[Federal Register Volume 68, Number 202 (Monday, October 20, 2003)]
[Rules and Regulations]
[Pages 59877-59880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-26282]


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DEPARTMENT OF COMMERCE

Bureau of the Census

15 CFR Part 30

[Docket Number 030820208-3208-01]
RIN 0607-AA39


Automated Export System Mandatory Filing for Exports (Reexports) 
of Rough Diamonds

AGENCY: Bureau of the Census, Commerce.

ACTION: Final rule.

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SUMMARY: The U.S. Census Bureau (Census Bureau) is amending the Foreign 
Trade Statistics Regulations (FTSR) to incorporate requirements for the 
mandatory electronic filing via the Automated Export System (AES) of 
exports of rough diamonds classified under Harmonized System 
subheadings 7102.10, 7102.21, and 7102.31 in accordance with the Clean 
Diamond Trade Act, which authorizes the President to implement the 
Kimberley Process Certification Scheme (the Kimberley Process) in the 
United States. The Kimberley Process sets forth an international 
certification scheme for trade in rough diamonds to combat the use of 
diamonds to support conflict in Africa and other world areas. This 
requirement is mandated by the Clean Diamond Trade Act. Executive Order 
13312 of July 29, 2003, implements the Clean Diamond Trade Act. This 
rule provides for AES mandatory filing in the FTSR.

EFFECTIVE DATE: This rule is effective October 20, 2003.

FOR FURTHER INFORMATION CONTACT: C. Harvey Monk, Jr., Chief, Foreign 
Trade Division, U.S. Census Bureau, Room 2104, Federal Building 3, 
Washington, DC 20233-6700, (301) 763-2255, by fax (301) 457-2645, or by 
e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Background

Reporting Requirements

    The Census Bureau is responsible for collecting, compiling, and 
publishing export trade statistics for the United States under the 
provisions of Title 13, United States Code (U.S.C.), chapter 9, section 
301. The paper Shipper's Export Declaration (SED) and the AES are the 
primary media used for collecting such trade data, and the information 
contained therein is used by the Census Bureau for statistical purposes 
only. This information is exempt from public disclosure under the 
provisions of Title 13, U.S.C., chapter 9, section 301(g). The SED and 
AES records also are used for export control purposes under Title 50, 
U.S.C., and Title 22, U.S.C., to detect and prevent the export of 
certain critical or sensitive commodities to unauthorized destinations 
or end-users.

Conflict Diamonds

    On December 1, 2000, the United Nations General Assembly adopted 
Resolution 55/56. Provisions of Resolution 55/56 charged the 
international community with developing proposals and procedures to 
address the potential negative impact of illicit trade in rough 
diamonds on world peace, safety, and security. Trade in rough diamonds 
has in the past been linked to the finance of armed conflicts in 
certain world areas, specifically in some African nations (referred to 
as ``conflict'' diamonds). Funds derived from the sale of rough 
diamonds have been used by rebel groups to finance military activities, 
overthrow legitimate governments, commit atrocities against unarmed 
civilians, and subvert international efforts to promote peace and 
stability within and among the governments of nations.
    This trade, if allowed to continue, poses a serious threat to the 
economies of many producing, processing, exporting, and importing 
states. Representatives of nations with a stake in resolving the 
problem of ``conflict'' diamonds, including the United States, along 
with members of the diamond industry and concerned nongovernmental 
institutions, have worked together for nearly 3 years to develop a 
certification scheme, designed to control the worldwide movement of 
illicit rough diamonds. This process, which culminated in the 
Interlaken Declaration of November 5, 2002, launched the Kimberley 
Process. Under the Kimberley Process, participating nations or 
entities, in cooperation with industry, will establish internal control 
systems designed to eliminate ``conflict'' diamonds from shipments of 
rough diamonds imported into and exported from their territories.
    Public Law 108-19, April 25, 2003, 117 stat. 631, known as the 
``Clean Diamond Trade Act,'' implements the Kimberley Process in the 
United States by authorizing the President to prohibit the importation 
into or the exportation from the United States of any rough diamond, 
from whatever source, unless the rough diamond is controlled through 
the Kimberley Process Certification Scheme. Executive Order 13312, 
signed on July 29, 2003, implements these prohibitions, effective July 
30, 2003. In accordance with section 15 of the Clean Diamond Trade Act, 
the President certified in a letter to Congress on July 29, 2003, that 
an applicable waiver granted by the World Trade Organization is in 
effect until December 31, 2006.
    Section 6 of Public Law 108-19 names the Census Bureau as the 
exporting authority for the purposes of the Clean Diamond Trade Act. 
This requires the Census Bureau to validate the Kimberley Process 
Certificate (the Certificate) for exports of rough diamonds by 
verifying that an Internal Transaction Number (ITN) provided by the AES 
is shown on the Certificate. The ITN is the confirmation number 
provided by the AES when the data transmission for exports of rough 
diamonds is accepted. Shipments of rough diamonds from the United 
States must also meet additional Department of the Treasury exporting 
requirements identified in the Office of Foreign Assets Control's 
(OFAC) Rough Diamonds Control Regulations, Title 31, Code of Federal 
Regulations (CFR), part 592. Section 8 of Public Law 108-19 authorizes 
the Bureau of Customs and Border Protection and the Bureau of 
Immigration and Customs Enforcement to enforce the provisions of the 
Clean Diamond Trade Act. OFAC also has enforcement authority pursuant 
to

[[Page 59878]]

section 5(a) of the Clean Diamond Trade Act and the Rough Diamonds 
Control Regulations (31 CFR part 592).

Program Requirements

    To comply with the requirements of the Act and Executive Order 
13312, which implements the Clean Diamond Trade Act, the Census Bureau 
is amending the appropriate sections of the FTSR to specify the 
requirements for the mandatory electronic filing via the AES for 
exports of rough diamonds.
    The Census Bureau is revising the following sections of the FTSR:
    [sbull] Section 30.1 is amended to require mandatory filing via AES 
for exports of rough diamonds;
    [sbull] Section 30.2 is amended to stipulate that electronic SED 
filing through the AES is subject to export control regulations;
    [sbull] Section 30.55 is amended to require filing through AES for 
all exports of rough diamonds regardless of value;
    [sbull] Section 30.58 is amended to require filing through AES for 
exports of rough diamonds destined for Canada;
    [sbull] Section 30.60 is amended to require mandatory participation 
in the AES for filers of information on exports of rough diamonds;
    [sbull] Section 30.61 is amended to require full reporting, that 
is, reporting of all required information under the AES filing Option 
2, prior to exportation for shipments of rough diamonds;
    [sbull] Section 30.63 is amended to specify the Harmonized System 
subheadings for rough diamond exports subject to the Clean Diamond 
Trade Act and the Rough Diamonds Control Regulations (31 CFR part 592) 
and required to be reported through the AES;
    [sbull] Section 30.65 is amended to specify the requirements for 
annotating commercial documents with the proper proof of filing 
citation when exports of rough diamonds are filed through the AES, and 
to require the reporting of an AES confirmation number on the Kimberley 
Process Certificate; and
    [sbull] Section 30.95 is amended to specify penalty provisions 
mandated by the Clean Diamond Trade Act.
    The Departments of State and Homeland Security concur with the 
provisions contained in this notice of final rulemaking.

Rulemaking Requirements

Administrative Procedure Act

    Executive Order 13312 addresses further threats to international 
peace and security by the trade in conflict diamonds and implements 
Public Law 108-19, the Clean Diamond Trade Act. This final rule is 
issued in response to Public Law 108-19 and is exempt from requirements 
of section 553 of the Administrative Procedures Act because it deals 
with a foreign affairs function of the United States (5 U.S.C. 553 
(a)(1)). Therefore, the Census Bureau is not required to solicit public 
comment on this rule or provide a delay in the rule's effective date. 
No other law requires a notice of proposed rulemaking and an 
opportunity for public comment on this rule.

Regulatory Flexibility Act

    Because a notice and opportunity for public comment are not 
required by 5 U.S.C. 553, or any other law for a rule regarding a 
foreign affairs function, a Regulatory Flexibility Analysis is not 
required and has not been prepared (5 U.S.C. 603 (a)).

Paperwork Reduction Act

    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall a person be subject to a penalty for failure 
to comply with, a collection of information subject to the requirements 
of the Paperwork Reduction Act (PRA), unless that collection of 
information displays a current, valid Office of Management and Budget 
(OMB) control number. In accordance with the PRA, 44 U.S.C., chapter 
35, OMB has approved on July 22, 2003, with control number 0607-0152, 
the collection of all information associated with the AES and the SED 
under this rule. We estimate that each electronic SED will take 
approximately 3 minutes to complete; we estimate that each paper SED 
will take approximately 11 minutes to complete. A decrease of 31 burden 
hours accounts for the difference in time it takes to complete an AES 
transaction versus filling out a paper SED.

Executive Order 12866

    This rule has been determined to be significant for purposes of 
Executive Order 12866.

List of Subjects in 15 CFR Part 30

    Economic statistics, foreign trade, exports, reporting and 
recordkeeping requirements.

0
For the reasons set out in the preamble, title 15 CFR part 30, is 
amended as follows:

PART 30--FOREIGN TRADE STATISTICS

0
1. Revise the authority citation for part 30 to read as follows:

    Authority: 5 U.S.C. 301; 13 U.S.C. 301-307; 19 U.S.C. 3901-3913; 
Reorganization Plan 5 of 1950 (3 CFR 1949-1953 Comp., 1004); E.O. 
13312; and Department of Commerce Organization Order No. 35-2A, July 
22, 1987, as amended, and No. 35-2B, December 20, 1996, as amended.

Subpart A--General Requirements--U.S. Principal Party in Interest 
(USPPI)

0
2. In Sec.  30.1, revise paragraph (c) to read as follows:


Sec.  30.1  General statement of requirement for Shipper's Export 
Declarations.

* * * * *
    (c) In lieu of filing paper SEDs as provided elsewhere in this 
section, when an SED would be required, the USPPI or the authorized 
agent is required to file shipper's export information electronically 
through the AES for the export of items identified on the CCL of the 
EAR (15 CFR Supp. No. 1 to part 774) or the USML of the ITAR (22 CFR 
part 121) as provided for in subpart E of this part, Electronic Filing 
Requirements--Shipper's Export Information. Information for items 
identified on the USML, including those exported under an export 
license exemption, must be filed electronically prior to export, unless 
exempted from the AES filing requirement by the State Department. For 
USML shipments, refer to the ITAR (22 CFR parts 120-130) for 
requirements concerning the AES proof of filing citation and filing 
time requirements. USPPIs or their authorized agents are required to 
file export information through the AES for shipments of rough diamonds 
classified under Harmonized System subheadings 7102.10, 7102.21, and 
7102.31 and exported (reexported) in accordance with the Clean Diamond 
Trade Act and the Rough Diamonds Control Regulations (31 CFR part 592) 
as provided for in subpart E of this part. Use of the SED form is not 
permitted for reporting exports of rough diamonds. Entities serving as 
data entry and other forms of processing centers are not authorized to 
either collect or file export information on shipments of rough 
diamonds using any export reporting option. The USPPI or the authorized 
agent filing SEDs for the export of items not on the CCL, the USML, or 
exported (reexported) under the provisions of the Clean Diamond Trade 
Act and the Rough Diamonds Control Regulations (31 CFR part 592) has 
the option of filing this information electronically as provided for in 
subpart E of this part.
* * * * *

0
3. In Sec.  30.2, add paragraph (c) to read as follows:


Sec.  30.2  Related export control requirements.

* * * * *

[[Page 59879]]

    (c) Export shipments to all foreign destinations, including those 
filed electronically through the AES, are subject to export control 
regulations. This applies to mandatory, as well as voluntary AES 
filing. Executive Order 13312, signed July 29, 2003, implements the 
Clean Diamond Trade Act, which authorizes the President to implement 
the Kimberley Process Certification scheme in the United States. The 
Kimberley Process was developed to stem the worldwide movement of rough 
diamond exports linked to the finance of armed conflicts in certain 
world areas (``conflict'' diamonds), specifically in some Southern 
African countries. The Kimberley Process Certificate serves as the 
mechanism to verify the absence of ``conflict'' diamonds from diamonds 
exported (reexported) from the United States.

Subpart D--Exemptions From the Requirements for the Filing of 
Shipper's Export Declarations

0
4. In Sec.  30.55, add paragraph (h)(2)(vi) to read as follows:


Sec.  30.55  Miscellaneous exemptions.

* * * * *
    (h) * * *
    (2) * * *
    (vi) Classified as rough diamonds under 6-digit Harmonized System 
subheadings 7102.10, 7102.21, and 7102.31, regardless of value.
* * * * *

0
5. Amend Sec.  30.58 as follows:
0
a. Redesignate current paragraph (c)(6) as paragraph (c)(7).
0
b. Add a new paragraph (c)(6).
    The addition reads as follows:


Sec.  30.58  Exemptions for shipments from the United States to Canada.

* * * * *
    (c) * * *
    (6) Shipments of rough diamonds exported (reexported) to Canada for 
use or consumption in Canada.
* * * * *

Subpart E--Electronic Filing Requirements--Shipper's Export 
Information

0
6. In Sec.  30.60, add a new second sentence to paragraph (a) to read 
as follows:


Sec.  30.60  General requirements for filing export and manifest data 
electronically using the Automated Export System (AES).

* * * * *
    (a) Participation. * * * Filing using the AES also is mandatory for 
all exports (reexports) of rough diamonds regardless of destination, 
method of transport, or value. * * *
* * * * *

0
7. In Sec.  30.61, add sentence (a)(5) to read as follows:


Sec.  30.61  Electronic filing options.

* * * * *
    (a) * * *
    (5) Shipments of rough diamonds exported (reexported) in accordance 
with the Clean Diamond Trade Act and the Rough Diamonds Control 
Regulations (31 CFR part 592).
* * * * *

0
8. In Sec.  30.63, add a sentence after the second sentence of 
paragraph (a)(12) to read as follows:


Sec.  30.63  Information required to be reported electronically through 
AES (data elements).

* * * * *
    (a) * * *
    (12) * * * Shipments of rough diamonds at the 10-digit Schedule B 
level that are classified under 6-digit Harmonized System subheadings 
7102.10, 7102.21, and 7102.31 must be reported electronically through 
the AES. * * *
* * * * *

0
9. Amend Sec.  30.65 as follows:
0
a. Revise paragraphs (b) introductory text and (b)(1).
0
b. Redesignate current paragraph (b)(2) as paragraph (b)(4).
0
c. Add new paragraphs (b)(2) and (b)(3).
    The additions and revisions read as follows:


Sec.  30.65  Annotating the proper exemption legends or proof of filing 
citations for shipments transmitted electronically.

    (a) * * *
    (b) The USPPI or the authorized agent is responsible for annotating 
the proper exemption legend or proof of filing citation on the bill of 
lading, air waybill, or other commercial loading document for 
presentation to the carrier prior to tendering the cargo to the 
exporting carrier. The carrier is responsible for transmitting the 
appropriate exemption legend or proof of filing citation to the CBP 
Port Director at the port of exportation as stated in Sec.  30.21 and 
Sec.  30.22 of this part. Such transmittal shall be without material 
change or amendment of the exemption legend or proof of filing citation 
as provided to the carrier by the USPPI or the authorized agent. The 
exemption legend or proof of filing citation will identify that the 
shipment information has been accepted as transmitted and 
electronically filed using the AES. The exemption legend or proof of 
filing citation must appear on the bill of lading, air waybill, or 
other commercial loading documentation and the manifest and must be 
clearly visible and include any of the following:
    (1) The exemption legend or proof of filing citation will include 
the statement, ``NO SED REQUIRED--AES,'' followed by the filer's 
identification number and a unique shipment reference number referred 
to as the External Transaction Number (XTN) or the returned 
confirmation number provided by AES when the transmission is accepted, 
referred to as the Internal Transaction Number (ITN).
    (2) Shipments of USML articles must meet the predeparture reporting 
requirements in the ITAR (22 CFR parts 120-130).
    (3) For shipments of rough diamonds, the proof of filing citation 
shall include the statement, ``NO SED REQUIRED--AES,'' followed by the 
returned confirmation number provided by the AES when the transmission 
is accepted, referred to as the ITN. The ITN is required to be shown on 
the Kimberley Process Certificate for all exports (reexports) of rough 
diamonds to certify that the diamonds have been controlled through the 
Kimberley Process Certification Scheme, as defined in section 3 of 
Public Law 108-19 of the Clean Diamond Trade Act and implemented in the 
Rough Diamonds Control Regulations (31 CFR part 592).

Subpart H--General Administrative Provisions

0
10. Revise Sec.  30.95 to read as follows:


Sec.  30.95  Penalties for violations.

    (a) Exports (reexports) of rough diamonds.
    The Clean Diamond Trade Act, section 8(c), authorizes the Bureau of 
Customs and Border Protection (CBP) and the Bureau of Immigration and 
Customs Enforcement (BICE), as appropriate, to enforce the laws and 
regulations governing exports of rough diamonds, including with respect 
to the validation of the Kimberley Process Certificate by the exporting 
authority. The Treasury Department's Office of Foreign Assets Control 
(OFAC) also has enforcement authority pursuant to section 5(a) of the 
Clean Diamond Trade Act (the Act), Executive Order 13312, and the Rough 
Diamonds Control Regulations (31 CFR part 592). The CBP, the BICE, and 
OFAC, pursuant to section 5(a) of the Act, are further authorized to 
enforce provisions of section 8(a) of the Act that provide for the 
following civil and criminal penalties:

[[Page 59880]]

    (1) A civil penalty not to exceed $10,000 may be imposed on any 
person who violates, or attempts to violate, any order or regulation 
issued under the Act.
    (2) A criminal penalty not to exceed $50,000, or;
    (i) If a natural person, imprisonment for not more than 10 years, 
or both, may be imposed for willful violation of any license, order, or 
regulation issued under the Act.
    (ii) If a corporation, imprisonment for not more than 10 years, or 
both may be imposed on any officer, director, or agent of the 
corporation for willful violation of any license, order, or regulation 
issued under the Act.
    (b) Exports of other than rough diamonds. Any person who violates 
any provisions of this part, except for violations of the provisions 
relating to delayed filing of documents under bond as provided by Sec.  
30.24 and violations of section 8 of Public Law 108-19, the Clean 
Diamond Trade Act, shall be liable to the United States in an amount 
not exceeding $1,000 for each violation, as authorized by section 305, 
chapter 9, title 13 U.S.C.

    Dated: October 10, 2003.
Charles Louis Kincannon,
Director, Bureau of the Census.
[FR Doc. 03-26282 Filed 10-17-03; 8:45 am]
BILLING CODE 3510-07-P