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SUMMARY:TheBureauofIndustryandSecurity(BIS)proposestoexpandtheavailabilityof $D # licenseexceptionsforexportsand_reexports_Ԁofcomputertechnologyandsoftware,and &"% microprocessortechnologyontheCommerceControlList(CCL)oftheExportAdministration (#' Regulations(EAR)underExportClassificationControlNumbers(_ECCNs_)3E002,4D001and |*%) _4E001.TheseECCNscontroltechnologyandsoftwarethatcanbeusedforthedevelopment, d production,oruseofcomputers,anddevelopmentandproductionofmicroprocessors.Thegoal < ofthisproposedruleistosolicitpubliccommentstoassistBISinevaluatingtheeffectofthe   proposedamendments.Inaddition,thisproposedrulerequestsindustrytosuggestalternatives   foradifferentmethodorparameterforcontrollingexportsofcomputersandmicroprocessors,  ` andthetechnologyandsoftwaretherefore. 8  DATES:CommentsmustbereceivedbyNovember24,2003. L  ADDRESSES:Writtencomments(fourcopies)shouldbesenttoSharronCook,Regulatory  PolicyDivision,OfficeofExporterServices,BureauofIndustryandSecurity,Departmentof p Commerce,14thandPennsylvaniaAvenue,N.W.,P.O.Box273,Room2705,Washington,D.C. H 20230;oronecopyEMailedto:4g O  5  scook@bis.doc.gov;6s O   7 l Ԁorfaxedto2024823355.   FORFURTHERINFORMATIONCONTACT:SharronCook,SeniorExportPolicyAnalyst, 4  OfficeofExporterServices,RegulatoryPolicyDivision,BureauofIndustryandSecurity,  " Telephone:(202)4822440. #  SUPPLEMENTARYINFORMATION '0!$ Background l)#& TheBureauofIndustryandSecurity(BIS)proposestoexpandlicenseexceptionavailability D+$( undertheExportAdministrationRegulations(EAR)forcertainexportsofcomputertechnology -&* & ,/,   andsoftwareandmicroprocessortechnology.IndustryhasrequestedthatBISraisethe t CompositeTheoreticalPerformance(CTP)eligibilitylevelforcomputerandmicroprocessor L  technologyandsoftwaretocorrespondwiththatforequipment,inordertoenablecompaniesto $  provideaccesstothistechnologyandsoftwaretoforeignnationalsworkingintheirU.S.and   foreignfacilities. ` ComputerTechnologyandSoftware   TheEARcontroltheexportandreexportoftechnologyandsoftwareforthedevelopment, 4 production,oruseofcomputerswithaCTPgreaterthan28,000MillionsofTheoretical   OperationsperSecond(MTOPS)underExportControlClassificationNumbers(ECCNs)4D001 p and4E001oftheCommerceControlList(CCL).Suchtechnologyandsoftwarerequiresa H license,fornationalsecurity(NS)reasons,toalldestinationsexceptCanada.However,ECCNs   4D001and4E001providethatLicenseExceptionTSR(section740.6oftheEAR)isavailable l forexportsandreexportsofsuchtechnologyandsoftware:1)forcomputersofunlimitedCTPto D! 22countries;and2)forcomputerswithaCTPlessthanorequalto33,000MTOPStocountries # listedinCountryGroupB(SupplementNo.1topart740).LicenseExceptionTSRavailability $  forcomputersoftwareandtechnologyisinconsistentwithLicenseExceptionCTPavailability &X" forcomputerhardwareintwoways:1)thecountrieseligible;and2)theMTOPSlevel. (0!$ OnJune4,2002,BISpublishedanoticeofinquiry(67FR39675),requestinginformationfrom T,$( industrytoassistBISinevaluatingthelicenseexceptioneligibilitylevelof33,000MTOPSfor t exportsandreexportsofcomputertechnologyandsoftwarecontrolledunderECCNs4D001and L  4E001.BISreceivedfourcommentsinresponsetothenoticeofinquiry,allstatingthatthe $  licenseexceptionthresholdshouldbeadjusted.   ThisproposedrulewouldremoveLicenseExceptionTSReligibilityforcertaincomputer 8  technologyandsoftwareunderECCNs4D001and4E001,butwouldmakethiscomputer   technologyandsoftwareeligibleforLicenseExceptionCTP(section740.7oftheEAR). \  LicenseExceptionCTPcurrentlyonlyappliestocomputerhardwareclassifiedunderECCN 4 4A003.The22countriesthatarecurrentlyeligibletoreceivetechnologyandsoftwarefor   computerswithunlimitedCTPunderLicenseExceptionTSRwouldcontinuetobeeligiblefor p thesame,unlimitedleveloftechnologyandsoftwareunderLicenseExceptionCTP.Allofthese H 22countriesarein ComputerTier1forpurposesofLicenseExceptionCTP.Technologyand   softwareforcomputerswithaCTPequaltoorlessthan150,000MTOPSforexportorreexport l toComputerTier1destinationsotherthanthese22countrieswouldbeeligibleforLicense D! ExceptionCTP.TechnologyandsoftwareforcomputerswithaCTPequaltoorlessthan # 75,000MTOPSwouldbeeligibleforLicenseExceptionCTPto ComputerTier3 $  destinations.ExportsandreexportstocountriesinCountryGroupE:1(terroristsupporting &X" countries)willcontinuetobeineligibleforLicenseExceptionCTP.Thefollowingchartshows (0!$ theproposedeligibilitythresholdsunderLicenseExceptionCTP.     |*#&  T,$( Ї  Ӏ YX|0XXX|0ProposedComputerTechnologyandSoftwareeligibilitythresholds t underLicenseExceptionCTP  T  *hfnddd Xdd Xdd X(#(#,edd ,dd +  , ,  Unlimited   CTP  h  #X|0XXYX|0#XyXXX|022 Tier1"countries:Australia,Austria,Belgium,Canada,Denmark,Finland,   France,Germany,Greece,Ireland,Italy,Japan,Luxembourg,theNetherlands, h   NewZealand,Norway,Portugal,Spain,Sweden,Switzerland,Turkey,andthe @  UnitedKingdom#X|0XXXy #XX|0XXX|0.#X|0XXXX|0"#    150,000 d MTOPS   < XX|0XXX|0Allother Tier1"countries:AntiguaandBarbuda,Argentina,Bahamas, d Bangladesh,#X|0XXXX|0"#XX|0XXX|0ԀBarbados,Belize,Benin,Bhutan,Bolivia,Botswana,Brazil,  < Brunei,BurkinaFaso,Burma,Burundi,Cameroon,CapeVerde,CentralAfrican   Republic,Chad,Chile,Colombia,Congo,CostaRica,Coted'Ivoire,Cyprus, `   CzechRepublic,#X|0XXXX|0_##XX|0XXX|0Dominica,DominicanRepublic,Ecuador,ElSalvador, 8  EquatorialGuinea,Eritrea,Estonia,Ethiopia,Fiji,Gabon,#X|0XXXX|0$#XX|0XXX|0ԀGambia(The),   Ghana,Grenada,Guatemala,Guinea,GuineaBissau,Guyana,Haiti,Honduras, t  HongKong,Hungary,Iceland,Indonesia,Jamaica,Kenya,Kiribati,Korea L  (Republicof),Latvia,Lesotho,Liberia,Liechtenstein,Lithuania,Madagascar, $ Malawi,Malaysia,Maldives,Mali,Malta,MarshallIslands,Mauritius,Mexico, p Micronesia(FederatedStatesof),Monaco,Mozambique,Namibia,Nauru, H Nepal,Nicaragua,Niger,Nigeria,Palau,Panama,PapuaNewGuinea,Paraguay,   Peru,Philippines,Poland,Romania,Rwanda,St.Kitts&Nevis,St.Lucia,St.  VincentandGrenadines,SaoTome&Principe,SanMarino,Senegal, \ Seychelles,SierraLeone,Singapore,Slovakia,Slovenia,SolomonIslands, !4   Somalia,SouthAfrica,SriLanka,Surinam,Swaziland,Taiwan,Tanzania,Togo, # " Tonga,Thailand,TrinidadandTobago,Tuvalu,Uganda,Uruguay,Vatican X%$ City,Venezuela,WesternSahara,WesternSamoa,Zaire,Zambia,and 0'& Zimbabwe.#X|0XXXX|0%#  )!( 75,000 d MTOPS   < XX|0XXX|0All Tier3"countries:Afghanistan,Albania,Algeria,Andorra,Angola, d Armenia,Azerbaijan,Bahrain,Belarus,Bosnia&Herzegovina,Bulgaria,  <  Cambodia,China(People'sRepublicof),Comoros,Croatia,Djibouti,Egypt,   Georgia,India,Israel,Jordan,Kazakhstan,Kuwait,Kyrgyzstan,Laos,Lebanon, `   Macau,Macedonia(TheFormerYugoslavRepublicof),Mauritania,Moldova, 8  Mongolia,Morocco,Oman,Pakistan,Qatar,Russia,SaudiArabia,Tajikistan,   Tunisia,Turkmenistan,Ukraine,UnitedArabEmirates,Uzbekistan,Vanuatu, t  Vietnam,Yemen,andFederalRepublicofYugoslavia(SerbiaandMontenegro). L  #X|0XXXX|0*#Ԁ  $ noteligible   Cuba,Iran,Iraq,Libya,NorthKorea,Sudan,andSyria.   MicroprocessorTechnology \ TechnologyforthedevelopmentandproductionofmicroprocessorsthathaveaCTPexceeding 4 530MTOPSandanarithmeticlogicunitwithanaccesswidthof32bitsormorearecontrolled !  byECCN3E002.LicenseExceptionTSRisavailablefortheexportandreexportoftechnology X#  formicroprocessorsofunlimitedCTPtooccurtoallCountryGroupBcountries(seeSupplement 0%" No.1topart740oftheEAR),ifallthecriteriaofLicenseExceptionTSRaremet(seesection '$ 740.6oftheEARforLicenseExceptionTSRrequirements). (l!& Thisruleproposestomaketechnologyforthedevelopmentandproductionofmicroprocessors ,%* alsoeligibleforLicenseExceptionCIV.ThethresholdforeligibilitywouldbelimitedbyCTPat t alevelthatisyettobedetermined.LicenseExceptionCIVisavailableforexportsand L  reexportsofitemsthatrequirealicensefornationalsecurityreasonsonlythataredestinedto $  civilendusersforcivilendusesinCountryGroupD:1,exceptNorthKorea.CIVmaynotbe   usedforexportsandreexportstomilitaryendusersortoknownmilitaryuses.Inadditionto ` conventionalmilitaryactivities,militaryusesincludeanyproliferationactivitiesdescribedin 8  part744oftheEAR.Itshouldbenotedthatalicenseisalsorequiredfortransferofitems   exportedunderLicenseExceptionCIVtomilitaryendusersorenduseswithinCountryGroup \  D:1countries. 4 RequestforComments p ThegoalsofthisproposedrulearetosolicitpubliccommentstoassistBISinevaluatingthe H effecttheproposedamendmentstoexpandlicenseexceptionavailabilitywouldhaveonindustry,   andtodiscoverwhetherindustrywouldsuggestadifferentmethodorparameterforcontrolling l exportsofcomputersandmicroprocessors,andthetechnologyandsoftwaretherefor.Toensure D! maximumpublicparticipationinthereviewprocess,commentsaresolicitedforthenext30days. # Inparticular,BISisinterestedincommentsrelatingtothefollowing: $     `     h      p 1.Whatimpactwouldtheproposedrevisionofcomputertechnologyandsoftwarecontrolshave (0!$ onyourcompany? |*#&  T,$( 2.Isthereanotherproposalregardingcomputertechnologyandsoftware,andmicroprocessor t technologycontrolsthatyouwouldlikeCommercetoconsider?Ifso,describeyourproposalin L  detailandpleasegivetechnicalandotherjustificationsforyourproposal. $  3.WhatisthehighestCTPlevelformicroprocessorscurrentlybeingmanufacturedbyyour ` company? 8  4.WhatshouldbetheCTPMTOPSlimitationformicroprocessortechnologyunderthe \  proposedLicenseExceptionCIV?Pleaseprovidedetailedtechnicalandotherjustificationfor 4 yourproposal.   5.Howdoothercountrieslicensethetransferofcomputertechnologyandsoftware,and H microprocessortechnology?Havetherebeeninstanceswhereyourcompanyhasbeenplacedata   competitivedisadvantagebasedoncurrentU.S.licenserequirements? l 6.WhatareyourpredictionsfortheCTPlevelofmicroprocessorsthatwillbeinproduction3 # and5yearsfromnow?Onwhatbasisdidyoumakeyourpredictions? $  7.Whatpercentageofyourresearchanddevelopmentisaccomplished:1)outsideoftheUnited (0!$ States;and2)withtheassistanceofforeignnationalswithintheUnitedStates? |*#&  T,$( 8.Isthereanalternativemethodorparameterforcontrollingexportsofcomputersand t microprocessorsandthetechnologyandsoftwarethereforethatindustrybelieveswouldbemore L  inlinewiththewayindustryproduces,develops,ormeasurestheseitems? $  Partiessubmittingcommentsareaskedtobeasspecificaspossible.TheDepartmentencourages ` interestedpersonswhowishtocommenttodosoattheearliestpossibletime. 8  TheperiodforsubmissionofcommentswillcloseNovember24,2003.TheDepartmentwill \  considerallcommentsreceivedbeforethecloseofthecommentperiodindevelopingfinal 4 regulations.Commentsreceivedaftertheendofthecommentperiodwillbeconsideredif   possible,buttheirconsiderationcannotbeassured.TheDepartmentwillnotacceptcomments p accompaniedbyarequestthatapartorallofthematerialbetreatedconfidentiallybecauseofits H businessproprietarynatureorforanyotherreason.TheDepartmentwillreturnsuchcomments   andmaterialstothepersonssubmittingthecommentsandwillnotconsidertheminthe l developmentoffinalregulations.Allcommentsontheseregulationswillbeamatterofpublic D! recordandwillbeavailableforpublicinspectionandcopying.TheDepartmentrequires # commentsbesubmittedinwrittenform. $  ThepublicrecordconcerningthesecommentswillbemaintainedXyXXX|0intheBureauofIndustryand (0!$ Security,OfficeofAdministration,U.S.DepartmentofCommerce,Room6883,14thand |*#& ConstitutionAvenue,NW,Washington,DC20230;(202)482-0637.Thiscomponentdoesnot T,$( maintainaseparatepublicinspectionfacility.RequestersshouldfirstviewBIS'sFOIAwebsite t (whichcanbereachedthroughhttp://www.bis.doc.gov/foia).Iftherecordssoughtcannotbe L  locatedatthissite,oriftherequesterdoesnothaveaccesstoacomputer,pleasecallthephone $  numberaboveforassistance.#X|0XXXyE#   XyXXX|0AlthoughtheExportAdministrationActexpiredonAugust20,2001,ExecutiveOrder13222of 8  August17,2001#X|0XXXyH#Ԁ(3CFR,2001Comp.,p.783(2002)),asextendedbytheNoticeXyXXX|0ofAugust14,   2002(3CFR,2002Comp.,p.306(2003)),#X|0XXXyI#ԀcontinuestheRegulationsineffectunderthe \  InternationalEmergencyEconomicPowersAct. 4  RulemakingRequirements  p   1.ThisproposedrulehasbeendeterminedtobenotsignificantforpurposesofE.O. H 12866.     2.Notwithstandinganyotherprovisionoflaw,nopersonisrequiredtorespondto,nor D! shallanypersonbesubjecttoapenaltyforfailuretocomplywithacollectionofinformation, # subjecttotherequirementsofthePaperworkReductionAct(PRA),unlessthatcollectionof $  informationdisplaysacurrentlyvalidOMBControlNumber.YX|0XXX|0Ԁ#X|0XXYX|0L#ԀThisregulationinvolves &X" collectionspreviouslyapprovedbytheOfficeofManagementandBudgetundercontrolnumbers (0!$ 06940088, MultiPurposeApplication,whichcarriesaburdenhourestimateof45minutesper |*#& manualsubmissionand40minutesperelectronicsubmission.Miscellaneousandrecordkeeping T,$( activitiesaccountfor12minutespersubmission.eX|0XXX|0 t #X|0XXeX|0N#  3.ThisruledoesnotcontainpolicieswithFederalismimplicationsasthistermisdefined $  inExecutiveOrder13132.     4.XyXXX|0Pursuantto5U.S.C.553(b)(A),theprovisionsoftheAdministrativeProcedureAct 8  requiringanoticeofproposedrulemakingandtheopportunityforpubliccommentarewaived,   becausethisregulationinvolvesageneralstatementofpolicyandruleofagencyprocedure.No \  otherlawrequiresthatanoticeofproposedrulemakingandanopportunityforpubliccomment 4 begivenforthisrule.Becauseanoticeofproposedrulemakingandanopportunityforpublic   commentarenotrequiredtobegivenforthisrule#X|0XXXy P#eX|0XXX|0undertheAdministrativeProcedureActorby p anyotherlaw,theanalyticalrequirementsoftheRegulatoryFlexibilityAct(5U.S.C.601etseq.) H arenotapplicable.However,inviewoftheimportanceofthisproposedrule,whichrepresents   thefirstcomprehensivestatementofBISsapproachtowardtheseissues,BISisseekingpublic l commentsbeforetheserevisionstakeeffect.Theperiodforsubmissionofcommentswillclose D! November24,2003.BISwillconsiderallcommentsreceivedbeforethecloseofthecomment # periodindevelopingafinalrule.Commentsreceivedaftertheendofthecommentperiodwill $  beconsideredifpossible,buttheirconsiderationcannotbeassured.BISwillnotacceptpublic &X" commentsaccompaniedbyarequestthatapartorallofthematerialbetreatedconfidentially (0!$ becauseofitsbusinessproprietarynatureorforanyotherreason.BISwillreturnsuchcomments |*#& andmaterialstothepersonssubmittingthecommentsandwillnotconsidertheminthe T,$( developmentofthefinalrule.Allpubliccommentsonthisproposedrulemustbeinwriting t (includingfaxoremail)andwillbeamatterofpublicrecord,availableforpublicinspectionand L  copying.TheOfficeofAdministration,BureauofIndustryandSecurity,U.S.Departmentof $  Commerce,displaysthesepubliccommentsonBIS'sFreedomofInformationAct(FOIA)Web   siteathttp://www.bis.doc.gov/foia.Thisofficedoesnotmaintainaseparatepublicinspection ` facility.Ifyouhavetechnicaldifficultiesaccessingthiswebsite,pleasecallBIS'sOfficeof 8  Administrationat(202)4820637forassistance.   #X|0XXeX|0R#ListofSubjects p 15CFRpart740     Administrativepracticeandprocedure,Exports,Foreigntrade,Reportingand l recordkeepingrequirements. D! 15CFRpart774 $    Exports,ForeignTrade,Reportingandrecordkeepingrequirements. &X"   Accordingly,parts740and774oftheExportAdministrationRegulations(15CFRparts |*#& 730799)areproposedtobeamendedasfollows: T,$( Ї PART740[AMENDED]  t  ( 83"3"    3]2   1  .3  0 `   Theauthoritycitationforpart740continuestoreadasfollows: 3]]݌$ ` (#` (# Ќ    Authority: 50U.S.C.app.2401etseq.;50U.S.C.1701etseq.;Sec.901911,Pub.L. ` 106387;E.O.13026,61FR58767,3CFR,1996Comp.,p.228;E.O.13222,66FR44025,3 @  CFR,2001Comp.,p.783;NoticeofAugust7,2003,68FR47833,August11,2003.   "3"    3`2   2  .3  0 `   Section740.7isrevisedtoreadasfollows:3`H`݌` (#` (# Ќ  740.7Computers(CTP) . P (a)Scope.(1)Commodities.XX|0XXX|0LicenseExceptionCTPauthorizesexportsandreexportsof 0 computers,including electronicassembliesandspeciallydesignedcomponentstherefor | controlledbyECCN4A003,exportedorreexportedseparatelyoraspartofasystemfor T! consumptioninComputerTiercountriesasprovidedbythissection.Whenevaluatingyour ,# computertodetermineLicenseExceptionCTPeligibility,usetheCTPparametertothe %  exclusionofothertechnicalparametersforcomputersclassifiedunderECCN4A003.aor.b,and &h"  electronicassembliesunderECCN4A003.c,exceptforparametersspecifiedasMissile (@!$ Technology(MT)concernsor4A003.e(equipmentperforminganalogtodigitalconversions *#& exceedingthelimitsinECCN3A001.a.5.a). d,$( Ї(2)Technologyandsoftware.LicenseExceptionCTPauthorizesexportsandreexportsof#X|0XXXX|0pa#XX|0XXX|0 t softwareandtechnologycontrolledbyECCNs4D001and4E001speciallydesignedormodified L  forthe development, production,or useofcomputers,including electronicassemblies $  andspeciallydesignedcomponentstherefor#X|0XXXX|0e#XX|0XXX|0ԀclassifiedinECCN4A003or4A994toComputer   Tiercountriesasprovidedbythissection.#X|0XXXX|0"g#XX|0XXX|0 `   (b)Restrictions.(1)Relatedequipmentcontrolledunder4A003.dand.gmaynotbeexportedor |  reexportedunderthisLicenseExceptionwhenexportedorreexportedseparatelyfromeligible T  computersauthorizedunderthisLicenseException. , (2)Accessandreleaserestrictions.(i)Computers.ComputerseligibleforLicenseExceptionCTP h maynotbeaccessedeitherphysicallyorcomputationallybynationalsofCuba,Iran,Iraq,Libya, @ NorthKorea,Sudan,orSyria,exceptthatcommercialconsigneesdescribedinSupplementNo.3  topart742oftheEARareprohibitedonlyfromgivingsuchnationalsuseraccessible d programmability.