Document ID: BIS-2011-0018-0001
Agency: bis
Document Type: Rule
Title: Export Controls for High Performance Computers: Wassenaar Arrangement Agreement Implementation and Revisions to License Exceptions
Posted Date: 2011-06-24T04:00Z

[Federal Register Volume 76, Number 122 (Friday, June 24, 2011)]
[Rules and Regulations]
[Pages 36986-36989]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-15842]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 734, 740, 743 and 774

[Docket No. 110210131-1317-01]
RIN 0694-AF15

Export Controls for High Performance Computers: Wassenaar 
Arrangement Agreement Implementation for ECCN 4A003 and Revisions to 
License Exception APP

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: This final rule revises the Export Administration Regulations 
(EAR) to implement changes made to the Wassenaar Arrangement's List of 
Dual Use Goods and Technologies (Wassenaar List) maintained and agreed 
to by governments participating in the Wassenaar Arrangement on Export 
Controls for Conventional Arms and Dual Use Goods and Technologies 
(Wassenaar Arrangement, or WA) at the December 2009 WA Plenary Meeting 
(the Plenary) that relate to Export Control Classification Number 
(ECCN) 4A003. These changes agreed to at the Plenary pertain to raising 
the Adjusted Peak Performance (APP) for digital computers in ECCN 
4A003. In accordance with the National Defense Authorization Act (NDAA) 
for FY 1998, the President's report for High Performance Computers was 
sent to Congress on February 7, 2011, to identify and set forth a 
justification for the new APP. This rule also makes corresponding 
revisions to License Exception APP, the de minimis rule, and post 
shipment verification reporting requirements in the EAR.
    Additionally, this rule moves Albania and Croatia from Computer 
Tier 3 to Computer Tier 1 in the section of the EAR dedicated to export 
control requirements for high performance computers. The Administration 
believes Albania and Croatia are eligible to be treated as Computer 
Tier 1 countries because their governments have made the necessary 
reforms to allow the countries to join the North Atlantic Treaty 
Organization, and have adopted accepted global standards in export 
controls.

DATES: Effective Dates: This rule is effective on June 24, 2011.

FOR FURTHER INFORMATION CONTACT: For general questions contact Sharron 
Cook, Office of Exporter Services, Bureau of Industry and Security, 
U.S. Department of Commerce at 202-482 2440 or by e-mail: 
sharron.cook@bis.doc.gov.
    For technical questions contact: Joseph Young at 202-482-4197 or by 
e-mail at joseph.young@bis.doc.gov.

SUPPLEMENTARY INFORMATION:

Background

    In July 1996, the United States and thirty-three other countries 
gave final approval to the establishment of a new multilateral export 
control arrangement called the Wassenaar Arrangement on Export Controls 
for Conventional Arms and Dual Use Goods and Technologies (Wassenaar 
Arrangement or WA). The Wassenaar Arrangement contributes to regional 
and international security and stability by promoting transparency and 
greater responsibility in transfers of conventional arms and dual use 
goods and technologies, thus preventing destabilizing accumulations of 
such items. Participating states committed to exchange information on 
exports of dual use goods and technologies to non-participating states 
for the purposes of enhancing transparency and assisting in developing 
a common understanding of the risks associated with the transfers of 
these items. For more information on the Wassenaar Arrangement go to 
http://www.wassenaar.org/.
    Many computers are exported and reexported using License Exception 
Adjusted Peak Performance (APP). The primary eligibility criteria 
considered for this license exception are destination country and the 
processing speed. In the past, the processing speed was measured using 
a formula that would result in the Composite Theoretical Performance 
(CTP) of a computer. Presently, the speed of computers is calculated 
using a formula that results in the Adjusted Peak Performance

[[Page 36987]]

(APP). The countries eligible for export or reexport under License 
Exception APP are divided into two groups or ``Tiers'', (Tier 1 and 
Tier 3). Countries listed in Tier 1 are ally countries or countries 
that do not pose a national security, nuclear or missile threat to the 
United States. Tier 3 Countries are all other countries with the 
exception of the terrorist supporting countries listed in Country Group 
E:1 of Supplement No. 1 to part 740.
    The National Defense Authorization Act (NDAA) Congressional 
Notification Requirement, Subsections 1211(d) and (e) of the National 
Defense Authorization Act (NDAA) for FY 1998 (Pub. L. 105-85, November 
18, 1997, 111 Stat. 1932), provides that a new composite theoretical 
performance level for purposes of licensing exports of digital 
computers to Tier 3 countries may not take effect until sixty days 
after the President submits a report to Congress setting forth the new 
level and the justification for the new level. The President sent a 
report to Congress on February 7, 2011 that identifies and provides 
justification for a new 1.5 Weighted TeraFLOPS (WT) control level using 
the Adjusted Peak Performance (APP) formula.

Revisions to the Commerce Control List

    This rule revises Export Control Classification Number (ECCN) 4A003 
on the Commerce Control List (CCL) to implement the changes to the 
Wassenaar List of Dual Use Goods and Technologies agreed to at the 
December 2009 WA Plenary meeting. These changes are described in more 
detail below.

    ECCN 4A003 is amended by:
--Revising the APP from 0.75 to 1.5 WT in the AT control paragraph of 
the License Requirements section to make it consistent with the 
revision in 4A003.b.
--Revising the APP from 0.75 to 1.5 WT (in two places) in Note 1 of the 
License Requirements section, to make it consistent with a revision in 
4A003.b.
--Revising the APP from 0.75 to 1.5 WT in 4A003.b to maintain control 
of leading edge computers, while decontrolling older computers.

Section 740.7 Computers (APP)

    The WA members agreed at the 2009 Plenary to raise the ``License 
Exception Adjusted Peak Performance'' (APP) parameter in ECCNs 4D001 
(0.25 WT), and 4E001 (0.25 WT), because of the advancement of computer 
technology. In License Exception APP, with regard to deemed exports of 
``development'' and ``production'' technology controlled by ECCN 4E001 
and source code controlled by ECCN 4D001, BIS is raising the 
eligibility parameter (APP) from 0.5 WT to 1.5 WT for foreign nationals 
of Computer Tier 1 countries (with the exception of the countries 
listed in Section 740.7(c)(3)(i) that have unlimited APP for 
``development'' and ``production'' technology and source code) and from 
0.1 WT to 0.5 WT for foreign nationals of Computer Tier 3 countries, 
because of the advancement of high performance computer technology.

Albania and Croatia

    This rule removes Albania and Croatia from Computer Tier 3 and 
places these countries in Computer Tier 1 in Section 740.7 License 
Exception APP. The requirements in the 1998 National Defense 
Authorization Act (NDAA) provides that the removal of a country from 
Tier 3 may take effect 120 days after Congress receives a report 
justifying such a removal. The President sent a report to Congress on 
February 7, 2011, therefore the 120 days have passed. Albania and 
Croatia have made significant progress in conforming to international 
nonproliferation norms and export control standards. Croatia is a 
member of the Australia Group, the Nuclear Suppliers Group, and the 
Wassenaar Arrangement. Albania has declared its adherence to the 
international export control regimes and is working on becoming a 
member of the regimes. Albania and Croatia are parties to the Nuclear 
Non-Proliferation Treaty, the Chemical Weapons Convention, and the 
Biological Weapons Convention. In addition, Albania and Croatia adhere 
to the Hague Code of Conduct and are now North Atlantic Treaty 
Organization (NATO) allies. This revision will result in fewer license 
applications, because Albania and Croatia will now be eligible for 
License Exception APP. In addition, the EAR will no longer require 
NDAA-based recordkeeping and post shipment verification reporting of 
exports of high performance computers to Albania and Croatia (see 
Section 743.2 of the EAR).

Section 734.4 ``De minimis U.S. Content''

    Foreign-made computers with an APP of 0.75 WT located in a foreign 
country are not eligible for the application of the de minimis rules 
when they contain U.S.-origin controlled semiconductors (other than 
memory circuits) classified under ECCN 3A001 and are destined to a 
country in Computer Tier 3 of Section 740.7 of the EAR. This rule 
increases the APP parameter from 0.75 WT to 1.5 WT in harmonization 
with the revision made to ECCN 4A003.

Section 743.2 ``High Performance Computers: Post Shipment Verification 
Reporting''

    This section outlines special post-shipment reporting requirements 
for the export of certain computers to destinations in Computer Tier 3 
of License Exception APP (Section 740.7 of the EAR). The reporting 
requirement applies to high performance computer exports to 
destinations in Computer Tier 3, as well as exports of commodities used 
to enhance computers previously exported or reexported to Computer Tier 
3 destinations, where the APP is greater than 0.75 WT. This rule 
increases that APP level from 0.75 WT to 1.5 WT in accordance with the 
WA agreement to increase the APP level in ECCN 4A003.

Export Administration Act

    Since August 21, 2001, the Export Administration Act of 1979, as 
amended, has been in lapse. However, the President has continued the 
EAR in effect under the International Emergency Economic Powers Act (50 
U.S.C. 1701-1707) through Executive Order 13222 of August 17, 2001 (3 
CFR, 2001 Comp. 783 (2002)), which has been extended by successive 
Presidential Notices, the most recent being that of August 12, 2010, 75 
FR 50681 (August 16, 2010).

Rulemaking Requirements

    1. This final rule has been determined to be not significant for 
purposes of Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, nor shall any person 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 rule 
involves two collections of information subject to the PRA. One of the 
collections has been approved by OMB under control number 0694-0088, 
``Multi Purpose Application,'' and carries a burden hour estimate of 
43.8 minutes for a manual or electronic submission. The other of the 
collections has been approved by OMB under control number 0694-0137, 
``'Licensing Exceptions and Exclusions,'' and carries a burden hour 
estimate of 21 minutes for a manual or electronic submission. Send 
comments regarding these burden estimates or any other aspect of these 
collections of information, including

[[Page 36988]]

suggestions for reducing the burden, to OMB Desk Officer, New Executive 
Office Building, Washington, DC 20503; and to Jasmeet Seehra, OMB Desk 
Officer, by e-mail at Jasmeet_K._Seehra@omb.eop.gov or by fax to 
(202) 395-7285; and to the Office of Administration, Bureau of Industry 
and Security, Department of Commerce, 14th and Pennsylvania Avenue, 
NW., Room 6622, Washington, DC 20230.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under Executive Order 13132.
    4. The provisions of the Administrative Procedure Act (5 U.S.C. 
553) requiring notice of proposed rulemaking, the opportunity for 
public participation, and a delay in effective date, are inapplicable 
because this regulation involves a military and foreign affairs 
function of the United States (5 U.S.C. 553(a)(1)). Immediate 
implementation of these amendments fulfills the United States' 
international obligation to the Wassenaar Arrangement on Export 
Controls for Conventional Arms and Dual Use Goods and Technologies. The 
Wassenaar Arrangement contributes to international security and 
regional stability by promoting greater responsibility in transfers of 
conventional arms and dual use goods and technologies, thus preventing 
destabilizing accumulations of such items. The Wassenaar Arrangement 
consists of 44 member countries that act on a consensus basis and the 
changes set forth in this rule implement agreements reached at the 
December 2009 plenary session of the WA. Because the United States is a 
significant exporter of the items in this rule, implementation of this 
provision is necessary for the WA to achieve its purpose. Delaying 
implementation will create a disruption in the movement of affected 
items globally because of disharmony between export control measures 
implemented by WA members, resulting in tension between member 
countries. Export controls work best when all countries implement the 
same export controls in a timely manner. If this rulemaking was delayed 
to allow for notice and comment, it would prevent the United States 
from fulfilling its commitment to the WA in a timely manner and would 
injure the credibility of the United States in this and other 
multilateral regimes.
    Further, no other law requires that a notice of proposed rulemaking 
and an opportunity for public comment be given for this final rule. 
Because a notice of proposed rulemaking and an opportunity for public 
comment are not required to be given for this rule under the 
Administrative Procedure Act or by any other law, the analytical 
requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) 
are not applicable. Therefore, this regulation is issued in final form. 
Although there is no formal comment period, public comments on this 
regulation are welcome on a continuing basis. Comments should be 
submitted to Sharron Cook, Office of Exporter Services, Bureau of 
Industry and Security, Department of Commerce, 14th and Pennsylvania 
Ave., NW., Room 2099, Washington, DC 20230.

List of Subjects

15 CFR Part 734

    Administrative practice and procedure, Exports, Inventions and 
patents, Research science and technology.

15 CFR Part 740

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

15 CFR Part 743

    Administrative practice and procedure, Reporting and recordkeeping 
requirements.

15 CFR Part 774

    Exports, Reporting and recordkeeping requirements.

    Accordingly, Parts 734, 740, 743 and 774 of the Export 
Administration Regulations (15 CFR Parts 730 through 774) are amended 
as follows:

PART 734--[AMENDED]

0
1. The authority citation for Part 734 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13020, 61 
FR 54079, 3 CFR, 1996 Comp., p. 219; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 
783; Notice of August 12, 2010, 75 FR 50681 (August 16, 2010); 
Notice of November 4, 2010, 75 FR 68673 (November 8, 2010).

Sec.  734.4  [Amended]

0
2. Section 734.4 is amended by removing the phrase ``0.75 Weighted 
TeraFLOPS (WT)'' and adding in its place ``1.5 Weighted TeraFLOPS 
(WT)'' in paragraph (a)(1).

PART 740--[AMENDED]

0
3. The authority citation for Part 740 continues to read as follows:

    Authority:  50 U.S.C. app. 2401 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; Notice 
of August 12, 2010, 75 FR 50681 (August 16, 2010).

Sec.  740.7  [Amended]

0
4. Section 740.7 is amended by:
0
a. Removing Albania and Croatia from the list of countries in paragraph 
(d)(1) and adding them in alphabetical order to paragraph (c)(1);
0
b. Removing the number ``0.5'' and adding in its place ``1.5'' in 
paragraph (c)(3)(ii); and
0
c. Removing the number ``0.1'' and adding in its place ``0.5'' in 
paragraph (d)(3)(i).

PART 743--[AMENDED]

0
5. The authority citation for Part 743 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 
12, 2010, 75 FR 50681 (August 16, 2010).

Sec.  743.2  [Amended]

0
6. Section 743.2 is amended by removing the phrase ``0.75 Weighted 
TeraFLOPS (WT).'' and adding in its place ``1.5 Weighted TeraFLOPS 
(WT).'' in paragraph (b).

PART 774--[AMENDED]

0
7. The authority citation for Part 774 continues to read as follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
10 U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c, 22 U.S.C. 3201 et 
seq., 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42 
U.S.C. 6212; 43 U.S.C. 1354; 15 U.S.C. 1824a; 50 U.S.C. app. 5; 22 
U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 
783; Notice of August 12, 2010, 75 FR 50681 (August 16, 2010).

0
8. In Supplement No. 1 to Part 774 (the Commerce Control List), 
Category 4--Computers, ECCN 4A003 is amended by revising the AT entry 
and Notes 1 and 2 in the License Requirements section, and paragraph b. 
in the Items paragraphs of the List of Items Controlled section, to 
read as follows:

Supplement No. 1 to Part 774--The Commerce Control List

* * * * *

4A003 ``Digital computers'', ``electronic assemblies'', and related 
equipment therefor, as follows and specially designed components 
therefor.

License Requirements

* * * * *

[[Page 36989]]

 
                                                               Country
                        Control(s)                              chart
 
 
                                * * * * *
AT applies to entire entry................................          AT Column 1.
(refer to 4A994 for controls on ``digital computers''.....
with a APP > 0.0128 but <= to 1.5 WT).....................
 
                                * * * * *
 

    Note 1:  For all destinations, except those countries in Country 
Group E:1 of Supplement No. 1 to part 740 of the EAR, no license is 
required (NLR) for computers with an ``Adjusted Peak Performance'' 
(``APP'') not exceeding 1.5 Weighted TeraFLOPS (WT) and for 
``electronic assemblies'' described in 4A003.c that are not capable 
of exceeding an ``Adjusted Peak Performance'' (``APP'') exceeding 
1.5 Weighted TeraFLOPS (WT) in aggregation, except certain transfers 
as set forth in Sec.  746.3 (Iraq).

    Note 2:  Special Post Shipment Verification reporting and 
recordkeeping requirements for exports of computers to destinations 
in Computer Tier 3 may be found in Sec.  743.2 of the EAR.

* * * * *

List of Items Controlled

* * * * *
    Items:
* * * * *
    b. ``Digital computers'' having an ``Adjusted Peak Performance'' 
(``APP'') exceeding 1.5 weighted TeraFLOPS (WT);
* * * * *

    Dated: June 15, 2011.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2011-15842 Filed 6-23-11; 8:45 am]
BILLING CODE 3510-33-P