[Federal Register Volume 64, Number 9 (Thursday, January 14, 1999)]
[Rules and Regulations]
[Pages 2429-2431]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-867]


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DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Parts 740, 742, and 748

[Docket No. 981208298-8298-01]
RIN 0694-AB82


Exports of High Performance Computers Under License Exception CTP

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Interim rule with request for comments.

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SUMMARY: The Bureau of Export Administration (BXA) is amending the 
Export Administration Regulations by revising the requirements for 
exports of high performance computers to the People's Republic of 
China. This rule requires that exports of high performance computers, 
regardless of value, to the People's Republic of China under License 
Exception CTP be supported by a PRC End-User Certificate. The PRC End-
User Certificate must be obtained by the exporter prior to export. In 
addition, this rule also removes the $5,000 End-User Certification 
exemption for license applications for exports of high performance 
computers to the People's Republic of China.

DATES: Effective Date: This rule is effective January 14, 1999.
    Comment Date: Comments on this rule must be received on or before 
March 1, 1999.

ADDRESSES: Written comments should be sent to Patricia Muldonian, 
Regulatory Policy Division, Bureau of Export Administration, Department 
of Commerce, P.O. Box 273, Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Patricia Muldonian, Regulatory Policy 
Division, Bureau of Export Administration, Telephone: (202) 482-2440.

SUPPLEMENTARY INFORMATION:

Background

    The National Defense Authorization Act for Fiscal Year 1998 (NDAA) 
requires the Department of Commerce to conduct a post shipment 
verification of each high performance computer exported to a country in 
Computer Tier 3 as defined Sec. 740.7(d) of the Export Administration 
Regulations. For purposes of this post shipment verification 
requirement, the NDAA defines a high performance computer as one with a 
composite theoretical performance greater than 2,000 millions of 
theoretical operations per second. Tier 3 includes the People's 
Republic of China. In order to facilitate the Department's ability to 
conduct the required verifications, the Bureau of Export Administration 
is amending the Export Administration Regulations to require the 
exporter to obtain a PRC End-User Certificate issued by the Ministry of 
Foreign Trade and Economic Cooperation before exporting any high 
performance computer to the People's Republic of China if the computer 
is to be exported under the authority of an export license or License 
Exception CTP regardless of value. This rule also requires exporters to 
report the End-User Certificate number to the Bureau of Export 
Administration. This amendment does not affect the requirements for 
reexports of high performance computers because the NDAA does not 
require the Department to conduct post shipment verifications on those 
computers.
    Although the Export Administration Act (EAA) expired on August 20, 
1994, the President invoked the International Emergency Economic Powers 
Act and continued in effect the EAR and, to the extent permitted by 
law, the provisions of the EAA in Executive Order 12924 of August 19, 
1994, as extended by the President's notices of August 15, 1995 (60 FR 
42767), August 14, 1996 (61 FR 42527), August 13, 1997 (62 FR 43629) 
and August 13, 1998 (63 FR 44121).

Savings Clause

    Shipments of items now subject to a PRC End-User Certificate as a 
result of this regulatory action that were on dock for loading, on 
lighter, laden aboard an exporting carrier, or en route aboard a 
carrier to a port of export pursuant to actual orders for export before 
January 28, 1999 may be exported up to and including February 11, 1999. 
Any such items not actually exported before midnight February 11, 1999, 
require a PRC End-User Certificate, in accordance with this regulation.

Rulemaking Requirements

    1. This interim rule has been determined to be significant for 
purposes of E.O. 12866.
    2. Notwithstanding any other provision of law, no person is 
required to, nor shall any person be subject to a penalty for failure 
to comply with a collection of information, subject to the Paperwork 
Reduction Act (PRA), unless

[[Page 2430]]

that collection of information displays a currently valid OMB Control 
Number. This rule involves collections of information subject to the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). These 
collections have been approved by the Office of Management and Budget 
under control number 0694-0088, ``Multi-Purpose Application,'' which 
carries a burden hour estimate of 52.5 minutes per submission and 
control number 0694-0107, ``National Defense Authorization Act,'' 
Advance Notifications and Post-Shipment Verification reports. Reports 
in support of Post-Shipment Verifications require 15 minutes per 
submission, whether the Post-Shipment Verification is conducted on an 
export authorized under a license or License Exception CTP. In 
addition, this rule contains a new collection of information 
requirement approved under control number 0694-0112, which carries a 
burden hour estimate of 15 minutes per submission for obtaining and 
maintaining the PRC End-Use Certificate for License Exception CTP 
shipments. An additional 1 minute per submission is needed for 
recordkeeping. Comments are invited on: (a) Whether the collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information shall have practical 
utility; (b) the accuracy of the agency's estimate of the burden of the 
proposed collection of information; (c) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (d) ways 
to minimize the burden of the collection of information on respondents, 
including through the use of automated collection techniques or other 
forms of information technology. Comments regarding these burden 
estimates or any other aspect of the collection of information, 
including suggestions for reducing the burdens, should be forwarded to 
Patricia Muldonian, Regulatory Policy Division, Office of Exporter 
Services, Bureau of Export Administration, Department of Commerce, P.O. 
Box 273, Washington, DC 20044, and David Rostker, Office of Management 
and Budget, OMB/OIRA, 725 17th Street, NW, NEOB Rm. 10202, Washington, 
DC 20503.
    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 (Sec. 5 U.S.C. 553(a)(1)). Further, no 
other law requires that a notice of proposed rulemaking and an 
opportunity for public comment be given for this interim rule. Because 
a notice of proposed rulemaking and an opportunity for public comment 
are not required to be given for this rule under 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 not applicable.
    However, because of the importance of the issues raised by these 
regulations, this rule is being issued in interim form and comments 
will be considered in the development of final regulations.
    Accordingly, the Department encourages interested persons who wish 
to comment to do so at the earliest possible time to permit the fullest 
consideration of views.
    The period for submission of comments will close March 1, 1999. The 
Department will consider all comments received before the close of the 
comment period in developing final regulations. Comments received after 
the end of the comment period will be considered if possible, but their 
consideration cannot be assured. The Department will not accept public 
comments accompanied by a request that a part or all of the material be 
treated confidentially because of its business proprietary nature or 
for any other reason. The Department will return such comments and 
materials to the persons submitting the comments and will not consider 
them in the development of final regulations. All public comments on 
these regulations will be a matter of public record and will be 
available for public inspection and copying. In the interest of 
accuracy and completeness, the Department requires comments in written 
form.
    Oral comments must be followed by written memoranda, which will 
also be a matter of public record and will be available for public 
review and copying. Communications from agencies of the United States 
Government or foreign governments will not be available for public 
inspection.
    The public record concerning these regulations will be maintained 
in the Bureau of Export Administration Freedom of Information Records 
Inspection Facility, Room 4525, Department of Commerce, 14th Street and 
Pennsylvania Avenue, NW, Washington, DC 20230. Records in this 
facility, including written public comments and memoranda summarizing 
the substance of oral communications, may be inspected and copied in 
accordance with regulations published in part 4 of Title 15 of the Code 
of Federal Regulations. Information about the inspection and copying of 
records at the facility may be obtained from Margaret Cornejo, Bureau 
of Export Administration Freedom of Information Officer, at the above 
address or by calling (202) 482-5653.

List of Subjects

15 CFR Parts 740 and 748

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

15 CFR Part 742

    Exports, Foreign trade, Terroism.

    Accordingly, parts 740, 742, and 748 of the Export Administration 
Regulations (15 CFR parts 730-799) are amended to read as follows:
    1. The authority citation for part 740 is revised to read as 
follows:

    Authority: 50 U.S.C. app. 4201 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, 3 CFR, 1995 Comp. 501 (1996); notice of August 14, 1996 
(61 FR 42527, August 15, 1996); Notice of August 13, 1997 (62 FR 
43629, August 15, 1997); P.L. 105-85, 111 Stat. 1629; and Notice of 
August 13, 1998 (63 FR 44121).

    2. The authority citation for part 742 is revised 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, 3 
CFR, 1993 Comp., p. 608; E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., 
p. 917; E.O. 12938, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 3 CFR, 
1996 Comp. p. 219; E.O. 13026, 3 CFR, 1996 Comp., p. 228; Notice of 
August 13, 1997 (62 FR 43629, August 15, 1997); and Notice of August 
13, 1998 (63 FR 44121).

    3. The authority citation for part 748 is revised to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12924, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 3 CFR, 1996 
Comp., p. 228; Notice of August 13, 1997 (62 FR 43629, August 15, 
1997); and Notice of August 13, 1998 (63 FR 44121).

PART 740--[AMENDED]

    4. Section 740.7 is amended:
    a. By redesignating paragraph (d)(4) as paragraph (d)(5) and by 
adding a new paragraph (d)(4);
    b. By amending newly designated paragraph (d)(5) as follows:
    i. In newly designated paragraph (d)(5)(iii), revise the phrase 
``paragraph (d)(4)(iv) of this section'' to read ``paragraph (d)(5)(iv) 
of this section'';
    ii. In newly designated paragraph (d)(5)(v) introductory text, 
revise the

[[Page 2431]]

phrase ``paragraph (d)(4)(v)'' to read ``paragraph (d)(5)(v)'';
    iii. In newly designated paragraph (d)(5)(v)(A) introductory text, 
revise the phrase ``paragraph (d)(4)(v)(B)'' to read ``paragraph 
(d)(5)(v)(B)'';
    iv. In newly designated paragraph (d)(5)(v)(A), add a ``note'' at 
the end of paragraph (d)(5)(v)(A)(8); and
    c. By revising newly designated paragraph (d)(5)(v)(B).
    The additions and revision read as follows:


Sec. 740.7  Computers (CTP).

* * * * *
    (d) * * *
    (4) Supporting documentation. Exports of computers as described by 
paragraph (d)(2) of this section, regardless of value, to the People's 
Republic of China must be supported by a PRC End-User Certificate. (See 
Sec. 748.10(c)(3) of the EAR for information on obtaining the PRC End-
User Certificate.) Exporters are required to obtain a PRC End-User 
Certificate before exporting computers regardless of value to the 
People's Republic of China. Exporters are also required to provide the 
PRC End-User Certificate Number to BXA as part of their post-shipment 
report (see paragraph (d)(5) of this section). When providing the PRC 
End-User Certificate Number to BXA, you must identify the transaction 
in the post shipment report to which that PRC End-User Certificate 
Number applies. The original PRC End-User Certificate shall be retained 
in the exporter's files in accordance with the recordkeeping provisions 
of Sec. 762.2 of the EAR.
    (5) * * *
    (v) * * *
    (A) * * *

    Note to paragraph (d)(5)(v)(A): For exports authorized under 
License Exception CTP to the Peoples Republic of China (PRC), you 
must submit the PRC End-User Certificate Number identifying the 
transaction for which the End-User Certificate Number applies.

    (B) Mailing address. A copy of the post-shipment report[s] required 
under paragraph (d)(5)(v)(A) of this section shall be delivered to one 
of the following addresses. Note that BXA will not accept reports sent 
C.O.D.
    (1) For deliveries by U.S. postal service: Bureau of Export 
Administration, U.S. Department of Commerce, P.O. Box 273, Attn: HPC 
Team, Washington, DC 20044.
    (2) For courier deliveries: U.S. Department of Commerce, Office of 
the Assistant Secretary for Export Enforcement, Room 3721, 14th Street 
and Constitution Ave., NW., Washington, DC 20230.
* * * * *

PART 742--[AMENDED]

    5. Section 742.12 is amended:
    a. By revising paragraph (b)(3)(i)(C); and
    b. By revising paragraph (b)(3)(iv)(B) to read as follows:


Sec. 742.12  High performance computers.

* * * * *
    (b) * * *
    (3) * * *
    (i) * * *
    (C) A license may be required to export or reexport computers with 
a CTP greater than 2,000 MTOPS to countries in Computer Tier 3 pursuant 
to the NDAA (see Sec. 740.7(d)(5) of the EAR).
* * * * *
    (iv) * * *
    (B) Mailing address. A copy of the post-shipment report[s] required 
under paragraph (b)(3)(vi)(A) of this section shall be delivered to one 
of the following addresses. Note that BXA will not accept reports sent 
C.O.D.
    (1) For deliveries by U.S. postal service: Bureau of Export 
Administration, U.S. Department of Commerce, P.O. Box 273, Attn: HPC 
Team, Washington, DC 20044.
    (2) For courier deliveries: U.S. Department of Commerce, Office of 
the Assistant Secretary for Export Enforcement, Room 3721, 14th Street 
and Constitution Ave., NW., Washington, DC 20230.
* * * * *

PART 748--[AMENDED]


Sec. 748.9  [Amended]

    6. Section 748.9 is amended by removing paragraph (b)(2)(i)(1) and 
redesignating paragraphs (b)(2)(i)(2) and (b)(2)(i)(3), as paragraphs 
(b)(2)(i)(A) and (b)(2)(i)(B), respectively.
    7. Section 748.10 is amended by removing ``; and'' at the end of 
paragraph (b)(2) and adding a period in its place, by redesignating 
paragraph (b)(3) as paragraph (b)(4), by adding a new paragraph (b)(3), 
and by revising the introductory text of newly designated paragraph 
(b)(4) to read as follows:


Sec. 748.10  Import and End-User Certificates.

* * * * *
    (b) * * *
    (3) Your transaction involves an export of a computer with a 
Composite Theoretical Performance (CTP) greater than 2,000 Million 
Operations Per Second (MTOPS) under either a license application or 
under License Exception CTP to the People's Republic of China, you must 
obtain a PRC End-User Certificate, regardless of dollar value.
    (4) Your license application involves the export of commodities and 
software classified in a single entry on the CCL, the total value of 
which exceeds $5,000. Note that this $5,000 threshold, does not apply 
to exports of computers with a CTP exceeding 2,000 MTOPS to the 
People's Republic of China.
* * * * *

    Dated: January 8, 1999.
R. Roger Majak,
Assistant Secretary for Export Administration.
[FR Doc. 99-867 Filed 1-13-99; 8:45 am]
BILLING CODE 3510-33-P