-origin item from a third country to Libya, any foreign-
manufactured item containing U.S.-origin parts, components or 
materials, as defined in Sec. 734.2(b)(2) of the EAR, or any national 
security-controlled foreign-produced direct product of U.S. technology 
or software, as defined in Sec. 734.2(b)(3) of the EAR, exported from 
the U.S. after March 12, 1982. You will need a license from BXA to 
reexport all items subject to the EAR (see part 734 of the EAR) to 
Libya, except:
    (i) Food, medicines, medical supplies, and agricultural 
commodities;
    (ii) Reexports eligible for the following License Exceptions (read 
each License Exception carefully, as the provisions available for 
embargoed countries are generally narrow):
    (A) Temporary exports and reexports (TMP): reexports by the news 
media (see Sec. 740.8(a)(2)(viii) of the EAR).
    (B) Operation technology and software (TSU) for legally exported 
commodities (see Sec. 740.12(a) of the EAR).
    (C) Sales technology (TSU) (see Sec. 740.12(b) of the EAR).
    (D) Software updates (TSU) for legally exported software (see 
Sec. 740.12(c) of the EAR).
    (E) Parts (RPL) for one-for-one replacement in certain legally 
exported commodities (Sec. 740.9(a) of the EAR).
    (F) Baggage (BAG) (Sec. 740.13 of the EAR).
    (G) Aircraft and vessels (AVS) for vessels only (see 
Sec. 740.14(c)(1) of the EAR).
    (H) Governments and international organizations (GOV) (see 
Sec. 740.10 of the EAR).
    (I) Gift parcels and humanitarian donations (GFT) (see Sec. 740.11 
of the EAR).
* * * * *
    25. Section 746.5 is amended by revising paragraphs (a)(1) and 
(b)(1) to read as follows:


Sec. 746.5  North Korea.

    (a) * * *
    (1) License Exceptions. You may export without a license if your 
transaction meets all the applicable terms and conditions of any of the 
License Exceptions specified in this paragraph. To determine scope and 
eligibility requirements, you will need to turn to the sections or 
specific paragraphs of part 740 of the EAR (License Exceptions). Read 
each License Exception carefully, as the provisions available for 
embargoed countries are generally narrow.
    (i) Temporary exports and reexports (TMP) by the news media (see 
Sec. 740.8(a)(2)(viii) of the EAR).
    (ii) Operation technology and software (TSU) for legally exported 
commodities (see Sec. 740.12(a) of the EAR).
    (iii) Sales technology (TSU) (see Sec. 740.12(b) of the EAR).
    (iv) Software updates (TSU) for legally exported software (see 
Sec. 740.12(c) of the EAR).
    (v) Parts (RPL) for one-for-one replacement in certain legally 
exported commodities (Sec. 740.9(a) of the EAR).

[[Page 64285]]

    (vi) Baggage (BAG) (Sec. 740.13 of the EAR).
    (vii) Aircraft and vessels (AVS) for fishing vessels under 
governing international fishery agreements and foreign-registered 
aircraft on temporary sojourn in the U.S.1 (see Sec. 740.14(a) and 
(c)(1) of the EAR).
---------------------------------------------------------------------------

    \1\  Export of U.S. aircraft on temporary sojourn or vessels is 
prohibited, 44 CFR Ch. IV, Part 403 ``Shipping restrictions: North 
Korea (T-2).''
---------------------------------------------------------------------------

    (viii) Governments and international organizations (GOV) (see 
Sec. 740.10 of the EAR).
    (ix) Gift parcels and humanitarian donations (GFT) (see Sec. 740.11 
of the EAR).
* * * * *
    (b) * * * 
    (1) BXA will review on a case-by-case basis applications for export 
of donated human-needs items listed in Supplement No. 2 to Part 740 of 
the EAR that do not qualify for the humanitarian donation provisions of 
License Exception GFT (see Sec. 740.11(b) of the EAR). Such 
applications include single transactions involving exports to meet 
emergency needs.
* * * * *

PART 748--[AMENDED]

    26. Supplement No. 2 to part 748 is amended by revising the 
introductory text of paragraphs (d), (e), and (p) to read as follows:

Supplement No. 2 to Part 748--Unique License Application Requirements

* * * * *
    (d) Gift parcels; consolidated in a single shipment. If you are 
submitting a license application to export multiple gift parcels for 
delivery to individuals residing in a foreign country, you must include 
the following information in your license application. NOTE: Each gift 
parcel must meet the terms and conditions described for gift parcels in 
License Exception GFT (See Sec. 740.11(a) of the EAR).
* * * * *
    (e) Intransit through the United States. If you are submitting a 
license application for items moving intransit through the United 
States that do not qualify for the intransit provisions of License 
Exception TMP (see Sec. 740.8(b)(1) of the EAR), you must provide the 
following information with your license application:
* * * * *
    (p) Temporary exports or reexports. If you are submitting a license 
application for the temporary export or reexport of an item (not 
eligible for the temporary exports and reexports provisions of License 
Exception TMP (see Sec. 740.9(a) of the EAR)) you must include the 
following certification in Block 24:
* * * * *
    26. Supplement No. 5 to part 748 is amended by revising paragraph 
(a)(6)(vii) to read as follows:

Supplement No. 5 to Part 748--U.S. Import Certificate and Delivery 
Verification Procedure

* * * * *
    (a) * * *
    (6) * * *
    (vii) Reexport or transshipment of items after delivery to U.S. 
Items imported into the U.S. under the provisions of a U.S. 
International Import Certificate may not be reexported to any 
destination under the intransit provisions of License Exception TMP 
(see Sec. 740.8(b)(1) of the EAR). However, all other provisions of the 
EAR applicable to items of domestic origin shall apply to the reexport 
of items of foreign origin shipped to the U.S. under a U.S. 
International Import Certificate.
* * * * *

PART 750--[AMENDED]

    28. Section 750.7 is amended by revising paragraph (h)(2) to read 
as follows:


Sec. 750.7  Issuance of licenses.

* * * * *
    (h) * * *
    (2) Intransit within the United States. If you have been issued a 
license authorizing an intransit shipment (that does not qualify for 
the intransit provisions of License Exception TMP) through the United 
States, your license will be valid only for the export of the intransit 
shipment wholly of foreign origin and for which a Transportation and 
Exportation customs entry or an Immediate Exportation customs entry is 
outstanding.
* * * * *

PART 752--[AMENDED]

    29. Section 752.5 is amended by revising the introductory text of 
paragraph (c)(8)(i) to read as follows:


Sec. 752.5  Steps you must follow to apply for an SCL.

* * * * *
    (c) * * *
    (8) * * *
    (i) Temporary exports. Proposed consignees that plan to exhibit or 
demonstrate items in countries other than those in which they are 
located or are authorized under an SCL, an approved Form BXA-752, or a 
License Exception provision described in Sec. 740.8(a)(2)(iii) of the 
EAR may obtain permission to do so by including the following 
additional certification on company letterhead, and attaching it to 
Form BXA-752.
* * * * *

PART 758--[AMENDED]

    30. Section 758.1 is amended by revising the first sentence of 
paragraph (d)(2)(vi) to read as follows:


Sec. 758.1  Export clearance requirements.

* * * * *
    (d) * * *
    (2) * * *
    (vi) Software and technology. If you are exporting software or 
technology, the export of which is authorized under the License 
Exceptions in Sec. 740.6 or Sec. 740.12 of the EAR, you do not need to 
make any notation on the package. * * *
* * * * *
    31. Section 758.3 is amended by revising the third and fourth 
sentences of paragraph (h)(2) introductory text and the introductory 
text of paragraph (m)(3)(ii)(C) to read as follows:


Sec. 758.3  Shipper's Export Declaration (SED).

* * * * *
    (h) * * *
    (2) Exports not needing a license. * * * If the item(s) will be 
exported under the provisions of License Exceptions GBS, CIV, or LVS, 
or under the ``NLR'' provisions of the EAR (as described in 
Sec. 758.1(a) of this part) and the item(s) are covered by entries on 
the Commerce Control List that have the column identifier ``NS Column 
2'' controlled for ``NS'' reasons, the ECCN must also be shown in the 
designated space on the SED or SED continuation sheet. The following 
apply for notations made on SED:
* * * * *
    (m) * * *
    (3) * * *
    (ii) * * *
    (C) For intransit shipments of items of U.S.-origin eligible for 
the intransit provisions of License Exception TMP (see Sec. 740.8(b) of 
the EAR), enter the following statement:
* * * * *
    32. Section 758.6 is amended by revising paragraph (a)(1)(ii) to 
read as follows:


Sec. 758.6  Destination control statement.

    (a) * * *
    (1) * * *
    (ii) The export is made under the authority of the following 
License

[[Page 64286]]

Exceptions: LVS, GBS, CIV, CTP, TMP, or RPL; or
* * * * *

PART 770--[AMENDED]

    33. Section 770.3 is amended by revising paragraphs (d)(1)(i)(B), 
(d)(1)(ii), and (d)(2)(ii) to read as follows:


Sec. 770.3  Interpretations related to exports of technology and 
software to destinations in Country Group D:1.

* * * * *
    (d) * * *
    (1) * * *
    (i) * * *
    (B) Can we send an engineer (with knowledge and experience) to the 
customer site to perform the installation or repair, under the 
provisions of License Exception for operation technology and software 
described in Sec. 740.12(a) of the EAR, if it is understood that he is 
restricted by our normal business practices to performing the work 
without imparting the knowledge or technology to the customer 
personnel?
    (ii) Answer 1. Export of technology includes release of U.S.-origin 
data in a foreign country, and ``release'' includes ``application to 
situations abroad of personal knowledge or technical experience 
acquired in the United States.'' As the release of technology in the 
circumstances described here would exceed that permitted under the 
License Exception for operation technology and software described in 
Sec. 740.12(a) of the EAR, a license would be required even though the 
technician could apply the data without disclosing it to the customer.
* * * * *
    (2) * * *
    (ii) Answer 2. (A) Provided that this is your normal training, and 
involves technology contained in your manuals and standard instructions 
for the exported equipment, and meets the other requirements of License 
Exception for operation technology and software described in 
Sec. 740.12(a), the training may be provided within the limits of those 
provisions of License Exception TSU. The location of the training is 
not significant, as the export occurs at the time and place of the 
actual transfer or imparting of the technology to the customer's 
engineers.
    (B) Any training beyond that covered under the provisions of 
License Exception TSU for operation technology and software described 
in Sec. 740.12(a), but specifically represented in your license 
application as required for this customer installation, and in fact 
authorized on the face of the license or a separate technology license, 
may not be undertaken while the license is suspended or revoked.

    Dated: November 25, 1996.
Sue E. Eckert,
Assistant Secretary for Export Administration.
[FR Doc. 96-30502 Filed 12-3-96; 8:45 am]
BILLING CODE 3510-33-P