14 January 1999
Source: http://www.access.gpo.gov/su_docs/aces/aaces002.html

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[Federal Register: January 14, 1999 (Volume 64, Number 9)]
[Rules and Regulations]
[Page 2429-2431]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14ja99-5]

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DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Parts 740, 742, and 748

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


Exports of High Performance Computers Under License Exception CTP

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Interim rule with request for comments.

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

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

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

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

SUPPLEMENTARY INFORMATION:

Background

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

Savings Clause

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

Rulemaking Requirements

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

[[Page 2430]]

that collection of information displays a currently valid OMB Control
Number. This rule involves collections of information subject to the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). These
collections have been approved by the Office of Management and Budget
under control number 0694-0088, ``Multi-Purpose Application,'' which
carries a burden hour estimate of 52.5 minutes per submission and
control number 0694-0107, ``National Defense Authorization Act,''
Advance Notifications and Post-Shipment Verification reports. Reports
in support of Post-Shipment Verifications require 15 minutes per
submission, whether the Post-Shipment Verification is conducted on an
export authorized under a license or License Exception CTP. In
addition, this rule contains a new collection of information
requirement approved under control number 0694-0112, which carries a
burden hour estimate of 15 minutes per submission for obtaining and
maintaining the PRC End-Use Certificate for License Exception CTP
shipments. An additional 1 minute per submission is needed for
recordkeeping. Comments are invited on: (a) Whether the collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information shall have practical
utility; (b) the accuracy of the agency's estimate of the burden of the
proposed collection of information; (c) ways to enhance the quality,
utility, and clarity of the information to be collected; and (d) ways
to minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques or other
forms of information technology. Comments regarding these burden
estimates or any other aspect of the collection of information,
including suggestions for reducing the burdens, should be forwarded to
Patricia Muldonian, Regulatory Policy Division, Office of Exporter
Services, Bureau of Export Administration, Department of Commerce, P.O.
Box 273, Washington, DC 20044, and David Rostker, Office of Management
and Budget, OMB/OIRA, 725 17th Street, NW, NEOB Rm. 10202, Washington,
DC 20503.
    3. This rule does not contain policies with Federalism implications
sufficient to warrant preparation of a Federalism assessment under
Executive Order 12612.
    4. The provisions of the Administrative Procedure Act (5 U.S.C.
553) requiring notice of proposed rulemaking, the opportunity for
public participation, and a delay in effective date, are inapplicable
because this regulation involves a military and foreign affairs
function of the United States (Sec. 5 U.S.C. 553(a)(1)). Further, no
other law requires that a notice of proposed rulemaking and an
opportunity for public comment be given for this interim rule. Because
a notice of proposed rulemaking and an opportunity for public comment
are not required to be given for this rule under 5 U.S.C. 553 or by any
other law, the analytical requirements of the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.) are not applicable.
    However, because of the importance of the issues raised by these
regulations, this rule is being issued in interim form and comments
will be considered in the development of final regulations.
    Accordingly, the Department encourages interested persons who wish
to comment to do so at the earliest possible time to permit the fullest
consideration of views.
    The period for submission of comments will close March 1, 1999. The
Department will consider all comments received before the close of the
comment period in developing final regulations. Comments received after
the end of the comment period will be considered if possible, but their
consideration cannot be assured. The Department will not accept public
comments accompanied by a request that a part or all of the material be
treated confidentially because of its business proprietary nature or
for any other reason. The Department will return such comments and
materials to the persons submitting the comments and will not consider
them in the development of final regulations. All public comments on
these regulations will be a matter of public record and will be
available for public inspection and copying. In the interest of
accuracy and completeness, the Department requires comments in written
form.
    Oral comments must be followed by written memoranda, which will
also be a matter of public record and will be available for public
review and copying. Communications from agencies of the United States
Government or foreign governments will not be available for public
inspection.
    The public record concerning these regulations will be maintained
in the Bureau of Export Administration Freedom of Information Records
Inspection Facility, Room 4525, Department of Commerce, 14th Street and
Pennsylvania Avenue, NW, Washington, DC 20230. Records in this
facility, including written public comments and memoranda summarizing
the substance of oral communications, may be inspected and copied in
accordance with regulations published in part 4 of Title 15 of the Code
of Federal Regulations. Information about the inspection and copying of
records at the facility may be obtained from Margaret Cornejo, Bureau
of Export Administration Freedom of Information Officer, at the above
address or by calling (202) 482-5653.

List of Subjects

15 CFR Parts 740 and 748

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

15 CFR Part 742

    Exports, Foreign trade, Terroism.

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

    Authority: 50 U.S.C. app. 4201 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; Notice of August
15, 1995, 3 CFR, 1995 Comp. 501 (1996); notice of August 14, 1996
(61 FR 42527, August 15, 1996); Notice of August 13, 1997 (62 FR
43629, August 15, 1997); P.L. 105-85, 111 Stat. 1629; and Notice of
August 13, 1998 (63 FR 44121).

    2. The authority citation for part 742 is revised to read as
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
18 U.S.C. 2510 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a;
E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 3
CFR, 1993 Comp., p. 608; E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp.,
p. 917; E.O. 12938, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 3 CFR,
1996 Comp. p. 219; E.O. 13026, 3 CFR, 1996 Comp., p. 228; Notice of
August 13, 1997 (62 FR 43629, August 15, 1997); and Notice of August
13, 1998 (63 FR 44121).

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

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

PART 740--[AMENDED]

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

[[Page 2431]]

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

Sec. 740.7  Computers (CTP).

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

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

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

PART 742--[AMENDED]

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

Sec. 742.12  High performance computers.

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

PART 748--[AMENDED]

Sec. 748.9  [Amended]

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

Sec. 748.10  Import and End-User Certificates.

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

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