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

CourtIndustry And Security Bureau
Citation85 FR 84211
Record Number2020-26552
SectionRules and Regulations
Published date28 December 2020
Federal Register, Volume 85 Issue 248 (Monday, December 28, 2020)
[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,
                [email protected].
                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
                0
                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;
                0
                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
                

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