[Federal Register Volume 64, Number 148 (Tuesday, August 3, 1999)]
[Rules and Regulations]
[Pages 42009-42012]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19644]


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DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Parts 734, 738, 740, and 742

[Docket No. 990709187-9187-01]
RIN 0694-AB96


Revision of High Performance Computer Licensing Policy

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Final rule.

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SUMMARY: The Bureau of Export Administration (BXA) is amending the 
Export Administration Regulations (EAR) by raising the performance 
parameters for those computers which can be exported and reexported 
under License Exception CTP. The upper threshold of the Composite 
Theoretical Performance (CTP) parameter for Computer Tier 2 countries 
is raised from 10,000 millions of theoretical operations per second 
(MTOPS) to 20,000 MTOPS. The upper threshold for Computer Tier 3 
countries is raised from 7,000 MTOPS to 12,300 MTOPS for civilian end-
users and end-uses. For military end-users and end-uses in Computer 
Tier 3 destinations the CTP parameter remains at 2,000 MTOPS for the 
immediate future. The upper parameter for military end-users and end-
uses to Computer Tier 3 countries will be raised from 2,000 MTOPS to 
6,500 MTOPS on the same date the threshold for advance notification for 
high performance computers (HPC) exports to Tier 3 countries is raised 
from 2,000 MTOPS to 6,500 MTOPS. The threshold for advance notification 
for exports of HPCs to Tier 3 countries is raised to 6,500 MTOPS, 
effective approximately 180 days following the submission of a 
statutorily mandated report to Congress. The President sent this report 
to Congress on July 26, 1999. In addition, the following countries are 
moved from Computer Tier 2 to Computer Tier 1: Brazil, the Czech 
Republic, Hungary, and Poland.

DATES: This rule is effective August 3, 1999.

FOR FURTHER INFORMATION CONTACT: James A. Lewis, Office of Strategic 
Trade and Foreign Policy Controls, Bureau of Export Administration, 
Telephone: (202) 482-4196.

SUPPLEMENTARY INFORMATION:

Background

    On January 25, 1996, the Bureau of Export Administration created 
License Exception CTP for exports and reexports of HPCs. This policy 
took into account rapid technical advances in computing power, as well 
as national security and nonproliferation concerns. License Exception 
CTP divided the world into tiers based on U.S. national security and 
foreign policy interests. These tiers represent the level of 
proliferation and security risk a country poses to the U.S. and, as a 
result, the technical level of computer exports tier members can 
receive without applying for an export license. Computer Tier 1 
consists of close U.S. allies; Computer Tier 2 includes countries 
representing minimal security concerns to the U.S; countries 
representing a potential proliferation or security concern are listed 
in Computer Tier 3; and Computer Tier 4 consists of terrorist 
supporting states.
    The President has decided to amend these country tiers by 
transferring Brazil, the Czech Republic, Hungary, and Poland from Tier 
2 to Tier 1. The Administration will consider moving additional 
countries between Computer Tiers in the future.
    The rapid evolution of computer technology has also made CTP 
parameter revisions necessary. This rule changes the upper threshold of 
the CTP

[[Page 42010]]

parameter for Computer Tier 2 from 10,000 MTOPS to 20,000 MTOPS and the 
upper threshold of Computer Tier 3 countries from 7,000 MTOPS to 12,300 
MTOPS for civilian end-users and end-uses. License Exception CTP will 
be made available for military end-users and end-uses in Computer Tier 
3 in approximately 180 days along with the raising of the advance 
notification level under the 1998 National Defense Authorization Act 
(NDAA) from 2,000 MTOPS to 6,500 MTOPS. Revision of the advance 
notification threshold will be effective 180 days after the submission 
by the President of a required report notifying the Congress of this 
change. The President sent this report to Congress on July 26, 1999. 
Following this 180 day period, the upper parameter will be raised from 
2,000 MTOPS to 6,500 MTOPS for military end-users and end-uses in 
Computer Tier 3. This level reflects the Administration's determination 
that widespread commercial availability makes computers with a 
performance of 6,500 MTOPS or less uncontrollable. Note that the 
advance notification requirements of the 1998 NDAA for exports and 
reexports of computers with a CTP greater than 2,000 MTOPS to Computer 
Tier 3 destinations remains in effect until such changes are reviewed 
by the U.S. Congress.
    This rule does not have an immediate impact on post-shipment 
reporting and record keeping requirements compelled by the 1998 NDAA 
for HPC exports. All HPC exports with a CTP greater than 2,000 MTOPS to 
Tier 3 Countries still require post-shipment reporting. However, BXA 
may, prior to January 23, 2000, publish an additional rule regarding 
further reporting requirements to meet stipulations under the 1998 NDAA 
to provide the Congress an annual report on all HPC exports to Computer 
Tier 3 destinations. This potential rule will most likely require HPC 
exporters to report the intended end-use of all HPC exports with a CTP 
greater than 2,000 MTOPS but less than or equal to 6,500 MTOPS to 
Computer Tier 3 destinations. This information is currently provided by 
exporters in their advance notification requests for computers with a 
CTP greater than 2,000 MTOPS to Computer Tier 3 destinations. In light 
of the rapid technological advancement in HPCs, the United States will 
routinely review these licensing levels to determine if further 
adjustments are warranted. In particular, for Tier 2, the United States 
will review the licensing level in six months with the expectation of 
raising the level to the 32,000 to 36,000 MTOPS range. Changes to Tier 
3 may also be made at that time.
    This rule specifically amends the EAR in the following ways:
    1. In section 740.7, Brazil, the Czech Republic, Hungary, and 
Poland are moved from Computer Tier 2 to Computer Tier 1, and the upper 
threshold of the CTP parameter for Computer Tier 2 is raised from 
10,000 MTOPS to 20,000 MTOPS.
    2. In section 740.7, the upper threshold of the CTP parameter for 
Computer Tier 3 is raised from 7,000 MTOPS to 12,300 MTOPS for civilian 
end-users and end-uses. The upper parameter for military end-users and 
uses is raised from 2,000 MTOPS to 6,500 MTOPS, effective January 23, 
2000.
    3. In section 740.7, the CTP level for computers requiring advance 
notification for export and reexport to Computer Tier 3 destinations is 
raised from 2,000 MTOPS to 6,500 MTOPS, effective January 23, 2000.
    4. In section 740.11 and Supplement No. 1 to section 740.11, the 
CTP level for computers not eligible for License Exception GOV is 
raised from 10,000 MTOPS to 20,000 MTOPS.
    5. In section 742.12, the upper threshold of the CTP parameter as 
measured in MTOPS for Computer Tier 2 is raised from 10,000 MTOPS to 
20,000 MTOPS.
    6. In section 742.12, the upper threshold of the CTP parameter for 
Computer Tier 3 is raised from 7,000 MTOPS to 12,300 MTOPS for civil 
end-users and end-uses. Effective January 23, 2000, the upper threshold 
of the CTP parameter for Computer Tier 3 is raised from 2,000 MTOPS to 
6,500 MTOPS for military end-users and end-uses.
    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, as amended, 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).

Rule Making Requirements

    1. This final 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 respond to nor 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 current valid OMB Control Number. This regulation involves 
collections previously approved by the Office of Management and Budget 
under control numbers 0694-0088, ``Multi-Purpose Application,'' which 
carries a burden hour estimate of 45 minutes per manual submission and 
40 minutes per electronic submission. Miscellaneous and recordkeeping 
activities account for 12 minutes per submission. In addition, 
information is also collected under OMB control number 0694-0107, 
``National Defense Authorization Act,'' Advance Notifications and Post-
Shipment Verification reports.
    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 requiring 
notice of proposed rule making, the opportunity for public 
participation, and a delay in effective date, are inapplicable because 
this regulation involves a military or foreign affairs function of the 
United States (see 5 U.S.C. 553(a)(1)). Further, no other law requires 
that a notice of proposed rule making and an opportunity for public 
comment be given for this rule. Because a notice of proposed rule 
making and opportunities 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 Frank J. 
Ruggiero, Office of Exporter Services, Bureau of Export Administration, 
Department of Commerce, P.O. Box 273, Washington, D.C. 20044.

List of Subjects

15 CFR Part 734

    Administrative practice and procedure, Exports, Foreign trade.

15 CFR Part 738

    Administrative practice and procedure, Exports, Foreign trade.

15 CFR Part 740

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

[[Page 42011]]

15 CFR Part 742

    Exports, Foreign Trade.

    Accordingly, parts 734, 738, 740, and 742 of the Export 
Administration Regulations (15 CFR Parts 730-774) are amended as 
follows:
    1. The authority citation for 15 CFR part 734 is revised to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq., 1701 et seq.; E.O. 
12924, 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; and Notice of August 13, 1998, 63 FR 44121, 3 CFR, 
1998 Comp., p. 294.

    2. The authority citation for 15 CFR Part 738 is revised to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
10 U.S.C. 7420; 10 U.S.C. 7430(e); 18 U.S.C. 2510 et seq.; 22 U.S.C. 
287c; 22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; 30 U.S.C. 185(s), 
185(u); 42 U.S.C. 2139a; 42 U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. 
app. 466c; 50 U.S.C. app. 5; E.O. 12924, 59 FR 43437, 3 CFR, 1994 
Comp., p. 917; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; 
and Notice of August 13, 1998, 63 FR 44121, 3 CFR 1998 Comp., p. 
294.

    3. The authority citation for 15 CFR Part 740 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, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 61 
FR 58767, 3 CFR, 1996 Comp., p. 228; and Notice of August 13, 1998, 
63 FR 44121, 3 CFR 1998 Comp., p. 294.

    4. The authority citation for 15 CFR 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, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 
13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; and Notice of August 
13, 1998, 63 FR 44121, 3 CFR 1998 Comp., p. 294.

PART 734--[AMENDED]


Sec. 734.4  [Amended]

    5. Section 734.4 is amended by revising the phrase ``7,000 MTOPS'' 
in paragraph (a) to read ``12,300 MTOPS''.

PART 738--[AMENDED]

    6. Supplement No. 1 to Part 738 is amended by revising the phrase 
``greater than 10,000 MTOPS'' in the second footnote to read ``greater 
than 20,000 MTOPS''.

PART 740--[AMENDED]

    7. Section 740.7 is amended by:
    a. Revising paragraphs (b)(1) and (c);
    b. Revising paragraphs (d)(2) and (d)(3); and
    c. Revising paragraphs (d)(5)(i) and (d)(5)(v) introductory text to 
read as follows:


Sec. 740.7  Computers (CTP).

* * * * *
    (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, Brazil, Czech Republic, Denmark, 
Finland, France, Germany, Greece, the Holy See, Hungary, Iceland, 
Ireland, Italy, Japan, Liechtenstein, Luxembourg, Mexico, Monaco, 
Netherlands, New Zealand, Norway, Poland, Portugal, San Marino, Spain, 
Sweden, Switzerland, Turkey, and the United Kingdom.
* * * * *
    (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, Brunei, Burkina Faso, Burma, Burundi, 
Cameroon, Cape Verde, Central Africa, Chad, Chile, Colombia, Congo, 
Costa Rica, Cote d'Ivoire, Cyprus, 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, 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, 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 to Tier 2 destinations are those having a CTP greater 
than 2,000 MTOPS, but less than or equal to 20,000 MTOPS.
    (d) * * *
    (2) Eligible computers. The computers eligible for License 
Exception CTP to Tier 3 destinations are those having a CTP greater 
than 2,000 MTOPS, but less than or equal to 12,300 MTOPS for civil end-
users and end-uses. Beginning on January 23, 2000, computers having a 
CTP greater than 2,000 MTOPS but less than or equal to 6,500 MTOPS are 
eligible for License Exception CTP to military end-users and end-uses 
subject to the restrictions in paragraph (d)(3) of this section.
    (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 nuclear, chemical, biological, or missile end-users and end-uses 
and military end-users and end-uses subject to license requirements 
under Sec. 744.2, Sec. 744.3, 0Sec. 744.4, Sec. 744.5, and Sec. 744.12 
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 
defined proliferation end-users and end-uses in eligible countries is 
strictly prohibited without prior authorization.
    (4) * * *
    (5) NDAA notification--(i) General requirement. The National 
Defense Authorization Act (NDAA) of FY98 enacted on November 18, 1997 
requires advance notification of certain exports and reexports of 
computers to Computer Tier 3 countries. Prior to January 23, 2000, 
advance notification is required for all exports and reexports of 
computers with a CTP between 2,000 and 12,300 MTOPS to Computer Tier 3 
destinations. Beginning on January 23, 2000, advance notification is 
required for all exports and reexports of computers with a CTP between 
6,500 and 12,300 MTOPS to Computer Tier 3 destinations. For each such 
transaction destined to Computer Tier 3, prior to using License 
Exception CTP, you must first notify BXA by submitting a completed 
Multipurpose Application Form (BXA-748P). The Multipurpose Application 
Form must be completed including all information required for a license 
application according to the instructions described in Supplement No. 1 
to part 748 of the EAR, with two exceptions. You (the applicant as 
listed in Block 14) shall in Block 5 (Type of Application) mark the box 
``Other.'' This designator will permit BXA to route the NDAA notice 
into a special processing procedure. (Blocks 6 and 7, regarding support 
documentation, may be left blank.) You must also provide a notice using 
this procedure prior to exporting or reexporting items that you know 
will be used to enhance beyond 2,000 MTOPS the CTP of a previously 
exported or reexported computer. Beginning on January 23, 2000, you 
must provide a notice using this

[[Page 42012]]

procedure prior to exporting or reexporting items that you know will be 
used to enhance beyond 6,500 MTOPS the CTP of a previously exported or 
reexported computer. BXA will not initiate the registration of an NDAA 
notice unless all information on the Multipurpose Application form is 
complete.
* * * * *
    (v) Post-shipment verification. This section outlines special post-
shipment reporting requirements for exporters of computers with a CTP 
over 2,000 MTOPS to destinations in Computer Tier 3 under the NDAA. 
These reporting requirements also apply when you know that the items 
being exported will be used to enhance beyond 2,000 MTOPS the CTP of a 
previously exported or reexported computer. Such reports must be 
submitted in accordance with the provisions of this paragraph 
(d)(5)(v), and records of such exports subject to the post-shipment 
reporting requirements of this section, must be kept in accordance with 
part 762 of the EAR.
* * * * *


Sec. 740.11  [Amended]

    8. Section 740.11 is amended by revising the phrase ``10,000 
MTOPS'' in paragraphs (a)(2)(ii) and (iii) and in paragraph (c)(2)(i) 
to read ``20,000 MTOPS''.
    9. Supplement No. 1 to section 740.11 is amended by revising the 
phrase ``10,000 MTOPS'' in paragraphs (a)(1)(ii), (a)(1)(iii), 
(b)(1)(ii), and (b)(1)(iii) to read ``20,000 MTOPS''.

PART 742--[AMENDED]

    10. Section 742.12 is amended by revising the phrase ``greater than 
10,000'' in paragraph (b)(2)(i) to read ``greater than 20,000''; by 
revising the phrase ``to military end-users and end-uses and to 
nuclear, chemical, biological, or missile end-users and end-uses 
defined in part 744 of the EAR'' in paragraph (b)(3)(i)(A) to read ``to 
nuclear, chemical, biological, or missile end-users and end-uses and 
military end-users and end-uses subject to license requirements under 
Sec. 744.2, Sec. 744.3, Sec. 744.4, Sec. 744.5, and Sec. 744.12 of the 
EAR'' by revising the phrase ``to military end-users and end-uses and 
nuclear, chemical, biological, or missile end-users and end-uses 
defined in part 744 of the EAR'' in paragraph (b)(3)(ii) to read ``to 
nuclear, chemical, biological, or missile end-users and end-uses and 
military end-users and end-uses subject to license requirements under 
Sec. 744.2, Sec. 744.3, Sec. 744.4, Sec. 744.5, and Sec. 744.12 of the 
EAR''; and revising paragraphs (b)(3)(i)(B) and (C) to read as follows:
* * * * *


Sec. 742.12  High performance computers.

* * * * *
    (b) * * *
    (3) * * *
    (i) * * *
    (B) A license is required to export or reexport computers with a 
CTP greater than 12,300 MTOPS for civilian end-users and end-uses in 
countries in Computer Tier 3. Prior to January 23, 2000, a license is 
required to export or reexport computers having a CTP greater than 
2,000 MTOPS to military end-users and end-uses in Computer Tier 3. 
Beginning on January 23, 2000, a license is required to export or 
reexport computers having a CTP greater than 6,500 MTOPS to military 
end-users and end-uses in Computer Tier 3.
    (C) Prior to January 23, 2000, 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). Beginning on January 23, 2000, a license may be required to 
export or reexport computers with a CTP greater than 6,500 MTOPS to 
countries in Computer Tier 3 pursuant to the NDAA (see Sec. 740.7(d)(5) 
of the EAR).
* * * * *
    Dated: July 27, 1999.
Iain S. Baird,
Deputy Assistant Secretary for Export Administration.
[FR Doc. 99-19644 Filed 8-2-99; 8:45 am]
BILLING CODE 3510-33-P