U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

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89–011 2000

106th Congress, 2d Session – – – – – – – – – – – – House Document 106–315

NATIONAL EMERGENCY CAUSED BY THE LAPSE OF

THE EXPORT ADMINISTRATION ACT OF 1979 FOR

FEBRUARY 19, 2000 TO AUGUST 19, 2000

COMMUNICATION

FROM

THE PRESIDENT OF THE UNITED STATES

TRANSMITTING

A 6-MONTH PERIODIC REPORT ON THE NATIONAL EMERGENCY

DECLARED BY EXECUTIVE ORDER 12924 OF AUGUST 19, 1994,

TO DEAL WITH THE THREAT TO THE NATIONAL SECURITY, FOREIGN POLICY, AND ECONOMY OF THE UNITED STATES CAUSED

BY THE LAPSE OF THE EXPORT ADMINISTRATION ACT OF 1979,

PURSUANT TO 50 U.S.C. 1703(c)

DECEMBER 4, 2000.—Referred to the Committee on International Relations

and ordered to be printed

(1)

THE WHITE HOUSE,

Washington, November 17, 2000.

Hon. J. DENNIS HASTERT,

Speaker of the House of Representatives,

Washington, DC.

DEAR MR. SPEAKER: As required by section 204(c) of the International Emergency Economic Powers Act (50 U.S.C. 1703(c)) and

section 401(c) of the National Emergencies Act (50 U.S.C. 1641(c)),

I transmit herewith a 6-month periodic report on the national

emergency declared by Executive Order 12924 of August 19, 1994,

to deal with the threat to the national security, foreign policy, and

economy of the United States caused by the lapse of the Export Administration Act of 1979.

Sincerely,

WILLIAM J. CLINTON.

(3)

PRESIDENT’S PERIODIC REPORT ON THE NATIONAL EMERGENCY

CAUSED BY THE LAPSE OF THE EXPORT ADMINISTRATION ACT OF

1979 FOR FEBRUARY 19, 2000 TO AUGUST 19, 2000

On August 19, 1994, in Executive Order No. 12924, I declared a

national emergency under the International Emergency Economic

Powers Act (IEEPA) (50 U.S.C. 1701 et seq.) to deal with the threat

to the national security, foreign policy, and economy of the United

States caused by the lapse of the Export Administration Act of

1979, as amended (50 U.S.C. App. 2401 et seq.) and the system of

controls maintained under that Act. In that order, I continued in

effect, to the extent permitted by law, the provisions of the Export

Administration Act of 1979, as amended, the Export Administration Regulations (15 CFR 730 et seq.), and the delegations of authority set forth in Executive Order No. 12002 of July 7, 1977 (as

amended by Executive Order No. 12755 of March 12, 1991), Executive Order No. 12214 of May 2, 1980, Executive Order No. 12735

of November 16, 1990 (subsequently revoked by Executive Order

No. 12938 of November 14, 1994), and Executive Order No. 12851

of June 11, 1993. As required by the National Emergencies Act (50

U.S.C. 1622(d)), I issued notices on August 15, 1995, August 14,

1996, August 13, 1997, August 13, 1998, August 10, 1999, and August 3, 2000, continuing the emergency declared in Executive

Order No. 12924.

In 1996, I issued two Executive orders concerning the transfer of

items from the U.S. Munitions List to the Commerce Control List.

On October 12, 1996, I issued Executive Order No 13020 (regarding

hot-section technologies for commercial aircraft engines) and on November 15, 1996, I issued Executive Order No 13026 (regarding

encryption products).

I issued Executive Order No. 12924 pursuant to the authority

vested in me as President by the Constitution and laws of the

United States, including, but not limited to, IEEPA. At that time,

I also submitted a report to the Congress pursuant to section

204(b) of IEEPA (50 U.S.C. 1703(b)). Section 204 of IEEPA requires

follow-up reports, with respect to actions or changes, to be submitted every six months. Additionally, section 401(c) of the National Emergencies Act (50 U.S.C. 1641(c)) requires that the President, within 90 days after the end of each six-month period following a declaration of a national emergency, report to the Congress on the total expenditures directly attributable to that declaration. To comply with these requirements, I have submitted combined activities and expenditures reports for the 6-month periods

ending February 19, 1995, August 19, 1995, February 19, 1996, August 19, 1996, February 19, 1997, August 19, 1997, February 19,

1998, August 19, 1998, February 19, 1999, August 19, 1999, and

February 19, 2000. The following report covers the 6-month period

from February 19, 2000, to August 19, 2000. Detailed information

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on export control activities is contained in the most recent Export

Administration Annual Report for Fiscal Year 1999 and the January 2000 Report on Foreign Policy Export Controls, required by

section 14 and section 6(f) of the Export Administration Act, respectively, which the Department of Commerce continues to submit

to the Congress under a policy of conforming actions under the Executive Order to the provisions of the Export Administration Act,

as appropriate.

Since the issuance of Executive Order No. 12924, the Department of Commerce has continued to administer and enforce the

system of export controls, including anti-boycott provisions, contained in the Export Administration Regulations (EAR). In administering these controls, the Department has acted under a policy of

conforming actions under Executive Orders No. 12924, 13020, and

13026 to the provisions of the Export Administration Act, insofar

as appropriate.

The expenses incurred by the Federal Government in the 6-

month period from February 19, 2000, to August 19, 2000, that are

directly attributable to the exercise of authorities conferred by the

declaration of a national emergency with respect to export controls

were largely centered in the Department of Commerce, Bureau of

Export Administration (BXA). Expenditures by the Department of

Commerce for the reporting period are anticipated to be

$21,270,000, most of which represents program operating costs,

wage and salary costs for Federal personnel, and overhead expenses.

Since my last report to the Congress, there have been several

significant developments in the area of export controls:

Multilateral developments

Wassenaar Arrangement. The Wassenaar Arrangement on Export

Controls is a multilateral regime currently consisting of 33 member

countries. Its purpose is to contribute to regional and international

security and stability by promoting transparency and greater responsibility in international transfers of conventional arms and

dual-use goods and technologies.

• The United States Government has participated in submissions of export data made by member countries in the regime since

the November 1996 implementation of the Wassenaar dual-use export control list. The Wassenaar members make dual-use data submissions on a semi-annual basis in April and October.

• In April 2000, BXA representatives attended an Expert’s

Group meeting to review the Wassenaar Arrangement’s controls on

conventional arms and dual-use goods and technologies. Nearly 70

proposals were discussed to modify and streamline Wassenaar’s

Dual-Use and Munitions Lists, approximately 30 of which were

submitted by the United States. The majority of the proposals were

in the areas of electronics, computers, sensors, and machine tools.

Several proposals currently under review are tied to relaxing controls on microprocessors and computers. As is typical of first round

discussions, the Expert’s Group focused on presentation of proposals and reached relatively few final decisions. Member countries

requested and provided additional information on several proposals

to further justify recommendations. However, there continues to be

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strong pressure within the Arrangement to relax controls on general-purpose microprocessors and digital computers in light of rapid

technological advances and controllability factors. Several countries

advocate a complete decontrol of general-purpose microprocessors

accompanied with drastic liberalizations of computer controls. • Nearly all proposals require additional study by member countries and decisions to adopt or reject these proposals will occur

later in the year. Also in April, BXA representatives attended the

3rd Annual Licensing and Enforcement Officers Meeting designed

to exchange information on national practices of respective licensing and enforcement procedures. Discussions focused on 15 plenary-mandated agenda items, including intangible transfers of

technology and software, catch-all controls, elements of effective enforcement, and international import certificates. Further discussions on intangible transfers, catch-all controls, and elements of effective enforcement will continue during the year. • In May 2000, BXA representatives attended a General Working Group Meeting designed to increase the general information exchange regarding regions and projects of concern to the United

States (e.g., Sudan, Ethiopia and Eritrea). The group discussed the

specific information exchange on dual-use goods and technologies

and the scope of dual-use notifications and procedures associated

with cases requiring ‘‘extreme vigilance.’’ The group agreed to

adopt a ‘‘best practices’’ procedure for exercising extreme vigilance

for Very Sensitive List items and to establish criteria for effective

enforcement. Member countries are still studying U.S. proposals for

expanded reporting of conventional arms exports, strengthening

dual-use export notification procedures by establishing a denial

consultation procedure, and implementing controls on man-portable

defense systems. Discussions on these issues will continue during

the next meeting, scheduled for late 2000. The United States will

continue to work with interested countries in an attempt to bridge

the gap between dual-use items and arms in order to increase

transparency and reduce differences in licensing practices.

Australia Group. The Australia Group (AG) is an informal multilateral export control regime that seeks to impede the proliferation

of chemical and biological weapons through the harmonization of

export controls, an exchange of information on global proliferation

activities, and outreach of nonmembers. The 30 member countries

meet annually and communicate between sessions to review and

refine the list of controlled chemicals, biological agents, and related

equipment and technology.

• At the 1999 AG Plenary, informal agreement was reached between the United States and certain concerned AG partners to exempt diagnostic test kits used in blood chemistry and water quality

analysis from export licensing. These kits currently require an export license because they contain small quantities of AG-controlled

chemicals. A proposed U.S. text drafted by BXA outlining the parameters of the exemption was submitted for informal review by

other AG members during the week of August 14, 2000.

• All AG members are State Parties to the Chemical Weapons

Convention (CWC) and the Biological Weapons Convention. The

CWC is an international arms control and nonproliferation treaty

that bans chemical weapons and monitors the legitimate producVerDate 11-MAY-2000 20:13 Dec 05, 2000 Jkt 089011 PO 00000 Frm 00007 Fmt 6601 Sfmt 6602 E:\HR\OC\HD315.XXX pfrm11 PsN: HD315
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tion, processing, consumption, export, and import of certain toxic

chemicals and precursors related to chemical weapons. The BWC

entered into force in 1975 to prohibit the development, production,

and stockpiling of biological agents or toxins that do not have

peaceful uses. AG members support national export licensing policies that promote the purpose and objectives of the CWC and BWC.

Chemical Weapons Convention. The CWC is an international

arms control and nonproliferation treaty that bans chemical weapons (CW) and monitors the legitimate production, processing, consumption, export, and import of certain toxic chemicals and precursors related to CW. BXA has implemented certain export control

provisions of the Convention in the Export Administration Regulations. During this reporting period, BXA received two advance notifications of exports of Schedule 1 chemicals, two annual reports on

exports of Schedule 1 chemicals for the calendar year 1999, and 13

end-use certificates for exports to Taiwan, Malaysia, Thailand, and

Israel.

Nuclear Suppliers Group. The Nuclear Suppliers Group (NSG),

composed of 38 member countries with the European Commission

as a permanent observer, is an informal group of nations concerned

with the proliferation of nuclear weapons. The NSG has established guidelines to assist member nations in administering national nuclear export control programs. Controls are focused on certain categories of goods: nuclear material, equipment, and technology unique to the nuclear industry, and so-called nuclear dualuse items that have both nuclear and non-nuclear applications. • An NSG Working Group meeting was held the week of March

6, 2000, in Vienna, Austria, to discuss the control of parts and components exports. Under current rules, only a small number of parts

and components of controlled items are listed in the NSG Guidelines as being subject to control. While a number of NSG members

would like to change that approach, the United States favors continuing to allow each member’s ‘‘catch all’’ controls to apply to the

export of spare parts and components of controlled items.

• At the NSG Plenary held in Paris, France, June 19–June 24,

2000, the NSG took the following actions: (1) with the support of

the United States, it was decided that no further action was needed

to control parts and components; (2) it was determined that a

working group will continue to look at possible options for simplifying the NSG’s institutional arrangement; (3) Turkey, Belarus,

and Cyprus were welcomed as new NSG members, and it was

agreed that Slovenia, participating at this Plenary as an observer,

could be admitted to the NSG intercessionally; and (4) the United

States will host the 2001 Plenary in Aspen, Colorado, the week of

May 7, 2001, when the United States will take over the chairmanship of the NSG.

Missile Technology Control Regime (MTCR). The MTCR is an informal group of 32 countries that have agreed to coordinate their

national export controls for the prevention of missile proliferation.

Each member, under its own laws and practices, has committed to

adhere to the MTCR Guidelines for export licensing policy for items

found on the MTCR Equipment and Technology Annex.

• BXA staff represented the Department at a Missile Technology

Control Regime (MTCR) seminar in Munich, Germany, on May 24–

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26. Topics of discussion included possible measures to reduce regional and global security risks, further eliminate existing missile

stockpiles, and curtail indigenous missile development programs.

The consensus of views reached at the seminar will be presented

at the MTCR Plenary meeting in October 2000 in Helsinki, Finland. • BXA represented the Department at the MTCR intercessional

Technical Experts Meeting (TEM) held in Berlin, Germany, on July

4–6. The TEM, at which proposals on technical changes to the

MTCR Annex are reviewed and prepared for consideration by the

full MTCR membership, considered a proposal tabled by the United

States that would expand controls on small fuel efficient engines

and integrated navigation systems used in unmanned air vehicles

that can become potential delivery vehicles for chemical and biological agents. The proposal was well received, and will receive further consideration at the next TEM to be held prior to the MTCR

Plenary scheduled for October 2000 in Helsinki, Finland.

Encryption/high performance computer policy

Encryption. During the period February 19, 2000, to August 19,

2000, BXA carried out a number of activities to implement the Administration’s encryption policy. These activities included license

and commodity classification processing, meeting with industry

representatives and technical advisory committees, and working

with interagency groups on formulating encryption policy initiatives. BXA continues to manage a significant workload as a result

of U.S. companies seeking to meet the increased consumer demand

for encryption products worldwide. • To support and explain U.S. encryption policy in the international arena, BXA actively participates in policy discussions with

other nations. BXA attended several Wassenaar Arrangement

working group meetings to explain U.S. policy and discuss its proposal to release encryption software considered to be ‘‘in the public

domain.’’ Wassenaar members also discussed various proposals to

ease key length restrictions for mass-market hardware products.

On May 8, 2000, BXA briefed the Free Trade Area of the Americas

E-Commerce Working Group on the U.S. encryption regulations.

BXA also held encryption export control policy discussions with

other foreign delegations on a bilateral basis.

• BXA continues to educate exporters and the general public on

the goals of the Administration’s updated encryption policy, and

how to obtain export authorization through licensing and classification. BXA presented information technology licensing workshops at

its conferences in San Diego (‘‘Update West 2000’’) and Washington, D.C. (‘‘Update 2000’’). Through regular meetings with U.S.

companies and Web site updates, BXA provides exporters with

practical guidance concerning encryption export control policy and

procedures.

• The Administration believes its encryption export control policy continues to be effective and credible. During this reporting period, Congress failed to pass any legislation to move beyond these

initiatives. The Administration opposes proposed legislation such

as the ‘‘Security and Freedom Through Encryption Act of 1999’’ and

the ‘‘Promote Reliable On-Line Transactions to Encourage ComVerDate 11-MAY-2000 20:13 Dec 05, 2000 Jkt 089011 PO 00000 Frm 00009 Fmt 6601 Sfmt 6602 E:\HR\OC\HD315.XXX pfrm11 PsN: HD315
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merce and Trade Act of 1999.’’ The Administration believes that

such legislation is unnecessary in light of the current regulatory

structure that promotes secure electronic commerce, facilitates U.S.

competitiveness in global information technology markets, and protects privacy in balance with public safety and national security interests.

High Performance Computers. During the past six months, BXA

has been engaged in various activities to keep pace with technological trends in high-performance computers (HPCs). These activities include updating export controls on HPCs, studying alternative

methods for controlling HPCs, meeting with industry counterparts

to assess their needs, and working on developing bilateral and multilateral relationships with certain countries to ensure appropriate

safeguards are attached to the export HPCs. • On August 3, 2000, the Administration announced its intent to

raise the National Defense Authorization Act (NDAA) notification

requirement for exports of HPCs to Tier 3 countries (as listed in

Section 740.7 of the EAR) from 12,500 millions of theoretical operations per second (MTOPS) to 28,000 MTOPS, to account for rapid

changes in technology over the previous six months (MTOPS is a

measure of a computer’s composite theoretical performance, or

‘‘CTP’’). Similarly, the Tier 2 level for computers eligible for export

under a license exception will raise to 45,000 MTOPS. The Administration also announced its intention to move Estonia from Tier 3

to Tier 2 effective December 28, 2000, and to move Argentina from

Tier 2 to Tier 1 when BXA publishes its next computer regulation. • The Information Security Technical Advisory Committee is

continuing to study alternative control parameters for HPCs. The

Administration needs to continually update CTP-based control levels to keep up with the rapid technological advances in the computer industry. The need for these significant adjustments calls

into question the viability of the current approach for determining

HPC control levels. For this reason, BXA will continue to work

with other concerned agencies to explore alternative control parameters that would provide the flexibility necessary to accommodate

future advances in HPC and microprocessor technology.

• BXA is also actively involved in negotiations with one other

HPC producing country to ensure that appropriate safeguards and

licensing mechanisms are in place to avoid exports or transfers to

countries of concern and proliferation entities.

Bilateral cooperation/technical assistance

As part of the Administration’s continuing effort to encourage

other countries to strengthen their export control systems, the Department of Commerce and other agencies conducted a wide range

of discussions with a number of foreign countries.

Hong Kong. Under the Hong Kong Policy Act of 1992, the United

States Government committed itself to continuing its export licensing treatment for Hong Kong as long as Hong Kong maintains an

effective and autonomous export control program. BXA actively

monitors the status of Hong Kong’s post-reversion export control

program to ensure that it continues to be effective and autonomous

from that of the People’s Republic of China. By openly and vigilantly observing Hong Kong’s program, BXA supports Hong Kong’s

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efforts to maintain the separation of its export control system from

the rest of China.

The United States and Hong Kong Special Administrative Region

(SAR) hold semi-annual meetings to exchange information and enhance cooperation, as called for in the Agreed Minute on Strategic

Commodities Trade Controls signed by former Secretary Daley and

his Hong Kong counterpart in October 1997. These meetings assist

BXA in monitoring Hong Kong’s export control program to determine whether their system continues to be effective and free from

influence by the government of the PRC. In March 2000, BXA led

an interagency delegation to Hong Kong for the fifth round of strategic trade talks since the two sides signed the Agreed Minute.

During the March meeting, BXA encouraged Hong Kong to implement controls on intangible technology transfers and provided

Hong Kong officials with a white paper and other materials on the

subject. Hong Kong officials gave a comprehensive overview of the

SAR’s new licensing scheme for in-transit cargo at Hong Kong’s airport. The delegation visited strategic trade control facilities at

Chek Lap Kok airport, Lok Ma Chau boundary crossing, and Kwai

Chung container terminal port.

India. Under a regulation published on November 19, 1998, the

United States implemented economic sanctions on India by imposing a policy of denial for the export or reexport of U.S.-origin items

controlled for nuclear nonproliferation and missile technology reasons to India and Pakistan as stated in part 742 of the EAR. Prior

to the sanctions, the United States reviewed applications for these

items on a case-by-case basis with a presumption of approval.

In early March 2000, BXA participated in a Commerce Department delegation to India to prepare for the President’s visit to

India. The trip’s focus was advocacy for pending contracts with

U.S. companies, primarily in the power and telecommunications industries. BXA participated in the trip to address sanctions issues

related to these and other projects.

In April 2000, BXA participated in State Department-led meetings in Washington with a delegation of Indian export control officials. The two sides discussed India’s revisions to its control list

and recent U.S. policy changes. The United States provided an

analysis of the Indian revisions, which expanded controls on munitions and missile-related items. Indian officials indicated, however,

that as long as their civilian programs are targets of the multilateral nonproliferation regimes, the Indian government would continue to withhold membership in them. The two sides also discussed initiating technical-level exchanges on export controls and

agreed to further discussions on the scope of such exchanges in

New Delhi in the summer.

On August 7–10, 2000, BXA participated in an interagency visit

to India to discuss India’s specific interests in a program of export

control cooperation. In discussions with officials in Indian Customs

and the Directorate General of Foreign Trade in the Ministry of

Commerce and Industry, the two sides agreed on a series of exchanges, to begin in fall 2000, dealing with nonproliferation-related

Customs procedures and export licensing policies and procedures.

This outreach program is part of the U.S.-Indian dialogue on nonproliferation led by the State Department that began after India’s

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nuclear detonations in May 1998. The first activity, a seminar on

licensing procedures and policies in Washington, is scheduled for

October 2000.

Asia. BXA officials attended the Asian Export Control Seminar

in Tokyo, Japan, from February 29–March 2, 2000. Delegations

from 12 Asian countries and regions, including Australia, China,

Hong Kong, Macau, and Chinese Taipei, plus the United Kingdom,

also attended the conference, which was jointly chaired by Japan,

the United States, Australia, and the United Kingdom. The U.S.

delegation, led by the Department of State and including representatives from the Department of Defense and Commerce/BXA, made

presentations on the Wassenaar Arrangement, enforcement issues,

and export management systems. Audience response was very positive and there were questions and follow-up discussions on the

presentation on export management systems. Presentations by

other delegations covered such issues as transshipment, export control legal authority, and other multilateral export control regimes.

The conference featured small group discussions on a range of export control issues.

Cuba. Since I announced streamlined procedures for sale of medicines and medical equipment to Cuba in 1998, approved licenses

for sale to Cuba of these items have increased significantly. However, the food-for-sale program initiated by my Administration in

1999 has not been as effective as anticipated because prospective

U.S. exporters have had difficulty in identifying purchasers of the

food in Cuba that are private, non-governmental organizations, as

required by the regulations.

Nonproliferation Export Control and International Cooperation.

During the period February 2, 2000, through August 19, 2000,

BXA’s Nonproliferation Export Control and International Cooperation Program (NEC) hosted, participated in, and/or coordinated 18

technical exchanges on export controls in conjunction with representatives from the Departments of State, Defense, Energy, Justice, and the Treasury (U.S. Customs Service). These programs

sought not only to familiarize the governments of Russia, Central

Europe, the Balkans, the Baltics, the Causasus, and Central Asia

with the major elements comprising an export control system that

meets international standards for effectiveness, but also to assist

the governments in developing and strengthening their own national export control systems. These elements involve five functional areas: the legal and regulatory framework necessary for an

effective export control system, licensing procedures and control

lists, enforcement mechanisms, industry-government relations, and

system administration and automation support. Programs conducted during this period also included special activities and multilateral conferences that related to NEC objectives. These programs

have contributed to a reduction of the proliferation threat from and

through the participating countries by strengthening these countries’ national export control systems.

Regulatory actions: Published and pending

Encryption. On January 14, 2000, BXA published regulations implementing the Administration’s September 16, 1999, announcement to simplify the export of cryptography. The Administration’s

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encryption policy rests on three tenets: a review of encryption products in advance of sale, a streamlined post-export reporting system

that takes into account industry’s distribution models, and review

of exports to foreign government end-users. In carrying out this

policy, BXA analysts review license applications for exports to government end-users, classify encryption items to determine eligibility under new license exception provisions, and handle industry

notifications of products released from export controls. BXA actively reaches out to the public through correspondence, meetings

with industry, case consultation, and its Web site.

On July 17, 2000, the Administration announced changes to U.S.

encryption policy. The changes will be included in a regulation to

be published in fall 2000. The most significant change in the soonto-be released regulation is that U.S. companies will be able to export encryption products and technology under license exception to

any end user in the 15 nations of the European Union as well as

Australia, Norway, Czech Republic, Hungary, Poland, Japan, New

Zealand, and Switzerland immediately upon notifying BXA of intent to export. Even highly sophisticated encryption items such as

source code, general purpose toolkits, and high-end routers and

switches will be included under these new procedures. The upcoming regulation will only require licenses for ‘‘cryptanalytic items,’’

which are a specialized class of tools not normally used in commercial environments. Other policy initiatives to be implemented in

new regulations include streamlined export provisions for U.S.

products that operate with foreign-origin encryption through an

Open Cryptographic Interface; are compiled from ‘‘open’’ source

code; are made publicly available through submission to international standards bodies; implement short-range wireless

encryption technologies such as HomeRF and Bluetooth; or that

implement data encryption at key lengths (e.g. 56-bits) that are not

controlled by the Wassenaar Arrangement. The rule implementing

this policy was published on October 19.

Once implemented, this updated policy will reflect the invaluable

and ongoing dialogue between the interagency working group on

cryptography and various industry groups and organizations advocating privacy protection. Through consultation with groups such

as the President’s Export Council Subcommittee on Encryption,

Regulations and Procedures Technical Advisory Committee, Alliance for Network Security, Americans for Computer Privacy, and

Computer Systems Policy Project, the new regulations will take

into account technology trends and market realities, which, if not

addressed as a matter of policy, would only serve to disadvantage

U.S. industry and undermine the national interest. In addition to

facilitating exports to the European Union and other key trading

partners, the new regulation will ease the post-export reporting

burden on U.S. companies and will simplify exports to telecommunication and internet service providers. For the first time,

exporters will be able to self-classify 56- and 64-bit encryption

products not controlled by the Wassenaar Arrangement, and distribute ‘‘beta test’’ encryption software under license exception. The

regulation will also allow incorporation of certain U.S.-origin retail

encryption components and software into foreign products outside

of U.S. export control without triggering a U.S. license requireVerDate 11-MAY-2000 20:13 Dec 05, 2000 Jkt 089011 PO 00000 Frm 00013 Fmt 6601 Sfmt 6602 E:\HR\OC\HD315.XXX pfrm11 PsN: HD315
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ment, so long as total U.S. content does not exceed ‘‘de minimis’’

thresholds.

These initiatives will assure the continuing competitiveness of

U.S. companies in international markets, consistent with the national interest in areas such as electronic commerce, national security, and support to law enforcement.

High Performance Computers. On March 10, 2000, BXA published a regulation raising the technical level above which exports

of high performance computers require licenses implementing the

President’s February 1 update announcement to the Administration HPC export control policy. This update raised the upper

threshold of the license exception CTP for exports to Computer Tier

2 countries from 20,000 MTOPS to 33,000 MTOPS, and from

12,300 MTOPS to 20,000 MTOPS for exports to Tier 3 countries.

On August 3, 2000, the Administration announced a further modification of technical limits. BXA has a rule pending to implement

the changes. Due to rapid technological advancement in the computer industry, the technical level of computers is reviewed every

six months.

India. On March 17, 2000, BXA published a regulation that removed 51 Indian entities from the Entity List in Supplement 4 of

Section 744 of the EAR. The regulation also changed the policy for

exports of non-sensitive ‘‘EAR99’’ items to listed entities from ‘‘presumption of denial’’ to ‘‘presumption of approval.’’ This rule represented the first significant modification of measures associated

with India sanctions since their imposition in November 1998. Because many India applications submitted to BXA since May 1998

have been for EAR99 items that require a license under Glenn

Amendment sanctions, the March policy change has resulted in a

significant increase in the approval rate for India licenses. On July

26, 2000, BXA published another rule that removed two Indian entities from the Entity List and added one.

North Korea. On September 17, 1999, I announced my decision

to ease some of the sanctions against North Korea administered

under the Trading with the Enemy Act, the Defense Production

Act, and the EAR. On June 19, 2000, BXA published a regulation

easing restrictions on exports of low-level items to North Korea in

response to North Korea agreeing to halt further tests of its missile

program. Under sanctions easing measures, U.S. exporters may

now ship agricultural commodities, medical items, and low-level industrial goods to North Korea without a license. However, all multilaterally controlled items, as well as items controlled unilaterally

by the United States, continue to require a license to North Korea.

Wassenaar Arrangement. On July 12, 2000, BXA published a rule

implementing the Wassenaar Arrangement’s changes to their list of

dual-use items. This rule affected entries in Categories 1 through

6, and 9 of the Commerce Control List.

Export Clearance. On July 10, 2000, BXA and the Census Bureau

jointly published final rules clarifying export clearance, including

the definition of exporter and the requirements for filing a Shipper’s Export Declaration. Public comments contributed significantly

to the development of these rules.

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Export license information

During the reporting period, BXA continued to receive many requests for exports licensing information through the Freedom of Information Act and through discovery requests during enforcement

proceedings. Under section 12(c) of the Export Administration Act,

BXA continues to withhold from public disclosure information obtained for the purpose of consideration of, or concerning, export license applications, unless the release of such information is determined by the Under Secretary to be in the national interest, pursuant to the directive in Executive Order No. 12924 to carry out the

provisions of the Export Administration Act, to the extent permitted by law, notwithstanding an adverse court decision regarding

BXA’s authority to withhold such information. The Department has

appealed this decision.

BXA received two Congressional requests for large amounts of

export licensing information during the reporting period.

Office of Inspector General and the General Accounting Office

studies

During the reporting period, BXA continued its cooperation with

the Office of Inspector General (OIG) and the General Accounting

Office (GAO). OIG initiated three new studies and GAO initiated

nine. Also during the period, OIG closed three studies and GAO

closed six, with the issuance of final reports or briefings.

Export enforcement

Export Enforcement continued, through its three constituent offices, its programs of prevention of diversions, investigation/

enforcement of the export control provisions of the Export Administration Regulations, and enforcement of the antiboycott provisions

of the Export Administration Regulations.

Office of Enforcement Analysis

Preventive/Compliance Activities. Office of Enforcement Analysis

(OEA) prevention activities included designing a systematic plan to

target and prioritize pre-license checks (PLCs) and post shipment

verifications (PSVs) conducted by representatives of U.S. diplomatic posts. The purpose of the plan is to ensure that the PLC and

PSV programs, which are coordinated by BXA’s Export Enforcement, reflect the full range of U.S. export control concerns and use

available resources as effectively as possible.

PLCs validate information on export license applications including the reliability of the end-users. In contrast, PSVs strengthen

assurances that exporters, shippers, consignees, and end-users

comply with the terms of export licenses and licensing conditions

that are intended to deter diversions from approved end-users and

end-uses of dual-use exports. The overall objective for conducting

PLCs and PSVs is to detect and prevent the illegal transfer of controlled U.S.-origin goods and technology.

Another major preventive enforcement activity of OEA is the

compiling of information regarding parties of export control concern

and maintaining these names on Export Enforcement’s watch list.

All of the parties included on this watch list are screened against

names listed on export license applications received by BXA. OEA

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analysts review all applications in detail that include a match

against a party on the watch list to assess diversion risks, identify

potential violations, and determine the reliability of proposed endusers of controlled U.S.-origin commodities or technical data.

NDAA Activities. OEA has responsibility for implementing the

High Performance Computer post-shipment verification and annual

report requirements of the NDAA for FY1998. OEA tracks all postshipment reporting on exports of HPCs over a set operating level

to ‘‘Tier 3’’ counties, as defined by the NDAA, and oversees the

post-shipment verifications performed on such exports. OEA has

the responsibility for reporting the total number of HPCs exported

and the number of NDAA HPC post-shipment verifications performed to Congress in an Annual Report.

Visa Review Program. During the reporting period, OEA continued restructing its Visa Application Review Program to prevent unauthorized access to controlled technology or technical data by foreign nationals visiting the United States. The Office has developed

new criteria and thresholds for evaluating visa applications for targeting purposes. OEA has narrowed its focus and concentrated on

specific products most often used in weapons of mass destruction

projects. OEA’s evaluation and analysis of visa application cable

traffic involves preventive enforcement efforts such as recommending denial of certain visas and the referral of enforcement

leads to Office of Export Enforcement (OEE) field offices for possible case development. In some instances, OEE Special Agents uncovered possible visa fraud on the part of the foreign applicant.

These findings were forwarded to OEA and submitted to the State

Department’s Visa Fraud Unit for further investigation and action

during the reporting period.

Shipper’s Export Declaration Review Program. OEA systematically reviews Shipper’s Export Declarations (SEDs) filed by exporters. Using a computerized index of data fields, OEA produces a list

of SEDs targeted for closer review. These reviews focus particularly

on licensed and license exception shipments, shipments bound for

destinations of concern, and shipments of strategic commodities of

proliferation concern. Through these reviews, OEA identifies SEDs

that may indicate violations of the Export Administration Regulations and refers them to OEE special agents for further enforcement actions.

Office of Export Enforcement

The Office of Export Enforcement opened 486 and closed 813 investigations during the reporting period.

Office of Antiboycott Compliance Activities

The Office of Antiboycott Compliance continued to supply the

State Department with information on boycott requests received by

U.S. persons. The State Department uses this information in its

discussions with boycotting countries concerning ending the Arab

boycott of Israel. The Office of Antiboycott Compliance opened four

and closed ten investigations during the reporting period.

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