Document ID: BIS-2021-0006-0001
Agency: bis
Document Type: Rule
Title: Amendment to Country Groups for Ukraine, Mexico and Cyprus Under the Export Administration Regulations
Posted Date: 2020-12-28T05:00Z

[Federal Register Volume 85, Number 248 (Monday, December 28, 2020)]
[Rules and Regulations]
[Pages 84211-84213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26552]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Part 740

[Docket No. 201120-0311]
RIN 0694-AI12

Amendment to Country Groups for Ukraine, Mexico and Cyprus Under 
the Export Administration Regulations

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: In this rule, the Bureau of Industry and Security (BIS) amends 
the Export Administration Regulations (EAR) to revise the Country Group 
designations for Ukraine, Mexico and Cyprus. Specifically, in this 
rule, BIS moves Ukraine from Country Group D to Country Group B and 
adds Mexico and Cyprus in Country Group A:6. This rule also includes 
conforming changes.

DATES: Effective December 28, 2020.

FOR FURTHER INFORMATION CONTACT: Patricia Muldonian, Office of National 
Security and Technology Transfer Controls, 
Patricia.Muldonian@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

    The Export Administration Regulations (EAR) designates countries in 
Country Groups (A, B, D and E) (Supplement No. 1 to Part 740) which 
reflect each country's export control policy, multilateral regime 
membership, system, and practice. The Country Groups generally serve as 
a basis for the availability of exceptions from license requirements 
described in part 740 (License Exceptions) of the EAR, when applicable 
conditions are met in part 740. Country Groups may also be used when 
describing license review policy and end-user and end-use based 
controls under part 744.
    The EAR also sets forth license requirements in the Commerce 
Country Chart (Supplement No. 1 to Part 738). The Commerce Country 
Chart contains licensing requirements based on the destination to which 
items listed on the Commerce Control List (CCL) (Supplement No. 1 to 
Part 774) will be exported or reexported and their corresponding 
``Reason for Control,'' which is found in the CCL entry. An ``X'' in 
the cell where the ``reason for control'' column intersects with the 
row of the destination indicates a license requirement. Licenses are 
required to export and reexport items under the EAR for multilateral 
reasons (i.e., chemical and biological (CB), nuclear nonproliferation 
(NP), national security (NS), and missile technology (MT)); and for 
unilateral reasons (i.e., region stability (RS), crime control (CC) and 
anti-terrorism (AT)), as well as to implement controls for firearms 
convention (FC) and United Nations Security Council purposes. Controls 
for United Nations Security Council purposes are identified by the 
abbreviation ``UN'' in the applicable CCL entries. The ``UN'' reason 
for control is described in Sec.  746.2(b) of the EAR.
    In combination with the CCL--the list of items classified and set-
out as Export Control Classification Numbers (ECCNs) and arranged by 
categories--the Commerce Country Chart allows an exporter to determine 
whether a license is required for the export or reexport of an item on 
the CCL to the destinations on the Chart, unless otherwise specified in 
the particular ECCN entry on the CCL.

Specific Amendments in This Rule

Ukraine
    Ukraine is a member of the four multilateral export control regimes 
(Australia Group; Missile Technology Control Regime; Nuclear Suppliers 
Group; Wassenaar Arrangement). In addition, Ukraine works with the 
United States on a variety of export control matters. As a result, this 
rule removes Ukraine from Country Group D:1 and places Ukraine in 
Country Group B. This removes Ukraine from Country Group D completely. 
This rule does not remove ``Xs'' in Columns CB1, NS1, NS2, MT1, RS1, 
RS2, CC1 and CC2 for Ukraine in the Commerce Country Chart. In 
addition, BIS has determined that exports to Ukraine are not eligible 
for License Exceptions Shipments to Country Group B countries (GBS) and 
Technology and software under restriction (TSR). This rule makes 
conforming changes in part 740 consistent with that policy. Those 
amendments are described further in the following section on the 
``Impact of the Amendments in this Rule''.
Mexico
    Mexico is a member of three multilateral export control regimes 
(Australia Group; Nuclear Suppliers Group; Wassenaar Arrangement). 
Mexico also has national security interests and policies compatible 
with those of the United States. As a result, this rule adds Mexico to 
Country Group A:6. This rule does not remove ``Xs'' in Columns CB1, 
NS1, MT1, RS1, and CC1 for Mexico in the Commerce Country Chart.
Cyprus
    Cyprus is a member of the European Union. The European Union's 
export control regulations implement the controls of the four 
multilateral export control regimes and apply to all members. In 
addition, the Department of State recently issued a temporary final 
rule revising its licensing policy for Cyprus in Sec.  126.1 
(Prohibited exports, imports and sales to or from certain countries) 
(of the International Traffic in Arms Regulations) (85 FR 60698, 9/28/
20). As a result, this final rule adds Cyprus to Country Group A:6. 
This rule does not remove ``Xs'' in Columns CB1, NS1, MT1, RS1, RS2 and 
CC1 for Cyprus in the Commerce Country Chart.

Impact of the Amendments in This Rule

Ukraine
    Placing Ukraine in Country Group B and removing it from Country 
Group D, combined with Ukraine's existing Country Groups A:2, A:3, and 
A:4 status, makes certain license exceptions available for Ukraine, 
when applicable conditions are met, and the restrictions in Sec.  740.2 
do not apply. The available license exceptions are: Shipments of 
limited value (LVS)(Sec.  740.3); Temporary imports, exports, 
reexports, and transfers (in-country) (TMP)(Sec.  740.9); Servicing and 
replacement of parts and equipment (RPL) (Sec.  740.10); Gift parcels 
and humanitarian donations (GFT)(Sec.  740.12); Baggage

[[Page 84212]]

(BAG)(Sec.  740.14); Aircraft and vessels (AVS)(Sec.  740.15); 
Additional permissive reexports (APR)(Sec.  740.16); and Encryption, 
commodities, software, and technology (ENC)(Sec.  740.17).
    As noted earlier, License Exceptions Shipments to Country Group B 
countries (GBS) (Sec.  740.4) and Technology and software under 
restriction (TSR) (Sec.  740.6) will not be available for exports to 
Ukraine. Therefore, in this rule, BIS made conforming amendments in 
Sec. Sec.  740.4 and 740.6 to clearly set forth that license exceptions 
GBS and TSR are available for Country Group B countries except Ukraine.
    These changes also allow a less restrictive licensing policy for 
the export and reexport to Ukraine of items listed on the CCL and 
controlled for national security reasons. Also as a result of the 
amendments in this rule, applications to export and reexport to Ukraine 
items listed on the CCL and controlled for national security reasons 
will no longer be subject to the case-by-case licensing policy in Sec.  
742.4(b)(2), and now will be subject to a licensing policy of approval 
per Sec.  742.4(b)(1)(i). The restrictions on the export, reexport, and 
transfer (in-country) of certain microprocessors to military end uses 
and end users in Country Group D:1, pursuant to Sec.  744.17, 
(Restrictions on certain exports, reexports, and transfers (in-country) 
of microprocessors and associated ``software'' and ``technology'' for 
`military end uses' and to `military end users') also no longer apply 
to Ukraine. Furthermore, Sec.  744.7 (Restrictions on certain exports 
to and for the use of certain foreign vessels or aircraft) restrictions 
on certain exports and reexports to vessels and aircraft, located in 
Ukrainian ports or registered in Ukraine no longer apply to that 
destination. Finally, by removing Ukraine from Country Group D:1, the 
Sec.  736.2(b)(3), General Prohibition Three, licensing requirements 
for reexports of the foreign-produced direct product of U.S.-origin 
technology and software to Ukraine no longer apply.
    These amendments are intended to serve U.S. national security and 
foreign policy interests toward Ukraine. This rule does not change the 
status of the Crimea Region of Ukraine under the EAR.
Mexico
    With the addition of Mexico to Country Group A:6, License Exception 
Strategic Trade Authorization (STA) is available for exports, reexports 
and transfer (in-country) of lesser sensitivity items controlled for NS 
reasons only as set forth in Sec.  740.20(c)(2). This new Country Group 
status is in addition to Mexico's existing Country Group B status which 
includes the availability of License Exceptions GBS and TSR.
Cyprus
    Adding Cyprus to Country Group A:6 makes License Exception STA 
available for exports, reexports and transfer (in-country) of lesser 
sensitivity items controlled for NS reasons only as set forth in Sec.  
740.20(c)(2). This new Country Group status is in addition to Cyprus' 
existing Country Group B status which includes the availability of 
License Exceptions GBS and TSR. As Cyprus also is in Country Group D:5 
(U.S. Arms Embargoed Countries), however, consideration of license 
exceptions must include particular review and compliance with the 
restrictions on items in a 9x515 or ``600 series'' ECCN as set forth in 
paragraphs (a)(12) and (13) of Sec.  740.2.

Export Control Reform Act of 2018

    On August 13, 2018, the President signed into law the John S. 
McCain National Defense Authorization Act for Fiscal Year 2019, which 
included the Export Control Reform Act of 2018.
    (ECRA) (50 U.S.C. 4801-4852) that provides the legal basis for 
BIS's principal authorities and serves as the authority under which BIS 
issues this rule. As set forth in Section 1768 of ECRA, all 
delegations, rules, regulations, orders, determinations, licenses, or 
other forms of administrative action that were made, issued, conducted, 
or allowed to become effective under the Export Administration Act of 
1979 (50 U.S.C. 4601 et seq.) (as in effect prior to August 13, 2018, 
and as continued in effect pursuant to the International Emergency 
Economic Powers Act (50 U.S.C. 1701 et seq.)), or the Export 
Administration Regulations, and were in effect as of August 13, 2018, 
shall continue in effect according to their terms until modified, 
superseded, set aside, or revoked under the authority of ECRA.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distribute impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This final rule has been designated to be a ``significant 
regulatory action,'' although not economically significant, under 
section 3(f) of Executive Order 12866.
    2. This final rule is not subject to the requirements of E.O. 13771 
(82 FR 9339, February 3, 2017) because it is issued with respect to a 
military and foreign affairs function of the United States. In 
particular, this rule recognizes: (1) The Government of Ukraine's 
continuing engagement with regional and international export control 
authorities; (2) Mexico's multilateral export control regime 
memberships and national security approaches and interests compatible 
with the United States; and (3) Cyprus' European Union membership and 
like-minded export controls. These changes to the EAR serve U.S. 
foreign policy and national security interests. Accordingly, this rule 
meets the requirements set forth in the April 5, 2017, OMB guidance 
implementing E.O. 13771. See https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2017/M-17-21-OMB.pdf.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under Executive Order 13132.
    4. Pursuant to section 1762 of the Export Control Reform Act of 
2018 (50 U.S.C. 4821), this action is exempt from the Administrative 
Procedure Act (5 U.S.C. 553) requirements for notice of proposed 
rulemaking, opportunity for public participation, and delay in 
effective date.
    5. Because a notice of proposed rulemaking and an opportunity for 
public comment are not required to be given for this rule by 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. 
Accordingly, no regulatory flexibility analysis is required and none 
has been prepared.
    6. Notwithstanding any other provision of law, no person may be 
required to respond to or be subject to a penalty for failure to comply 
with a collection of information, subject to the requirements of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless 
that collection of information displays a currently valid Office of 
Management and Budget (OMB) Control Number. This regulation involves a 
collection currently approved by OMB under control number 0694-0088, 
Simplified Network Application Processing System. The collection 
includes, among other things, license applications, and carries a 
burden estimate of 42.5 minutes for a manual or electronic submission 
for a total burden

[[Page 84213]]

estimate of 31,878 hours. BIS expects the burden hours associated with 
this collection to decrease slightly or have limited impact on the 
existing estimates. Any comments regarding the collection of 
information associated with this rule, including suggestions for 
reducing the burden, should be sent within 30 days of publication of 
this notice to http://www.reginfo.gov/public/do/PRAMain. Find this 
particular information collection by selecting ``Currently under 30-day 
Review--Open for Public Comments'' or by using the search function.

List of Subjects in 15 CFR Part 740

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

    Accordingly, part 740 of the Export Administration Regulations (15 
CFR parts 730-774) are amended as follows:

PART 740--LICENSE EXCEPTIONS

0
1. The authority citation for part 740 continues to read as follows:

    Authority: 50 U.S.C. 4801-4852; 50 U.S.C. 4601 et seq.; 50 
U.S.C. 1701 et seq.; 22 U.S.C. 7201 et seq.; E.O. 13026, 61 FR 
58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 
2001 Comp., p. 783.

0
2. Section 740.4 is revised to read as follows:

Sec.  740.4  Shipments to Country Group B countries (GBS).

    License Exception GBS authorizes exports and reexports to Country 
Group B (see Supplement No. 1 to part 740), except Ukraine, of those 
commodities where the Commerce Country Chart (Supplement No. 1 to part 
738 of the EAR) indicates a license requirement to the ultimate 
destination for national security reasons only and identified by 
``GBS--Yes'' on the CCL. See Sec.  743.1 of the EAR for reporting 
requirements for exports of certain commodities under License Exception 
GBS.

0
3. Section 740.6 is amended by revising paragraph (a) introductory text 
to read as follows:

Sec.  740.6  Technology and software under restriction (TSR).

    (a) Scope. License Exception TSR permits exports and reexports of 
technology and software where the Commerce Country Chart (Supplement 
No. 1 to part 738 of the EAR) indicates a license requirement to the 
ultimate destination for national security reasons only and identified 
by ``TSR--Yes'' in entries on the CCL, provided the software or 
technology is destined to Country Group B, except Ukraine. (See 
Supplement No. 1 to part 740.) A written assurance is required from the 
consignee before exporting or reexporting under this License Exception.
* * * * *

Supplement No. 1 to Part 740 [Amended]

0
4. Supplement No. 1 to part 740 is amended by
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a. In the Country Group A table, adding ``Cyprus'' and ``Mexico'' in 
alphabetical order to Column A:6.
0
b. In the Country Group B table, adding ``Ukraine'' in alphabetical 
order;
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c. In the Country Group D table, removing the entry for ``Ukraine'';

Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
[FR Doc. 2020-26552 Filed 12-23-20; 8:45 am]
BILLING CODE 3510-33-P