[Federal Register Volume 65, Number 103 (Friday, May 26, 2000)]
[Rules and Regulations]
[Pages 34089-34092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-13329]


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DEPARTMENT OF STATE

22 CFR Part 123

[Public Notice 3318]


Exports of Commercial Communications Satellite Components, 
Systems, Parts, Accessories and Associated Technical Data

AGENCY: Bureau of Political-Military Affairs, State.

ACTION: Interim final rule.

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SUMMARY: Section 1309(a) of the Foreign Relations Authorization Act for 
Fiscal Years 2000 and 2001 requires the Department of State to 
establish a regulatory regime for the export licensing to U.S. allies 
of commercial satellites, technologies, components, and systems, which 
shall include expedited approval, as appropriate, while ensuring 
priority to national security and U.S. commitments under the Missile 
Technology Control Regime.
    Section 1302(a) of the same Act requires the Department to 
promulgate regulations in order to ensure timely reporting to the 
Department (within 15

[[Page 34090]]

days of shipment or export) of all shipment information concerning 
items exported pursuant to section 38 of the Arms Export Control Act. 
The Department will phase-in the reporting requirements for shipment 
information during the remainder of Calendar Year 2000 through 
publication of a separate rule change. However, U.S. exporters wishing 
to take advantage of the special regulatory regime for satellite 
related licensing to U.S. allies established in this amendment will 
need to meet the reporting requirements of section 1302(a) in 
accordance and coincident with the effective date of this amendment or 
their initial license application submissions. In order to facilitate 
use of the special regime, the Office of Defense Trade Controls will 
make available free of charge to U.S. exporters the computer software 
and guidance for its use that are needed to participate fully.
    This interim final rule amends the International Traffic in Arms 
Regulations (ITAR) by establishing a new regulatory regime for 
communications satellite related exports to U.S. allies.

EFFECTIVE DATE: July 1, 2000.

FOR FURTHER INFORMATION CONTACT: William Lowell or Terry Davis, Office 
of Defense Trade Controls, Department of State, Telephone (202) 663-
2700 or FAX (202) 261-8264, ATTN: Regulatory Change, Commercial 
Communications Satellites.

SUPPLEMENTARY INFORMATION: Section 1309(a) of the Foreign Relations 
Authorization Act for Fiscal Years 2000 and 2001 provides that the 
Secretary of State shall establish a regulatory regime for licensing 
the export of commercial satellites, satellite technologies, their 
components, and systems which shall include expedited approval, as 
appropriate, of the licensing for export by U.S. companies of such 
items to NATO allies and major non-NATO allies. Pursuant to 
Sec. 1309(a) the regime should include expedited processing of requests 
for export authorizations that are time critical (including information 
exchange relating to satellite failures or anomalies); are required to 
submit bids to foreign persons for procurements; are related to re-
export of unimproved materials, products, or data; or are required to 
obtain launch and on-orbit insurance.
    Within this legislative framework, the Department of State (Office 
of Defense Trade Controls) and the Department of Defense (Defense 
Threat Reduction Agency/Technology Policy) convened in January 2000 a 
task force of U.S. aerospace industry experts who were members of the 
State Department's federal advisory committee for defense trade 
matters, the Defense Trade Advisory Group (DTAG). This DTAG task force 
met regularly with State and Defense in the period January-April 2000 
for the purpose of setting forth a special licensing regime involving 
U.S. allies that would reflect experience gained since the transfer of 
commercial communications satellites to the U.S. Munitions List, which 
became effective March 15, 1999. This task force also drew on the 
technical and business expertise of other U.S. aerospace industry 
representatives in discrete product lines (particularly those involved 
in the supply of components and systems) and held a town hall 
discussion of the special licensing regime included herein at the April 
2-4, 2000 Spring Conference of the Society for International Affairs, a 
non-profit association comprised of defense firms, held at Laguna 
Beach, California.
    The ITAR amendment herein concerns the special satellite regime 
involving U.S. allies, provided for by authorizing legislation for 
exports and re-exports of U.S. Munitions List controlled articles for 
satellites to, within and among the territories of the member countries 
of NATO (Belgium, Canada, Czech Republic, Denmark, France, Germany, 
Greece, Hungary, Iceland, Italy, Luxembourg, Netherlands, Norway, 
Poland, Portugal, Spain, Turkey, United Kingdom and the United States) 
and countries that have been designated pursuant to the Foreign 
Assistance Act of 1961, as amended, as major non-NATO allies 
(Australia, New Zealand, Japan, Israel, Egypt, Jordan, Republic of 
Korea and Argentina). This coverage also includes exports and re-
exports of U.S. Munitions List controlled articles for approved 
satellite projects to be launched from the United States or the 
territory of a NATO or major non-NATO ally. Importantly, unless 
otherwise specifically authorized at the time of license approval, this 
special satellite regime does not apply to any other country in any 
measure, including but not limited to intermediate consignment 
occurring during the initial export; temporary re-transfer or re-
export; or launch into outer space of USML-controlled articles, whether 
or not incorporated (e.g., embedded) in a satellite when that activity 
involves a country that is not a member of NATO or a major non-NATO 
ally of the United States.
    The special satellite regime has three principal features. The 
first is the ability to use high volume licenses (e.g., known in the 
trade as ``bulk'' licenses) for exports of specifically designed or 
modified components, parts, systems, accessories, attachments and 
certain associated technical data for commercial communications 
satellites under specified conditions for multiple shipments to any of 
the NATO or major non-NATO allies.
    The second principal feature concerning use of this regime is that 
all eligible articles for export must be confined to an approved list 
of foreign aerospace firms located within the territories of U.S. 
allies for use in an approved list of commercial communications 
satellite programs of U.S. allies. The lists of foreign aerospace firms 
and commercial communications satellite programs included within the 
coverage of this regime will be kept under scrutiny by the U.S. 
Government and made publicly available on ODTC's Website and by other 
means. New firms and programs will be added to these lists following 
scrutiny within the U.S. Government (and approved for inclusion within 
the regime) in light of proposals from U.S. aerospace firms through 
export license applications.
    Third, when exporting pursuant to the special regime, it is not 
necessary under specified conditions for U.S. exporters to provide in 
advance the details of purchase orders or contracts, or non transfer 
and end use certificates (e.g., form DSP-83) where they may be 
required. While all of this documentation will continue to be 
mandatory, and while exporters will continue to be required to 
ascertain the specific end users and end uses prior to export or re-
export, the required documentation will only be required to be 
furnished to ODTC within 15 days following shipment from the United 
States (or re-transfer within the approved territory), at which time 
U.S. exporters will report the appropriate shipping information 
(discussed further below) and furnish the required documentation.
    For sensitive components, such as MTCR-controlled items, the long 
standing controls of the ITAR, including non-transfer and end use 
certificates, parts control plans, and the like, will continue to be 
required. But, in most cases, such documentation may be furnished 
within 15 days of shipment, as described below. Restrictions may also 
be imposed on such licenses, however, in view of the specific items 
proposed for export as appropriate in furtherance of the security and 
foreign policy of the United States (e.g., to meet missile 
nonproliferation objectives). Further, for particularly sensitive 
articles or information, the U.S. Government retains the discretion to 
require a separate license when

[[Page 34091]]

necessary in furtherance of the security and foreign policy of the 
United States.
    The principal articles envisaged for the special regime are: (1) 
The supply of satellite components, parts, systems, attachments, 
accessories and associated technical data, including for off-shore 
procurement; and, (2) technical information needed to respond to bids, 
to requests for quotations, plant visits, acceptance testing of 
equipment and the like. Technical data for satellite insurance 
purposes, including for on-orbit anomalies, involving exports to 
insurance firms and their brokers and consultants located within the 
territories of U.S. allies has also been discussed extensively within 
DTAG and will be the subject of separate, informal guidelines not 
requiring an amendment to the ITAR.
    Exports of complete commercial communications satellites for sale 
to, or launch by, U.S. allies have been proceeding expeditiously 
consistent with the Department of State's January 1999 report to 
Congress concerning implementation of the Strom Thurmond National 
Defense Authorization Act for Fiscal Year 1999. Such exports invariably 
involve contracts of $50 million or more, requiring notification to 
Congress pursuant to section 36(c) of the Arms Export Control Act 
before an export license may be issued. As such, these exports do not 
lend themselves to the special regime provided for herein and no rule 
change to that effect is being undertaken at this time. As suggested in 
the referenced report, the Department of State and the interested 
Committees of Congress have used all appropriate opportunities to 
ensure that U.S. aerospace companies are able to meet contract 
deadlines and launch schedules consistent with the security and foreign 
policy of the United States. The details of communications satellite 
notifications to Congress that have taken place since March 15, 1999, 
are available on the Website of the Office of Defense Trade Controls 
(HYPERLINK http://www.pmdtc.org.).
    In carrying out this directive Part 123, Licenses for the Export of 
Defense Articles is being amended.
    This amendment involves a foreign affairs function of the United 
States and therefore, is not subject to the procedures required by 5 
U.S.C. 553 and 554. It is exempt from review under Executive Order 
12866 but has been reviewed internally by the Department to ensure 
consistency with the purposes thereof. This rule does not require 
analysis under the Regulatory Flexibility Act or the Unfunded Mandates 
Reform Act. It has been found to be a minor rule within the meaning of 
the Small Business Regulatory Enforcement Act of 1966. It will not have 
substantial direct effects on the States, the relationship between the 
National Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Therefore, in 
accordance with Sec. 6 of Executive Order 13132, it is determined that 
this rule does not have sufficient federalism implications to warrant 
application of Executive Order Nos. 12372 and 13123. However, 
interested parties are invited to submit written comments to the 
Department of State, Office of Defense Trade Controls, ATTN: Regulatory 
Change, Part 123--Commercial Communications Satellites Components, 
Systems, Parts, and Accessories, 13th Floor, Room H1304, SA-1, 
Washington, D.C. 20520-0113. Such persons must be so registered with 
the Department's Office of Defense Trade Controls (ODTC) pursuant to 
the registration requirements of Sec. 38 of the Arms Export Control 
Act.

List of Subjects in 22 CFR Part 123

    Arms and munitions, Exports.

    Accordingly, for the reasons set forth above, Title 22, Chapter I, 
Subchapter M, Part 123, is amended as follows:

PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

    1. The authority citation for Part 123 is revised to read as 
follows:

    Authority: Secs. 2, 38, and 71, Pub.L. 90-629, 90 Stat. 744 (22 
U.S.C. 2752, 2778, 2797); 22 U.S.C. 2753; E.O. 11958, 42 FR 4311; 3 
CFR, 1977 Comp. p. 79; 22 U.S.C. 2658; Pub L. 105-261.


    2. Section 123.27 is revised to read as follows:


Sec. 123.27.  Special licensing regime for export to U.S. allies of 
commercial communications satellite components, systems, parts, 
accessories, attachments and associated technical data.

    (a) U.S. persons engaged in the business of exporting specifically 
designed or modified components, systems, parts, accessories, 
attachments, associated equipment and certain associated technical data 
for commercial communications satellites, and who are so registered 
with the Office of Defense Trade Controls pursuant to part 122 of this 
subchapter, may submit license applications for multiple permanent and 
temporary exports and temporary imports of such articles for 
expeditious consideration without meeting the documentary requirements 
of Sec. 123.1(c)(4) and (5) concerning purchase orders, letters of 
intent, contracts and non-transfer and end use certificates, or the 
documentary requirements of Sec. 123.9, concerning approval of re-
exports or re-transfers, when all of the following requirements are 
met:

    (1) The proposed exports or re-exports concern exclusively one 
or more countries of the North Atlantic Treaty Organization 
(Belgium, Canada, Czech Republic, Denmark, France, Germany, Greece, 
Hungary, Iceland, Italy, Luxembourg, The Netherlands, Norway, 
Poland, Portugal, Spain, Turkey, United Kingdom and United States) 
and/or one or more countries which have been designated in 
accordance with section 517 of the Foreign Assistance Act of 1961 as 
a major non-NATO ally (and as defined further in section 644(q) of 
that Act) for purposes of that Act and the Arms Export Control Act 
(Argentina, Australia, Egypt, Israel, Japan, Jordan, New Zealand and 
Republic of Korea).
    (2) The proposed exports concern exclusively one or more foreign 
persons (e.g., companies or governments) located within the 
territories of the countries identified in paragraph (a)(1) of this 
section, and one or more commercial communications satellite 
programs included within a list of such persons and programs 
approved by the U.S. Government for purposes of this section, as 
signified in a list of such persons and programs that will be 
publicly available through the Internet Website of the Office of 
Defense Trade Controls and by other means.
    (3) The articles are not major defense equipment sold under a 
contract in the amount of $14,000,000 or more or defense articles or 
defense services sold under a contract in the amount of $50,000,000 
or more (for which purpose, as is customary, exporters may not split 
contracts or purchase orders). Items meeting these statutory 
thresholds must be submitted on a separate license application to 
permit the required notification to Congress pursuant to section 
36(c) of the Arms Export Control Act.
    (4) The articles are not detailed design, development, 
manufacturing or production data and do not involve the manufacture 
abroad of significant military equipment.
    (5) The U.S. exporter reports complete shipment information to 
the Office of Defense Trade Controls within 15 days of shipment in 
accordance with section 1302 of the Foreign Relations Authorization 
Act for Fiscal Years 2000 and 2001, and at that time meets the 
documentary requirements of Sec. 123.1(c)(4) and (5), the 
documentary requirements of Sec. 123.9 in the case of re-exports or 
re-transfers, and, other documentary requirements that may be 
imposed as a condition of a license (e.g., parts control plans for 
MTCR-controlled items). The shipment information reported must 
include a description of the item and quantity, value, port of exit 
and end user and country of destination of the item.
    (6) At any time in which an item exported pursuant to this 
section is proposed for re-transfer outside of the approved 
territory, programs or persons (e.g., such as in the case of an item 
included in a satellite for launch beyond the approved territory), 
the detailed requirements of Sec. 123.9 apply with regard to

[[Page 34092]]

obtaining the prior written consent of the Office of Defense Trade 
Controls.
    (b) The re-export or re-transfer of the articles authorized for 
export (including to specified re-export destinations) in accordance 
with this section do not require the separate prior written approval 
of the Office of Defense Trade Controls provided all of the 
requirements in paragraph (a) of this section are met.
    (c) The Office of Defense Trade Controls will consider, on a 
case-by-case basis, requests to include additional foreign companies 
and satellite programs within the geographic coverage of a license 
application submitted pursuant to this section from countries not 
otherwise covered, who are members of the European Space Agency or 
the European Union. In no case, however, can the provisions of this 
section apply or be relied upon by U.S. exporters in the case of 
countries who are subject to the mandatory requirements of section 
1514 of the Strom Thurmond National Defense Authorization Act for 
Fiscal Year 1999, concerning national security controls on satellite 
export licensing.
    (d) Registered U.S. exporters may request at the time of a 
license application submitted pursuant to this section that 
additional foreign persons or communications satellite programs be 
added to the lists referred to in paragraph (a)(2) of this section, 
which additions, if approved, will be included within the publicly 
available lists of authorized recipients and programs.

    Dated: May 16, 2000.
 Eric D. Newsom,
Assistant Secretary, Bureau of Political-Military Affairs, U.S. 
Department of State.
[FR Doc. 00-13329 Filed 5-25-00; 8:45 am]
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