[Federal Register Volume 64, Number 191 (Monday, October 4, 1999)]
[Proposed Rules]
[Pages 53854-53861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25604]



[[Page 53853]]

_______________________________________________________________________

Part IV





Department of Commerce





_______________________________________________________________________



Bureau of Export Administration



_______________________________________________________________________



Bureau of the Census



_______________________________________________________________________



15 CFR Parts 30 et al.



Revisions to the Export Administration Regulations: Parties to a 
Transaction and Their Responsibilities, Routed Export Transactions, 
Shipper's Export Declarations, and Export Clearance; Proposed Rule



Amendment to Foreign Trade Statistics Regulations To Clarify Exporters' 
and Forwarding Agents' Responsibilities and To Clarify Provisions for 
Authorizing an Agent To Prepare and File a Shipper's Export Declaration 
on Behalf of a Principal Party in Interest; Proposed Rule

  Federal Register / Vol. 64, No. 191 / Monday, October 4, 1999 / 
Proposed Rules  

[[Page 53854]]



DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Parts 732, 740, 743, 748, 750, 752, 758, 762, and 772

[Docket No. 990709186-9186-01]
RIN 0694-AB88


Parties to a Transaction and their responsibilities, Routed 
Export Transactions, Shipper's Export Declarations, and Export 
Clearance

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Proposed rule, with request for comments.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Export Administration proposes to revise the 
Export Administration Regulations (EAR) to clarify the responsibilities 
of parties to an export transaction, the filing and use of Shipper's 
Export Declarations, Destination Control Statement requirements, and 
other export clearance issues.

DATES: Comments must be received December 3, 1999.

ADDRESSES: Written comments should be sent to Sharron Cook, Regulatory 
Policy Division, Office of Exporter Services, Bureau of Export 
Administration, Room 2705, 14th Street and Pennsylvania Avenue, N.W., 
Washington, D.C. 20230.

FOR FURTHER INFORMATION CONTACT: Sharron Cook, Regulatory Policy 
Division, Bureau of Export Administration, at (202) 482-2440.

SUPPLEMENTARY INFORMATION:

Background

    The Bureau of Export Administration (BXA) proposes to amend the 
Export Administration Regulations (EAR) in order to simplify and 
clarify the export clearance process and facilitate compliance. BXA's 
primary objective is to promote flexibility so that parties to 
transactions subject to the EAR may structure their transactions 
freely, consistent with national security and foreign policy 
objectives.
    In this proposed rule, BXA defines new terms, including ``principal 
parties in interest'', ``routed export transaction'', and ``end-user'', 
and clarifies existing ones (notably the definition of ``exporter''). 
The proposed amendments ensure that for every transaction subject to 
the EAR, some party to the transaction is clearly responsible for 
determining licensing authority (License, License Exception, or NLR), 
and for obtaining the appropriate license or other authorization. The 
proposed amendments also encourage communication among all parties to a 
transaction to ensure that each party knows its responsibilities in 
order to comply with the EAR.
    For export control purposes the exporter has generally been the 
seller. An export transaction, however, has two principal parties in 
interest: a U.S. party and a foreign party--usually the seller and the 
buyer. In a ``routed export transaction,'' the foreign principal party 
in interest agrees to terms of sale that may include assuming 
responsibility for export licensing. This proposed rule provides that 
when the foreign principal party expressly assumes responsibility in 
writing for determining license requirements and obtaining necessary 
authorization, that foreign party must have a U.S. agent who becomes 
the ``exporter'' for export control purposes. Without such a written 
undertaking by the foreign principal, the U.S. principal is the 
exporter, with all attendant responsibilities.
    The Shipper's Export Declaration (SED) plays an important role in 
export clearance. Both the EAR and the Foreign Trade Statistics 
Regulations (FTSR) of the Bureau of Census contain specific 
requirements regarding the use of this document. The EAR govern the use 
of the SED as an export control document, while the FTSR govern its use 
as a source of trade statistics. For statistical purposes, the Census 
Bureau requires the name of the U.S. principal party in interest, 
generally the seller, in Block (1a) of the SED. For purposes of 
responsibility for export licensing requirements under the EAR, 
however, the U.S. agent of the foreign principal party in interest may 
be the exporter, regardless of who is listed in Block (1a) of the SED. 
It is important to note that all parties who participate in 
transactions subject to the EAR are responsible for complying with the 
EAR. Therefore, a party that is listed in Block 1(a) of the SED or in 
the exporter field of the Automated Export System (AES) record is not 
the sole party to the transaction responsible for compliance with the 
EAR.
    In addition to clarifying export licensing responsibilities, this 
rule institutes a requirement that the export licensee communicate 
license conditions to all parties to whom those conditions apply and, 
when required by the license, to obtain written acknowledgment of 
receipt of the conditions. This new provision is part of BXA's License 
and Enforcement Action Program (LEAP), which is designed to enhance 
compliance with the EAR.
    Finally, these proposed amendments significantly revise the first 
six sections of Part 758 of the EAR by reorganizing, streamlining and 
clarifying necessary provisions while deleting unnecessary or redundant 
provisions. Section 758.1 consolidates into one section all export 
control-related provisions pertaining to SEDs. In consolidating these 
provisions into one section, BXA has eliminated those that are already 
contained in the FTSR, or that were otherwise unrelated to export 
controls. Section 758.2 clarifies and consolidates provisions relating 
to the responsibilities of the parties, and Sec. 758.3 consolidates, 
but does not significantly change, provisions concerning the use of an 
export license. Section 758.4, which contained very specific provisions 
relating to conformity of documents, has been greatly simplified in the 
interest of flexibility. Sections 758.5 and Sec. 758.6 have been 
combined and reduced into one paragraph.
    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, extended by Presidential notice of August 10, 1999, 64 FR 44101 
(August 13, 1999).

Rulemaking Requirements

    1. This proposed 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 that collection of information displays a 
currently valid OMB Control Number. This rule contains and involves 
collections of information subject to the Paperwork Reduction Act of 
1995 (44 U.S.C. 3501 et seq.). This rule involves collections that have 
been approved by the Office of Management and Budget under control 
numbers 0694-0038, and 0694-0096. This rule contains collections that 
have been approved by the Office of Management and Budget under control 
numbers: 0607-0152, 0694-0040, 0694-0094, 0694-0095, 0694-0097, 0694-
0088, and 0694-XXXX.
    Comments are invited on (a) whether the collection of information 
is necessary for 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

[[Page 53855]]

of information; (c) ways to enhance the quality, utility, and clarify 
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. Send comments regarding these or any other aspects of the 
collection of information to: Sharron Cook, Regulatory Policy Division, 
Bureau of Export Administration, U.S. Department of Commerce Room 2705, 
14th Street and Pennsylvania Ave., N.W. Washington, DC 20230.
    Because of the importance of the issues raised by these 
regulations, this rule is issued in proposed form and comments will be 
considered in the development of final regulations. Comments will be 
considered on provisions included in the regulations as well as 
provisions or guidance which commenters believe should be included in 
the 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 their views.
    The period for submission of comments will close December 3, 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 person 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 made 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 6883, Department of Commerce, 14th Street and 
Pennsylvania Avenue, N.W., 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 the Bureau of Export 
Administration Freedom of Information Officer, at the above address or 
by calling (202) 482-0500.
    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 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. or by any other law, 
the requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq. ) are not applicable.

List of Subjects

15 CFR Part 730

    Administrative practice and procedure, Advisory committees, 
Exports, Foreign trade, Reporting and recordkeeping requirements, 
Strategic and critical materials.

15 CFR Parts 740, 743, 748, 750, 752, and 758

    Administrative practice and procedure, Exports, Foreign trade, 
Reporting and Record keeping requirements.

15 CFR Part 762

    Administrative practice and procedure, Business and industry, 
Confidential business information, Exports, Foreign trade, Reporting 
and recordkeeping requirements.

    Accordingly, parts 732, 740, 743, 748, 750, 752, 758, 762, and 772 
of the Export Administration Regulations (15 CFR Parts 730-799) are 
proposed to be amended as follows:
    1. The authority citation for 15 CFR parts 758 and 762 are 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; Notice of August 
10, 1999, 64 FR 44101 (August 13, 1999).

    2. The authority citation for 15 CFR parts 732, 748, 752, and 772 
are 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; Notice of August 10, 1999, 64 
FR 44101 (August 13, 1999).

    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; Notice of August 10, 1999, 64 
FR 44101 (August 13, 1999).

    4. The authority citation for 15 CFR part 743 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 
10, 1999, 64 FR 44101 (August 13, 1999).

    5. 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; E.O. 12981, 60 
FR 62980, 3 CFR, 1997 Comp., p. 60; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; Notice of August 10, 1999, 64 FR 44101 (August 
13, 1999).

    6. Parts 740 through 772 are amended by revising the phrase ``U.S. 
exporter'' to read ``exporter'' in the following places:

Sec. 740.9(a)(2)(iii) last sentence
Sec. 740.10(b)(3)(ii)(C)
Sec. 743.1(b)
Sec. 748.11(e)(4)(ii)(1)
Supplement No. 3 to part 748, ``BXA-711, Statement By ultimate 
consignee and Purchaser Instructions'', Block 8
Supplement No. 3 to part 752, ``Instructions on Completing Form BXA-752 
``Statement by Consignee in Support of Special Comprehensive License'', 
Block 5

PART 732--[AMENDED]

    7. Section 732.5 is revised to read as follows:


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

    (a) Step 27: Shipper's Export Declaration (SED). Exporters or 
agents authorized to complete the Shipper's Export Declaration (SED), 
or to file SED

[[Page 53856]]

information electronically using the Automated Export System (AES), 
should review Sec. 758.1 of the EAR to determine when an SED is 
required and what export control information should be entered on the 
SED or AES record. More detailed information about how to complete an 
SED or file the SED information electronically using AES may be found 
in the Bureau of Census Foreign Trade Statistics Regulations (FTSR) at 
15 CFR part 30. Reexporters and firms exporting from abroad may skip 
Steps 27 through 29 and proceed directly to Sec. 732.6 of this part.
    (1) Entering license authority. You must enter the correct license 
authority for your export on the SED or AES record (License number, 
License Exception symbol, or No License Required designator ``NLR'') as 
appropriate. See Sec. 758.1(f) of the EAR and 15 CFR 30.7(m) of the 
FTSR.
    (i) License number and expiration date. If you are exporting under 
the authority of a license, you must enter the license number on the 
SED or AES record. The expiration date must be entered on paper 
versions of the SED only.
    (ii) License Exception. If you are exporting under the authority of 
a License Exception, you must enter the correct License Exception 
symbol (e.g., LVS, GBS, CIV) on the SED or AES record. See Sec. 740.1 
of the EAR.
    (iii) NLR. If you are exporting items for which no license is 
required, you must enter the designator NLR. You should use the NLR 
designator in two circumstances: first, when the items to be exported 
are subject to the EAR but not listed on the Commerce Control List 
(CCL) (i.e., items that are classified as EAR99), and second, when the 
items to be exported are listed on the CCL but do not require a 
license. Use of the NLR designator is also a representation that no 
license is required under any of the General Prohibitions set forth in 
part 736 of the EAR.
    (2) Item description. You must enter an item description identical 
to the item description on the license when a license is required or 
enter an item description sufficient in detail to permit review by the 
U.S. Government and verification of the Schedule B Number (or 
Harmonized Tariff Schedule number) for License Exception shipments or 
shipments for which No License is Required (NLR). See Sec. 758.1(f) of 
the EAR; and 15 CFR 30.7(l) of the FTSR.
    (3) Entering the ECCN. You must enter the correct Export Control 
Classification Number (ECCN) on the SED or AES record for all items 
having a classification other than EAR99, i.e., items listed on the 
Commerce Control List in Supplement No. 1 to part 774 of the EAR. See 
Sec. 758.1(f) of the EAR; and 15 CFR 30.7(m) of the FTSR.
    (b) Step 28: Destination Control Statement. The Destination Control 
Statement (DCS) must be entered on the invoice and on the bill of 
lading, air waybill, or other export control document that accompanies 
the shipment from its point of origin in the United States to the 
ultimate consignee or end-user abroad. The person responsible for 
preparation of those documents is responsible for entry of the DCS. The 
DCS is required for all exports from the United States of items on the 
Commerce Control List that are not classified as EAR99, unless the 
export may be made under License Exception BAG or GFT (see part 740 of 
the EAR). Reexporters should review Sec. 752.15 of the EAR for DCS 
requirements when using a Special Comprehensive License; otherwise, DCS 
requirements do not apply to reexports.
    (c) Step 29: Recordkeeping. Records of transactions subject to the 
EAR must be maintained for five years in accordance with the 
recordkeeping provisions of part 762 of the EAR.

PART 740--[AMENDED]

    8. Section 740.1 is amended by revising paragraph (d) to read as 
follows:


Sec. 740.1  Introduction.

* * * * *
    (d) Shipper's Export Declaration: Clearing exports under License 
Exceptions. You must enter on any required Shipper's Export Declaration 
(SED) or Automated Export System (AES) record the correct License 
Exception symbol, e.g., LVS, TMP, etc., for the License Exception(s) 
you use to export. In addition, you must enter the correct Export 
Control Classification Number (ECCN), e.g., 4A003, 5A002, etc., on the 
SED or AES record for all items having a classification other than 
EAR99, i.e., items listed on the Commerce Control List in Supplement 
No. 1 to part 774 of the EAR. See Sec. 758.1 of the EAR for Shipper's 
Export Declaration requirements.
* * * * *

PART 748--[AMENDED]

    9. Section 748.4 is amended by revising paragraphs (a) and (b) to 
read as follows:


Sec. 748.4  Basic guidance related to applying for a license.

    (a) License Applicant. (1) Export transactions. Only a person in 
the United States may apply for a license to export items from the 
United States. The applicant must be the exporter, who is that 
principal party in interest with the authority to determine and control 
the sending of items out of the United States. See definition of 
``exporter'' in part 772 of the EAR.
    (2) Routed export transactions. The U.S. principal party in 
interest or the duly authorized U.S. agent of the foreign principal 
party in interest may apply for a license to export items from the 
United States. Prior to submitting an application, the agent that 
applies for a license on behalf of the foreign principal party in 
interest must obtain a power of attorney or other written authorization 
from the foreign principal party in interest. See Sec. 758.2(c) and (e) 
of the EAR.
    (3) Reexport transactions. The U.S. or foreign principal party in 
interest, or the duly authorized U.S. agent of the foreign principal 
party in interest, may apply for a license to reexport controlled items 
from one country to another. Prior to submitting an application, an 
agent that applies for a license on behalf of a foreign principal party 
in interest must obtain a power-of-attorney or other written 
authorization from the foreign principal party in interest. See power-
of-attorney requirements in paragraph (b)(2) of this section.
    (b) Disclosure of parties on license applications and the power of 
attorney. (1) Disclosure of parties. License applicants must disclose 
the names and addresses of all parties to a transaction. When the 
applicant is the U.S. agent of the foreign principal party in interest, 
the applicant must disclose the fact of the agency relationship, and 
the name and address of the agent's principal. If there is any doubt 
about which persons should be named as parties to the transaction, the 
applicant should disclose the names of all such persons and the 
functions to be performed by each in Block 24 (Additional Information) 
of the BXA-748P Multipurpose Application form. Note that when the 
foreign principal party in interest is the ultimate consignee or end-
user, the name and address need not be repeated in Block 24. See 
``Parties to the transaction'' in Sec. 748.5.
    (2) Power of attorney or other written authorization. Prior to 
submitting an application for a license, an agent must obtain a power 
of attorney or other written authorization from the foreign principal 
party in interest to act on behalf of the foreign principal party in 
interest. When completing the BXA-748P Multipurpose Application Form, 
Block 7 (documents on file with applicant) must be marked ``other'' and

[[Page 53857]]

Block 24 (Additional information) must be marked ``748.4(b)(2)'' to 
indicate that the power of attorney or other written authorization is 
on file with the applicant (agent). See part 762 of the EAR for 
recordkeeping requirements.
* * * * *
    10. Section 748.5 is revised to read as follows:


Sec. 748.5  Parties to the transaction.

    The following parties may be entered on the BXA-748P Multipurpose 
Application Form. The definitions, which also appear in part 772 of the 
EAR, are set out here for your convenience to assist you in filling out 
your application correctly.
    (a) Applicant. The person who applies for an export or reexport 
license, and who has the authority of a principal party in interest to 
determine and control the export or reexport of items. See 
Sec. 748.4(a) of this part and definition of ``exporter'' in part 772 
of the EAR.
    (b) Other party authorized to receive license. The person 
authorized by the applicant to receive the license. If a person and 
address is listed in Block 15 of the BXA-748P Multipurpose Application 
Form, the Bureau of Export Administration will send the license to that 
person instead of the applicant. Designation of another party to 
receive the license does not alter the responsibilities of the 
applicant, licensee or exporter.
    (c) Purchaser. The person abroad who has entered into the 
transaction to purchase an item for delivery to the ultimate consignee. 
In most cases, the purchaser is not a bank, forwarding agent, or 
intermediary. The purchaser and ultimate consignee may be the same 
entity.
    (d) Intermediate consignee. The person that acts as an agent for a 
principal party in interest and takes possession of the items for the 
purpose of effecting delivery of the items to the ultimate consignee. 
The intermediate consignee may be a bank, forwarding agent, or other 
person who acts as an agent for a principal party in interest.
    (e) Ultimate consignee. The principal party in interest located 
abroad who receives the exported or reexported items. The ultimate 
consignee is not a forwarding agent or other intermediary, but may be 
the end-user.
    (f) End-user. The person abroad that receives and ultimately uses 
the exported or reexported items. The end-user is not a forwarding 
agent or intermediary, but may be the purchaser or ultimate consignee.

PART 750--[AMENDED]

    11. Section 750.7 is amended by revising paragraph (d) to read as 
follows:


Sec. 750.7  Issuance of licenses.

* * * * *
    (d) Responsibility of the licensee. The person to whom a license is 
issued is the licensee. In export transactions, the exporter must be 
the licensee, and the exporter-licensee is responsible for the proper 
use of the license, and for all terms and conditions of the license, 
except to the extent that certain terms and conditions are directed 
toward some other party to the transaction. In reexport or routed 
export transactions, a U.S. agent acting on behalf of a foreign 
principal party in interest may be the licensee; in these cases, both 
the agent and the foreign principal party in interest, on whose behalf 
the agent has acted, are responsible for the use of the license, and 
for all terms and conditions of the license, except to the extent that 
certain terms and conditions are directed toward some other party to 
the transaction. It is the licensee's responsibility to communicate the 
specific license conditions to the parties to whom those conditions 
apply. In addition, when required by the license, the licensee is 
responsible for obtaining written acknowledgment(s) of receipt of the 
conditions from the parties to whom those conditions apply.
* * * * *

PART 752--[AMENDED]

    11. Section 752.15 is amended by revising the citation 
``Sec. 758.3'' to read ``Sec. 758.1'' in paragraph (a) introductory 
text.

PART 758--[AMENDED]

    12. Part 758 is amended by revising Secs. 758.1, through 758.5 and 
removing and reserving Sec. 758.6, to read as follows:


Sec. 758.1  The Shipper's Export Declaration (SED).

    (a) The Shipper's Export Declaration (SED). The SED (Forms 7525-V 
or 7525-V-Alt or the Automated Export System (AES electronic 
equivalent)) is used by the Bureau of Census to collect trade 
statistics and by the Bureau of Export Administration for export 
control purposes. The SED and the AES collect basic information such as 
the names and addresses of the parties to a transaction; the 
description, the Export Control Classification Number (ECCN) (when 
required), the Schedule B number or Harmonized Tariff Schedule number, 
the quantity and value of the items exported; and the license authority 
for the export. The SED or the AES electronic equivalent is a statement 
to the United States Government that the transaction occurred as 
described.
    (b) When an SED is required. You must file a paper SED, or file the 
SED information electronically using the AES, with the United States 
Government in the following situations:
    (1) For all shipments of tangible items subject to the EAR that are 
authorized under a license, regardless of value or destination;
    (2) For all shipments of tangible items subject to the EAR that are 
authorized under a License Exception or NLR, when the value of the 
items classified under a single Schedule B Number (or Harmonized Tariff 
Schedule number) is over $2,500, except as exempted by the Foreign 
Trade Statistics Regulations (FTSR) in 15 CFR part 30 and referenced in 
paragraph (c) of this section;
    (3) For all shipments subject to the EAR that are destined to Cuba, 
Iran, Iraq, Libya, North Korea, Serbia, Sudan, or Syria, regardless of 
value (see 15 CFR 30.55(h) of the FTSR); and
    (4) For all shipments that will be transshipped through Canada to a 
third destination, where the shipment would require an SED if shipped 
directly to the final destination from the United States (see 15 CFR 
30.58(c) of the FTSR).

    Note to paragraph (b): In addition to the Shipper's Export 
Declaration for exports, the Bureau of Census Foreign Trade 
Statistics Regulations provide for a specific Shipper's Export 
Declaration for In-Transit Goods (Form 7513). See 15 CFR 30.3 and 
30.8 of the FTSR.

    (c) Exemptions. A complete list of exemptions from the SED or AES 
filing requirement is set forth in the FTSR. Some of these FTSR 
exemptions have elements in common with certain EAR License Exceptions. 
An FTSR exemption may be narrower than a License Exception. The 
following references are provided in order to direct you to the FTSR 
exemptions that relate to EAR License Exceptions:
    (1) License Exception Baggage (BAG), as set forth in Sec. 740.14 of 
the EAR. See 15 CFR Sec. 30.56 of the FTSR;
    (2) License Exception Gift Parcels and Humanitarian Donations 
(GFT), as set forth in Sec. 740.12 of the EAR. See 15 CFR 30.55(g) of 
the FTSR;
    (3) License Exception Aircraft and Vessels (AVS), as set forth in 
Sec. 740.15 of the EAR. See 15 CFR 30.55(l) of the FTSR;
    (4) License Exception Governments and International Organizations 
(GOV), as set forth in Sec. 740.11 of the EAR. See 15 CFR 30.53 of the 
FTSR;

[[Page 53858]]

    (5) License Exception Technology and Software Under Restriction 
(TSR), as set forth in Sec. 740.6 of the EAR. See 15 CFR 30.54(b) and 
30.55 (h) of the FTSR; or
    (6) License Exception Temporary Imports, Exports, and Reexports 
(TMP) ``tools of trade'', as set forth in Sec. 740.9(a)(2)(i) of the 
EAR. See 15 CFR 30.56(b) of the FTSR.
    (d) Notation on export documents for exports exempt from SED 
requirements. When an exemption from filing the Shipper's Export 
Declaration applies, the forwarding or other agent must include on the 
bill of lading, air waybill, or other loading document the export 
authority of the items, i.e., either the number of and expiration date 
of a license issued by BXA, the appropriate License Exception symbol, 
or NLR ``No License Required'' designator. This notation applies to any 
bill of lading or other loading document, including one issued by a 
consolidator (indirect carrier) for an export included in a 
consolidated shipment. However, this requirement does not apply to a 
``master'' bill of lading or other loading document issued by a carrier 
to cover a consolidated shipment. The bill of lading or other loading 
document must be available for inspection along with the items prior to 
lading on the carrier.
    (e) Signing the Shipper's Export Declaration. The person who signs 
the SED must be in the United States at the time of signing. That 
person, whether exporter or agent, is responsible for the truth, 
accuracy, and completeness of the SED, except insofar as that person 
can demonstrate that he or she reasonably relied on information 
furnished by others.
    (f) The SED or AES electronic equivalent is an export control 
document. The SED or AES electronic equivalent is a statement to the 
U.S. Government. The SED or AES electronic equivalent is an export 
control document as defined in part 772 of the EAR. False statements 
made thereon may be a violation of Sec. 764.2(g) of the EAR. When an 
SED or AES electronic equivalent is presented to the U.S. Government, 
the signer or filer of the SED or AES electronic equivalent represents 
the following:
    (1) Export of the items described on the SED or AES electronic 
equivalent is authorized under the terms and conditions of the 
designated license issued by BXA; is in accordance with the terms and 
conditions of the appropriate License Exception; or is authorized under 
``NLR'' as No License is Required for the shipment;
    (2) Statements on the SED or AES electronic equivalent are in 
conformity with the contents of any license issued by BXA; and
    (3) All information shown on the SED or AES electronic equivalent 
is true, accurate, and complete.
    (g) Export control information requirement on the SED or AES 
electronic equivalent. You must show the license authority (License 
number, License Exception, or No License Required (NLR)), the Export 
Control Classification Number (ECCN) (when required), and the item 
description in the designated blocks of the SED or AES electronic 
equivalent.
    (1) Specific information requirements for licensed exports. When 
exporting under the authority of a license, you must enter on the 
Shipper's Export Declaration or AES equivalent the license number and 
expiration date (the expiration date is only required on paper versions 
of the SED), the ECCN, and an item description identical to the item 
description on the license. The item description on the license must be 
stated in Commerce Control List terms, which may be inadequate to meet 
Census Bureau requirements. In this event, the item description you 
place on the SED or AES electronic equivalent must be given in enough 
additional detail to permit verification of the Schedule B Number (or 
Harmonized Tariff Schedule number) (e.g., size, material, or degree of 
fabrication). See 15 CFR 30.7(l) of the FTSR. If you include other 
items on the SED or AES electronic equivalent that do not require 
licenses, but that may be exported under the authority of a License 
Exception or No License Required, you must show the License Exception 
symbol or NLR designator, along with the specific description 
(quantity, Schedule B Number (or Harmonized Tariff Schedule number), 
value) of the item(s) to which the authorization applies in the 
designated blocks. See 15 CFR 30.7(m) of the FTSR.
    (2) Specific information requirements for License Exceptions. You 
must enter on any required Shipper's Export Declaration (SED) or AES 
electronic equivalent the correct License Exception symbol (e.g., LVS, 
GBS, CIV) for the License Exception(s) under which you are exporting. 
Also, you must enter the correct Export Control Classification Number 
(ECCN) on the SED or AES electronic equivalent for all items having a 
classification other than EAR99, i.e., items listed on the Commerce 
Control List in Supplement No. 1 to part 774 of the EAR. In addition, 
an item description that is sufficiently detailed to permit review by 
the U.S. Government and verification of the Schedule B Number (or 
Harmonized Tariff Schedule number) is required. See Sec. 740.1(d) of 
the EAR.
    (3) Specific information requirements when no license is required. 
You must enter on any required Shipper's Export Declaration (SED) or 
AES electronic equivalent the ``NLR'' designation when the items to be 
exported are subject to the EAR but not listed on the Commerce Control 
List (i.e., items are classified as EAR99), and when the items to be 
exported are listed on the CCL but do not require a license. In 
addition, you must enter the correct ECCN on the SED or AES electronic 
equivalent for all items being exported under the NLR provisions that 
have a classification other than EAR99, i.e., items listed on the 
Commerce Control List in Supplement No. 1 to part 774 of the EAR. Also, 
you must enter on the SED or AES electronic equivalent an item 
description that is sufficiently detailed to permit review by the U.S. 
Government and verification of the Schedule B Number (or Harmonized 
Tariff Schedule number). The designator ``TSPA'' may be used, but is 
not required, when the export consists of technology or software 
outside the scope of the EAR. See Sec. 734.7 through Sec. 734.11 of the 
EAR for TSPA information.
    (h) Submission of the SED. The SED must be submitted to the U.S. 
Government in the manner prescribed by the Bureau of Census Foreign 
Trade Statistics Regulations (15 CFR part 30).
    (i) Exports by U.S. Mail. When you make an export by U.S. mail that 
requires the submission of an SED, a properly executed paper version of 
the SED must be submitted to the post office at the place of mailing, 
or you must file the export information via AES procedures found in the 
FTSR. See 15 CFR 30.12 of the FTSR. Whenever you export items subject 
to the EAR that meets one of the exemptions for submission of an SED, 
you must enter the appropriate export authority on the parcel, i.e., 
either the number of and expiration date of a license issued by BXA, 
the appropriate License Exception symbol, or NLR ``No License 
Required'' designator.
    (j) Power of attorney or other written authorization. (1) In a 
``power of attorney'' or other written authorization, authority is 
conferred upon an agent to perform certain specified acts or kinds of 
acts on behalf of a principal.
    (2) An agent must obtain a power of attorney or other written 
authorization in the following circumstances:
    (i) An agent that represents a foreign principal party in interest 
in a routed transaction must obtain a power of

[[Page 53859]]

attorney or other written authorization that sets forth his authority;
    (ii) An agent that applies for a license on behalf of a principal 
party in interest must obtain a power of attorney or other written 
authorization that sets forth the agent's authority to apply for the 
license on behalf of the principal.

    Note to paragraph (j)(2): The Bureau of Census Foreign Trade 
Statistics Regulations impose additional requirements for a power of 
attorney or other written authorization. See 15 CFR 30.4 (e) of the 
FTSR.

    (3) This requirement for a power of attorney or other written 
authorization is a legal requirement aimed at ensuring that the parties 
to a transaction negotiate and understand their responsibilities. The 
absence of a power of attorney or other written authorization does not 
prevent BXA from using other evidence to establish the existence of an 
agency relationship for purposes of imposing liability.


Sec. 758.2  Responsibilities of parties to the transaction.

    (a) General. All parties that participate in transactions subject 
to the EAR must comply with the EAR. Parties are free to structure 
transactions as they wish, and to delegate functions and tasks as they 
deem necessary, as long as the transaction complies with the EAR. 
However, acting through a forwarding or other agent, or delegating or 
redelegating authority, does not in and of itself relieve anyone of 
responsibility for compliance with the EAR.
    (b) Export transactions. The U.S. principal party in interest is 
the exporter, except in certain routed transactions. The exporter must 
determine licensing authority (License, License Exception, or NLR), and 
obtain the appropriate license or other authorization. The exporter may 
hire forwarding or other agents to perform various tasks, but doing so 
does not necessarily relieve the exporter of compliance 
responsibilities.
    (c) Routed export transactions. All provisions of the EAR, 
including the end-use and end-user controls found in part 744 of the 
EAR, and the General Prohibitions found in part 736 of the EAR, apply 
to routed export transactions. The U.S. principal party in interest is 
the exporter and must determine licensing authority (License, License 
Exception, or NLR), and obtain the appropriate license or other 
authorization, unless the U.S. principal party in interest obtains from 
the foreign principal party in interest a writing wherein the foreign 
principal party in interest expressly assumes responsibility for 
determining licensing requirements and obtaining license authority, 
making the U.S. agent of the foreign principal party in interest the 
exporter for EAR purposes. See Sec. 748.4(a)(3) of the EAR.

    Note to paragraph (c) For statistical purposes, the Census 
Bureau requires the name of the U.S. principal party in interest, 
generally the seller, in Block (1a) of the SED. For purposes of 
licensing responsibility under the EAR, however, the U.S. agent of 
the foreign principal party in interest may be the exporter, 
regardless of who is listed in Block (1a) of the SED.

    (d) Information sharing requirements. In routed export transactions 
where the foreign principal party in interest assumes responsibility 
for determining and obtaining licensing authority, the U.S. principal 
party in interest must, upon request, provide the foreign principal 
party in interest and its forwarding or other agent with the Export 
Control Classification Number (ECCN), or with sufficient technical 
information to determine classification. In addition, the U.S. 
principal party in interest must provide the foreign principal party in 
interest or the foreign principal's agent any information that it knows 
will affect the determination of license authority. See Sec. 758.1(f) 
of the EAR.
    (e) Power of attorney or other written authorization. In routed 
export transactions, a forwarding or other agent that represents the 
foreign principal party in interest, or who applies for a license on 
behalf of the foreign principal party in interest, must obtain a power 
of attorney or other written authorization from the foreign principal 
party in interest to act on its behalf. See Sec. 748.4(b) and 
Sec. 758.1(i) of the EAR.


Sec. 758.3  Use of export license.

    (a) License valid for shipment from any port. An export license 
issued by BXA authorizes exports from any port of export in the United 
States unless the license states otherwise. Items that leave the United 
States at one port, cross adjacent foreign territory, and reenter the 
United States at another port before being exported to a foreign 
country, are treated as exports from the last U.S. port of export.
    (b) Shipments against expiring license. Any item requiring a 
license that has not departed from the final U.S. port of export by 
midnight of the expiration date on an export license may not be 
exported under that license unless the shipment meets the requirements 
of paragraphs (b) (1) or (2) of this section.
    (1) BXA grants an extension; or
    (2) Prior to midnight on the date of expiration on the license, the 
items:
    (i) Were laden aboard the vessel; or
    (ii) Were located on a pier ready for loading and not for storage, 
and were booked for a vessel that was at the pier ready for loading; or
    (iii) The vessel was expected to be at the pier for loading before 
the license expired, but exceptional and unforseen circumstances 
delayed it, and BXA or the U.S. Customs Service make a judgment that 
undue hardship would result if a license extension were required.
    (c) Reshipment of undelivered items. If the consignee does not 
receive an export made under a license because the carrier failed to 
deliver it, the exporter may reship the same or an identical item, 
subject to the same limitations as to quantity and value as described 
on the license, to the same consignee and destination under the same 
license. If an item is to be reshipped to any person other than the 
original consignee, the shipment is considered a new export and 
requires a new license. Before reshipping, satisfactory evidence of the 
original export and of the delivery failure, together with a 
satisfactory explanation of the delivery failure, must be submitted by 
the exporter to the following address: Operations Division, Bureau of 
Export Administration, U.S. Department of Commerce, Room 2705, 14th 
Street & Pennsylvania Avenue, N.W., Washington, D.C. 20230.


Sec. 758.4  Conformity of documents and unloading of items.

    (a) Purpose. The purpose of this section is to prevent items 
licensed for export from being diverted while in transit or thereafter. 
It also sets forth the duties of the parties when the items are 
unloaded in a country other than that of the ultimate consignee as 
stated on the export license.
    (b) Conformity of documents. When a license is issued by BXA, the 
information entered on related export control documents (e.g., the SED, 
bill of lading or air waybill) must be consistent with the license.
    (c) Issuance of the bill of lading or air waybill.--(1) Ports in 
the country of the ultimate consignee. No person may issue a bill of 
lading or air waybill that provides for delivery of licensed items to 
any foreign port located outside the country of the intermediate or the 
ultimate consignee named on the BXA license and Shipper's Export 
Declaration (SED).
    (2) Optional ports of unloading. (i) Licensed items. No person may 
issue a bill of lading or air waybill that provides for delivery of 
licensed items to optional ports of unloading unless all the optional 
ports are within the country of

[[Page 53860]]

ultimate destination or are included on the BXA license and SED.
    (ii) Unlicensed items. For shipments of items that do not require a 
license, the exporter may designate optional ports of unloading on the 
SED and other export control documents, so long as the optional ports 
are in countries to which the items could also have been exported 
without a license. See also 15 CFR 30.7(h) of the FTSR.
    (d) Delivery of items. No person may deliver items to any country 
other than the country of the intermediate or ultimate consignee named 
on the BXA license and SED without prior written authorization from 
BXA, except for reasons beyond the control of the carrier (such as acts 
of God, perils of the sea, damage to the carrier, strikes, war, 
political disturbances or insurrection).
    (e) Procedures for unscheduled unloading.--(1) Unloading in country 
where no license is required. When items are unloaded in a country to 
which the items could be exported without a license issued by BXA, no 
notification of BXA is required. However, any persons disposing of the 
items must continue to comply with the terms and conditions of any 
license or license exception, and with any other relevant provisions of 
the EAR.
    (2) Unloading in a country where a license is required. (i) When 
items are unloaded in a country to which the items would require a 
license issued by BXA, no person may effect delivery or entry of the 
items into the commerce of the country where unloaded without prior 
written approval from BXA. The carrier, in ensuring that the items do 
not enter the commerce of the country, may have to place the items in 
custody, or under bond or other guaranty. In addition, the carrier must 
inform the exporter and BXA of the unscheduled unloading in a time 
frame that will enable the exporter to submit its report within 10 days 
from the date of unscheduled unloading. The exporter must within 10 
days of the unscheduled unloading report the facts to and request 
authorization for disposition from BXA using either: mail, fax, or E-
mail. The report to BXA must include:
    (A) A copy of the manifest of the diverted cargo;
    (B) Identification of the place of unloading; and
    (C) A proposal for disposition of the items and a request for 
authorization for such disposition from BXA.
    (ii) Contact information. U.S. Department of Commerce, Bureau of 
Export Administration, Office of Exporter Services, Room 1093, 14th and 
Pennsylvania Avenue, N.W., Washington, D.C. 20230; phone number 202-
482-0436; facsimile number 202-482-3322; and E-Mail address: 
[email protected].


Sec. 758.5  Destination Control Statement.

    The Destination Control Statement (DCS) must be entered on the 
invoice and on the bill of lading, air waybill, or other export control 
document that accompanies the shipment from its point of origin in the 
United States to the ultimate consignee or end-user abroad. The person 
responsible for preparation of those documents is responsible for entry 
of the DCS. The DCS is required for all exports from the United States 
of items on the Commerce Control List that are not classified as EAR99, 
unless the export may be made under License Exception BAG or GFT (see 
part 740 of the EAR). At a minimum, the DCS must state: ``These 
commodities, technology or software were exported from the United 
States in accordance with the Export Administration Regulations. 
Diversion contrary to U.S. law is prohibited.''
* * * * *

PART 762--[AMENDED]

    13. Section 762.2 is amended by:
    a. Revising the citation ``Sec. 758.1(b)(3)'' to read 
``Sec. 758.2(d)(2)(ii)'' in paragraph (b)(29);
    b. Revising the citation ``758.6'' to read ``Sec. 758.1'' in 
paragraph (b)(31);
    c. Revising paragraphs (b)(15), (b)(37), and (b)(38); and
    d. Adding a new paragraph (b)(39) to read as follows:


Sec. 762.2  Records to be retained.

* * * * *
    (b) *  *  *
    (15) Sec. 750.7, Issuance of license and acknowledgment of 
conditions;
* * * * *
    (37) Sec. 743.1, Wassenaar reports;
    (38) Sec. 748.14, Exports of firearms; and
    (39) Sec. 758.2(c), Assumption writing.

PART 772--[AMENDED]

    14. Part 772 is amended by revising the definitions of 
``Applicant'' , ``Exporter'', ``Forwarding agent'', ``Intermediate 
consignee'', ``Purchaser'', and ``Ultimate Consignee'; removing the 
definition for ``U.S. exporter'; and adding definitions for ``End-
user'', ``Order Party'', ``Other party authorized to receive license'', 
``Principal parties in interest'', and ``Routed export transaction'' in 
alphabetical order, to read as follows:
* * * * *
    Applicant. The person who applies for an export or reexport 
license, and who has the authority of a principal party in interest to 
determine and control the export or reexport of items. See Sec. 748.4 
of the EAR and definition for ``exporter'' in this part of the EAR.
* * * * *
    End-user. The person abroad that receives and ultimately uses the 
exported or reexported items. The end-user is not a forwarding agent or 
intermediary, but may be the purchaser or ultimate consignee.
* * * * *
    Exporter. The person in the United States who has the authority of 
a principal party in interest to determine and control the sending of 
items out of the United States. For purposes of completing the SED or 
filing export information on the Automated Export System (AES), the 
exporter is the U.S. principal party in interest (see Foreign Trade 
Statistics Regulations, 15 CFR part 30).
* * * * *
    Forwarding agent. The person in the United States who is authorized 
by a principal party in interest to perform the services required to 
facilitate the export of the items from the United States. This may 
include air couriers or carriers. In routed export transactions, the 
forwarding agent and the exporter may be the same for compliance 
purposes under the EAR.
* * * * *
    Intermediate consignee. The person that acts as an agent for a 
principal party in interest for the purpose of effecting delivery of 
items to the ultimate consignee. The intermediate consignee may be a 
bank, forwarding agent, or other person who acts as an agent for a 
principal party in interest.
* * * * *
    Order Party. The person in the United States who conducted the 
direct negotiations or correspondence with the foreign purchaser or 
ultimate consignee and who, as a result of these negotiations, received 
the order from the foreign purchaser or ultimate consignee.
    Other party authorized to receive license. The person authorized by 
the applicant to receive the license. If a person and address is listed 
in Block 15 of the BXA-748P Multipurpose Application Form, the Bureau 
of Export Administration will send the license to that person instead 
of the applicant. Designation of another party to receive the license 
does not alter the responsibilities of the applicant, licensee or 
exporter.
* * * * *
    Principal parties in interest. Those persons in a transaction that 
receive the primary benefit, monetary or otherwise,

[[Page 53861]]

of the transaction. Generally, the principals in a transaction are the 
seller and the buyer. In most cases, the forwarding or other agent is 
not a principal party in interest.
* * * * *
    Purchaser. The person abroad who has entered into a transaction to 
purchase an item for delivery to the ultimate consignee. In most cases, 
the purchaser is not a bank, forwarding agent, or intermediary. The 
purchaser and ultimate consignee may be the same entity.
* * * * *
    Routed export transaction. A transaction where the foreign 
principal party in interest authorizes a U.S. forwarding or other agent 
to facilitate export of items from the United States.
* * * * *
    Ultimate consignee. The principal party in interest located abroad 
who receives the exported or reexported items. The ultimate consignee 
is not a forwarding agent or other intermediary, but may be the end-
user.
* * * * *
    Dated: September 23, 1999.
R. Roger Majak,
Assistant Secretary for Export Administration.
[FR Doc. 99-25604 Filed 10-1-99; 8:45 am]
BILLING CODE 3510-33-P