Revisions to the Export Administration Regulations (EAR): Control of Military Electronic Equipment and Other Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML)
Federal Register, Volume 79 Issue 126 (Tuesday, July 1, 2014)
Federal Register Volume 79, Number 126 (Tuesday, July 1, 2014)
Rules and Regulations
Pages 37551-37575
From the Federal Register Online via the Government Printing Office www.gpo.gov
FR Doc No: 2014-14683
Page 37551
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
Bureau of Industry and Security
Docket No. 120330233-4307-03
RIN 0694-AF64
Revisions to the Export Administration Regulations (EAR): Control of Military Electronic Equipment and Other Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML)
AGENCY: Bureau of Industry and Security, Department of Commerce.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule adds to the Commerce Control List military electronics, technology and software for certain wing folding systems, certain superconducting and cryogenic equipment, and related items the President determines no longer warrant control under the United States Munitions List (USML). This also amends ECCNs 7A006 and 7A106 to apply the ``missile technology'' reason for control only to items in those ECCNs on the Missile Technology Control Regime (MTCR) Annex. This rule is being published simultaneously with a Department of State rule that amends the list of articles controlled by USML Category XI to control only those articles the President has determined warrant control in that category of the USML. Both rules are part of the President's Export Control Reform Initiative. The revisions in this rule also are part of the Department of Commerce's retrospective plan under EO 13563 completed in August 2011.
DATES: Effective dates--This rule is effective December 30, 2014, except for the addition of software and technology for certain wing folding systems to ECCNs 0D521 and 0E521 via Supplement No. 5 to part 774 of the EAR (amendatory instruction number 24), which is effective July 1, 2014.
ADDRESSES: The Department of Commerce's full retrospective regulatory review plan can be accessed at: http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules.
FOR FURTHER INFORMATION CONTACT: Brian Baker, Director, Electronics and Materials Division, Office of National Security and Technology Transfer Controls, (202) 482-5534, brian.baker@bis.doc.gov.
SUPPLEMENTARY INFORMATION:
Background
The Export Control Reform Initiative
This final rule is part of the Administration's Export Control Reform Initiative, the objective of which is to protect and enhance U.S. national security interests. The Initiative began in August 2009 when President Obama directed the Administration to conduct a broad-
based review of the U.S. export control system to identify additional ways to enhance national security. In April 2010, then-Secretary of Defense Robert M. Gates, describing the initial results of that effort, explained that fundamental reform of the U.S. export control system is necessary to enhance national security. Once the Department of State's International Traffic in Arms Regulations (ITAR) and its U.S. Munitions List (USML) are amended so that they control only the items that provide the United States with a critical military or intelligence advantage or otherwise warrant such controls, and the Export Administration Regulations (EAR) are amended to control military items that do not warrant USML controls, the U.S. export control system will enhance national security by (i) improving interoperability of U.S. military forces with allied countries, (ii) strengthening the U.S. industrial base by, among other things, reducing incentives for foreign manufacturers to design out and avoid U.S.-origin content and services, and (iii) allowing export control officials to focus government resources on transactions that pose greater concern.
The changes described in this rule and the State Department's rule amending USML Category XI are based on a review of that category by the Defense Department, which worked with the Departments of State and Commerce in preparing the amendments. The review was focused on identifying the types of articles that are now controlled by the USML that either (i) are inherently military and otherwise warrant control on the USML, or (ii) if of a type common to civil applications, possess parameters or characteristics that provide a critical military or intelligence advantage to the United States and that are almost exclusively available from the United States. If an article was found to satisfy either or both of those criteria, the article remains on the USML. If an article was found not to satisfy either criterion, but is nonetheless a type of article that is ``specially designed'' for military applications, then, generally, it is identified in one of the new ``600 series'' ECCNs created by this rule.
Section 38(f) of the Arms Export Control Act (AECA) obligates the President to review the USML ``to determine what items, if any, no longer warrant export controls under'' the AECA. The President must report the results of the review to the Congress and wait 30 days before removing any such items from the USML. The report must ``describe the nature of any controls to be imposed on that item under any other provision of law.'' 22 U.S.C. Sec. 2778(f)(1). The Department of State has delivered the required report to the Congress.
The Proposed Rules
This final rule is the successor to two proposed rules, both entitled Revisions to the Export Administration Regulations (EAR): Control of Military Electronic Equipment and Related Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML). The first proposed rule (herein the November 28 (military electronics) rule) published in the Federal Register on November 28, 2012 (77 FR 70945). The second proposed rule (herein the July 25 (military electronics) rule) was based on a review of the public comments to the first proposed rule and published on July 25, 2013 (78 FR 45026). Simultaneously, the Department of State published two proposed rules on November 28, 2012 (77 FR 70945) (herein the State November 28 (military electronics) rule) and on July 25, 2013 (78 FR 45018) (herein the State July 25 (military electronics) rule). This final rule is based on an evaluation of those comments by the Departments of Defense, State and Commerce with additional input from other Departments on various portions of the rules.
In addition, this rule adds provisions controlling development software and technology for certain wing folding systems to the EAR. These provisions are related to prior proposed rules of the Departments of State and Commerce: ``Amendments to the International Traffic in Arms Regulations: Revisions of U.S. Munitions List Category VIII,'' November 7, 2011 (76 FR 68694) (herein the State November 7 (aircraft) rule) and ``Revisions to the Export Administration Regulations (EAR): Control of Aircraft and Related Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML),'' November 7, 2011 (76 FR 68675) (herein the November 7 (aircraft) rule). Upon review of the current state of development of such software and technology, the Department of Commerce, with the concurrence of the
Page 37552
Departments of Defense and State, concluded that they should be controlled for export under the EAR rather than the ITAR. This is because these items do not provide a critical military or intelligence advantage to the United States or otherwise warrant ITAR controls but they should be controlled because they provide at least a significant military or intelligence advantage to the United States or foreign policy reasons.
Overview of This Rule
This rule adds to the EAR's CCL certain military electronic equipment and related articles now controlled by the ITAR's USML Category XI and certain cryogenic and superconductive equipment that are now controlled by ``catch all'' provisions of the ITAR's USML Categories VI, VII, VIII, and XV. This rule also corrects two ECCNs in CCL Category 7 to apply the ``missile technology'' reason for control only to items that are on the Missile Technology Control Regime (MTCR) Annex. Finally, this rule controls under ECCNs 0D521 and 0E521 software and technology for the ``development'' of certain wing folding systems for aircraft powered by gas turbine engines while the United States seeks to have such software and technology added to the Dual-Use List of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar Arrangement).
This rule also adopts the changes to the structure of the ECCNs and the elimination of the ``Units'' paragraphs from the ECCNs as set forth in the rule entitled ``Revisions to the Export Administration Regulations (EAR) To Make the Commerce Control List (CCL) Clearer'' published in the Federal Register on October 4, 2013 (78 FR 61874).
Alignment With the Wassenaar Arrangement Munitions List
The Administration has stated since the beginning of the Export Control Reform Initiative that the reforms are consistent with the obligations of the United States to the multilateral export control regimes. Accordingly, the Administration, in this and subsequent rules, exercises its national discretion to implement, clarify, and, to the extent feasible, align its control text with those of the regimes. This rule maintains the alignment that exists between the USML, in which military electronics are controlled under Category XI, and the Wassenaar Arrangement Munitions List (herein WAML), in which military electronic equipment is controlled under WAML category ML11, and by ECCN 3A611 by this rule. Similarly, 3B611 aligns with WAML category ML18, which, inter alia, controls ``specially designed or modified `production' equipment for the `production' of products specified by the Munitions List, and ``specially designed'' components therefor.''
This rule aligns cryogenic and superconducting equipment currently controlled in Categories VI, VII, VIII, and XV of the USML with WAML category ML20 by controlling them under ECCN 9A620. As with other ``600 series'' ECCNs, this rule follows the existing CCL numbering pattern for test, inspection and production equipment (3B611 and 9B620), software (3D611 and 9D620) and technology (3E611 and 9E620), rather than strictly following the Wassenaar Arrangement Munitions List pattern of placing production equipment, software and technology for munitions list items in WAML categories ML18, ML21 and ML22, respectively. BIS believes that including the ECCNs for test, inspection and production equipment, software, and technology in the same category as the items to which they relate results in an easier to understand CCL than would separate categories.
Public Comments on the July 25 (Military Electronics) Rule and BIS Responses
Comments Concerning Manner of Listing Items Controlled Only for Antiterrorism and China Military End-Use Reasons
Previous rules creating new ``600 series'' ECCNs have included paragraphs in some of those ECCNs, designated as .y paragraphs, which list items that require a license only if going to countries that have been designated as State Sponsors of Terrorism or to the People's Republic of China. In the preamble to the July 25 (military electronics) rule, BIS announced that it was considering four options to address items of limited military significance for which a license is required only if destined for a terrorist supporting destination or the People's Republic of China. Those options are: (1) Creating separate ECCN-specific .y paragraphs; (2) creating a single list of ``600 series'' items subject only to antiterrorism and China military end-use license requirements; (3) establishing a classification request procedure whereby a ``600 series'' item could be designated as subject to only antiterrorism and China military end-use license requirements, but eliminating the .y listings from the regulations; or (4) removing all .y lists completely. BIS invited comments on these four options.
Comment 1
Comments were divided between options 1 and 2--the options that result in more complex, detailed, and tailored ECCNs. No commenter supported options 3 or 4--the options that would have resulted in significantly shorter and simpler ECCNs. One commenter stated of the four listed options, it favored number 2, but also proposed combining options 1 and 2 to form a fifth option. Under that fifth option, BIS would compile a single .y list composed of basic hardware that is common to many ECCNs and also would list .y items that are specific to particular ECCNs in .y paragraphs within those ECCNs.
Response 1
BIS has decided to accept the commenters' requests for a more complex, tailored regulatory structure by creating a type of a single .y list so that less significant controls are imposed on the less significant items listed. In addition, BIS believes that most of the items that would be appropriate for .y treatment are electronic in nature. Therefore, rather than create a new ECCN to cover such items, this final rule revises the .y paragraph in ECCN 3A611 to include parts, components, accessories and attachments that are eligible for .y treatment regardless of the ECCN of the ``600 series'' item that they are used in or with. Thus, BIS has revised the heading of paragraph .y to apply to ``Specific ``parts,'' ``components,'' ``accessories'' and ``attachments'' ``specially designed'' for a commodity subject to control in a ``600 series'' ECCN and not elsewhere specified in any ``600 series'' ECCN . . . .'' This revision combines the benefits of options 1 and 2. BIS did not adopt option 3 because it would create a time consuming process and, although it would tailor .y classification decisions closely to the characteristics of individual items, it would not provide public notice of its results. BIS did not adopt option 4 because doing so would impose license requirements that apply to more destinations and licensing policies that are more restrictive than are warranted for the items that have been selected for .y treatment.
Comments Proposing Additional Items .y Paragraphs
Comment 2
Commenters suggested over 100 items that they believed should be included in .y paragraphs (or excluded from the
Page 37553
definition of ``specially designed''). The commenters favored, in descending order of preference: exclusion from the definition of ``specially designed,'' then inclusion on a universal .y list, and finally inclusion in ECCN 3A611.y. One commenter included in its list some items that were already in ECCN 3A611.y or were already excluded from the definition of specially designed.
Response 2
Technical experts from the Department of Defense reviewed the items suggested by the commenters. On the basis of that review, this final rule includes 37 commodities in ECCN 3A611.y, but also gives that paragraph the status of a universal .y list--i.e., the 3A611.y commodities are those ``specially designed'' for any ``600 series'' item or defense article on the USML, not just those ``specially designed'' for 3A611 items or USML Category XI defense articles. Export license requirements allow the United States Government to see the pattern of usage of military equipment. The knowledge of usage patterns of even parts and components that are relatively unsophisticated or that do not directly contribute to the military functions of a ``600 series'' commodity can provide valuable insights into military capabilities and activities of other nations. Therefore, the .y classification must be limited to those parts, components, accessories and attachments for which knowledge of usage patterns are unlikely to provide such insights. Based on the technical experts' review, this final rule removes 11 paragraphs that were included in the July 25 (military electronics) rule because the commodities they listed were redundant or problematic from a nomenclature standpoint. Those 11 commodities are: (1) Electric couplings; (2) cathode ray tubes; (3) rotron fans; (4) electric fuses other than those ``specially designed'' for explosive detonation; (5) grid vacuum tubes; (6) audio headphones, earphones, handsets, and headsets; (7) intercom systems; (8) loudspeakers; (9) electric switches other than RF, pressure, diplexer, duplexer, circulator or isolator switches; (10) vacuum tubes other than TWTs, klystron tubes, or tubes ``specially designed'' for articles enumerated in USML Category XII; and (11) waveguides. This final rule adds 22 paragraphs for a total of 35.
Comment 3
In commenting on the items to be included in the .y paragraphs, one commenter suggested that certain items should be excluded from the specially designed definition based on paragraph (b)(2) of that definition. Those items are not expressly mentioned in paragraph (b)(2) but the commenter implied that they are included within the scope of the items that are expressly mentioned. Spacers, fasteners and grommets are expressly mentioned in paragraph (b)(2). This commenter listed circuit board and enclosure hardware and standoffs as examples of spacers. It listed ``rods, thumbscrews, standoffs, and turnbuckles, etc.'' as examples of fasteners. It listed grommet strips as grommets.
Response 3
The July 25 (military electronics) rule did not propose changes to nor did it request comments on paragraph (b)(2) of ``specially designed.'' As with all provisions of the EAR, BIS is reviewing ways to make them current and directly relevant to the objectives of the EAR. Thus, BIS will consider at another time whether paragraph (b)(2) warrants revision. BIS reminds the commenter that Sec. 748.3(e) invites the submissions of classification requests for consideration by the Departments of Defense, State, and Commerce regarding whether, under paragraph (b)(1) of ``specially designed,'' extraordinarily insignificant items not listed in paragraph (b)(2) warrant treatment as ``specially designed'' items.
Comments Concerning Whether To Move Certain ``600 Series'' Electronic Items From CCL Category 3 to CCL Categories Containing Similar Non-
``600 Series'' Items
The July 25 (military electronics) rule included radars, acoustic systems, computers, telecommunications equipment, and navigation and avionics equipment ``specially designed'' for a military use in a single CCL category (Category 3--Electronics). Doing so is consistent with the USML, which also covers such commodities in a single category (Category XI--Military Electronics). However, the CCL divides those same types of items not ``specially designed'' for a military use into four categories. Computers are in Category 4--Computers. Telecommunication equipment is in Category 5, Part 1--
Telecommunications. Radars and acoustic systems are in Category 6--
Sensors and Lasers. Navigation and avionics equipment are in Category 7--Navigation and Avionics. The July 25 (military electronics) rule proposed to place in Categories 4, 5, 6 and 7 ECCNs that contain no substantive text but merely advised readers that proposed ECCN 3A611 in Category 3 controlled radars, acoustic systems, computers and telecommunications equipment ``specially designed'' for a military use. The rule invited comment on which approach to take, 1) the July 25 (military electronics) rule approach of placing the items in a single category with cross references or 2) placing each type of item in the category that includes similar items that already are on the CCL.
Comment 4
Comments were divided on this topic. Two reasons were provided in support of placing these ``600 series'' items in the categories that control similar items currently on the CCL. First, having similar items (e.g., military radar and civil radar) in different categories is likely to lead to confusion and misclassification or even incorrect ECCNs on licenses. Second, moving military computers, telecommunications devices and radars to separate categories that are aligned with the current CCL is likely to be necessary as the government moves towards its stated goal of a single control list for both military and commercial items.
Four reasons were provided in support of placing these ``600 series'' items in a single CCL category. (1) Such placement would better align such items with the order of review (Supplement No. 4 to Part 774 of the EAR). (2) The Department of State Export Control Reform rules tend to classify components according to the end item for which they are designed. (3) The items in CCL Category 3 in the proposed rule often are installed into other items. (4) The existing CCL approach, which follows the pattern of the Wassenaar Arrangement Dual Use List (although the lack of a definition for ``avionics'' sometimes causes uncertainty as to whether a component in CCL Category 7 or Category 9).
One commenter also noted that BIS does not appear to have contemplated creating specialized electronics ECCNs related to end items (e.g., 0Y611 for vehicle electronics or 8Y611 for surface vessel and submersible electronics).
Response 4
On balance, BIS has concluded that the approach proposed in the July 25 (military electronics) rule is the better of the two. The alternative would have resulted in the creation of 20 new ECCNs with no change in the scope of controls. Accordingly, this final rule makes no changes to the July 25 (military electronics) rule on this point. As noted above, commenters made valid points for both approaches. However, BIS has concluded that attempting to spread the contents of proposed ECCN
Page 37554
3A611 over five CCL categories (one each for radar, acoustic sensors, telecommunications equipment, computers and electronic parts and component that are common to multiple categories) would unnecessarily complicate and lengthen the EAR.
As noticed by one commenter, BIS did not propose creating new ECCNs in categories 0 and 8 for electronic items that are specially designed for ground vehicles, surface vessels and submersibles. BIS believes that such ECCNs are not necessary because as noted in the related controls paragraph of ECCN 3A611 in the July 25 (military electronics) rule and in this final rule ``Electronic items `specially designed' for military application that are not controlled in any USML category but are within the scope of another `600 series' ECCN are controlled by that `600 series' ECCN.'' This sentence would resolve any ambiguity concerning whether a particular device is to be treated as a specially designed part of a land vehicle, surface vessel or submersible vessel or as a military electronic item controlled under 3A611.
Three of the four types of items about which BIS sought comments on possible movement from CCL Category 3 to CCL categories containing similar non-``600 series'' are computers, telecommunication, and radar. Each of these three was expressly mentioned in ECCN 3A611 in the July 25 (military electronics) rule and each is expressly mentioned in a category other than Category 3 on the CCL. The fourth, avionics, was added to the proposal in response to a comment on the November 28 (military electronics) rule. Land vehicles, surface vessels and submersible vessels are not expressly mentioned in ECCN 3A611 and were not suggested by any commenters. Therefore, less likelihood of confusion existed in the case of these items than in the case of the items about which BIS sought comments on this topic.
Comments Concerning Defining Elements Used in ``600 Series'' Software and Technology ECCNs
Comment 5
Two commenters objected to the use of the word ``or'' in software and technology ``600 series'' ECCNs, which apply, respectively, to software for the ``development,'' ``production,'' operation or maintenance of specified items and to technology for the ``development,'' ``production,'' operation, installation, maintenance, repair, overhaul or refurbishing of specified items. The commenters noted that BIS interprets the elements of ``use'' software and technology elsewhere in the EAR as operation, installation, maintenance, repair, overhaul and refurbishing.'' The commenters stated that use of the disjunctive in the ``600 series'' ECCNs would force academic institutions to screen foreign students and visitors before even showing them how to operate ``600 series'' or other ECCN equipment. The commenters expressed the opinion that such screening would require expensive, complex security programs with no clear national security benefit.
One commenter noted that in response to similar comments in other rules creating ``600 series'' ECCNs, BIS stated that``nearly all the software and technology in existing and proposed ``600 series'' ECCNs comes from USML categories. One goal of the U.S. government in the Export Control Reform Initiative is not to decontrol completely and inadvertently items the President determines no longer warrant control on the USML.'' The commenter noted that ``BIS believes the `or' formulation achieves this objective.'' The commenter found this reason ``unpersuasive'' because ``it essentially states that even though the items are being transferred to the CCL they still will be subject to USML type controls. In our opinion, this contradicts the objectives of the Export Control Reform Initiative to create `bright lines' between the two control lists. We worry that by creating inconsistencies within the EAR this will lead to confusion and misunderstanding. Moreover, this outcome appears inconsistent with the goal of the Export Control Reform Initiative to reduce unnecessary and burdensome controls and to allow the government and regulated community to focus resources on transactions that pose the greatest concern.''
Response 5
BIS continues to believe in identifying in the new software and technology controls the types of software and technology that warrant control. The controls are not increasing or decreasing the scope of what is controlled under the ITAR's definition of ``technical data.'' (See 22 CFR Sec. 120.10). Thus, BIS is not increasing the regulatory compliance burden with respect to such technology. To the contrary, it is reducing the regulatory compliance burden with respect to such software and technology to the extent their release would be within the scope of one of the license exceptions (such as License Exception STA) that is available in the EAR but not in the ITAR.
The commenters' proposal would result in a significant decontrol of technology that is now ITAR controlled, which is not the objective of the reform effort or this final rule. BIS recognizes that it is treating software and technology for ``600 series'' items more strictly than software and technology for similar dual-use items. However, this stricter treatment is warranted because of the military nature of the ``600 series'' items to which the software and technology relate.
BIS also recognizes that its decision requires academic institutions to be aware of the nationalities of students and researchers for whom they provide instruction on how to operate these items that are ``specially designed'' for military applications and, in some instances, obtain authorization before providing such instruction even if the recipient of the instruction uses the item for a civil or commercial purpose. Again, BIS believes that this requirement is justified by the military nature of the items enumerated in the ``600 series'' ECCNs. Moreover, these requirements are no stricter or more burdensome than the requirements currently imposed for these items by the ITAR.
Recommendations for Removal of Certain EAR Provisions as Erroneous or Obsolete
Comment 6
One commenter recommended removing text describing certain helix tubes, microwave solid state amplifiers and traveling wave tube amplifiers from the related control notes ECCNs 3A001, 3D001, and 3E001 that direct the reader to regulations of the Department of State, Directorate of Defense Trade Controls (DDTC). This same commenter recommended removing similar references to technology for certain electron vacuum tubes from the related control notes of ECCN 3E003. The commenter recommended these changes because under proposed rules published by the Department of State these items would not be ``positively controlled under Category XI or XV of the USML.''
Response 6
BIS agrees with the commenter's assessment and concludes that changes made to USML Category XV by the rule entitled ``Amendments to the International Traffic in Arms Regulations: Revision of U.S. Munitions List Category XV (79 FR 27180, May 13, 2014) and by the revisions to USML Category XI being published simultaneously with this rule make obsolete all of the references in the ``Related Controls'' paragraphs of ECCNs 3A001 and 3D001, all of the references
Page 37555
in the ``Related Controls'' paragraph of ECCN 3E001 except those to ECCN 3E101 and 3E201 and all of the references in the ``Related Controls'' paragraph of 3E003 except that to 3E001. Accordingly, this final rule revises ``Related Controls'' paragraphs in ECCNs 3A001, 3D001, 3E001 and 3E003 to remove the obsolete references. This rule also adds general references to USML Categories XI and XV and ECCNs 9A515 and 3A611 to the related controls paragraph of ECCN 3A001.
Comments Concerning ECCN 3A611, in General
Comment 7
One commenter recommended adding the phrase ``not enumerated in either a USML category or another ECCN'' to the heading of ECCN 3A611 and removing similar text from paragraph .a of that ECCN. The commenter said that the statement applies to the entire ECCN not just paragraph .a.
Response 7
BIS is making no changes to the rule in response to this comment. As noted in Supplement No. 4 to Part 774 of the EAR--the Commerce Control List Order of Review, the USML takes precedence over the CCL. That precedence applies to all ECCNs, and BIS believes that it is not necessary to reiterate this concept in the heading of the ``600 series'' ECCNs.
Comment 8
One commenter recommended that in the ``Reasons for Control,'' the phrase ``NS applies to entire entry except 3A611.y'' be revised to read ``NS applies to entire entry except 3x611.y or other portions of 3x611 not controlled by Wassenaar Munitions List or Wassenaar Dual-Use List'' to comply with Section 5(c)(6) of the Export Administration Act, which prescribes certain limits on unilateral national security export controls, and that such unilateral controls should be identified on the CCL. This commenter also recommended that the missile technology (MT) reason for control be added to ECCN 3A611 with the phrase ``MT applies to portion of 3x611 controlled by MTCR--MT Column 1'' because items covered on the Missile Technology Control Regime (MTCR) Annex (the basis for imposing the MT reason for control in the EAR) should be identified. The commenter indicated that his reasoning for this proposal was that it might not be possible to identify all items in 3A611 that are covered on the MTCR Annex at this time because continuing transfers ``make this a moving target,'' suggesting that once the Export Control Reform Initiative was complete a comprehensive review would be in order.
Response 8
BIS is making no changes to the rule in response to this comment. BIS believes that all of the items covered by ECCN 3A611 (including those listed in 3A611.y) and all of the items covered by ECCNs 3B611, 3D611 and 3E611 are within the scope of the Wassenaar Arrangement Munitions List. BIS also believes that none of the items in ECCN 3A611 as published in this final rule are listed on the MTCR Annex.
Comment 9
One commenter recommended removing related controls (1), (2), (4) and (5), which identify items that are subject to the ITAR, from the ``Related Controls'' paragraph of ECCN 3A611 because the ``ITAR, rather than the EAR, should define what is controlled on the ITAR.'' The commenter stated specifically that part (1) is redundant, especially if the commenter's recommendation to put ``not enumerated in . . . a USML category'' in the heading of 3A611 is accepted. The commenter recommended that if ``Part (2)'' is retained, it should be revised to change ``defense articles'' to ``a characteristic in the text of a U.S. Munitions List description of a defense article.'' Without that change, the commenter asserted the specific application could concern a trivial functionality having no connection to the reason for the control of the defense article. Parts (4) and (5), if retained, should similarly be revised to change ``is `specially designed' for defense articles'' to ``furthers a characteristic in the text of a U.S. Munitions List description of a defense article.''
Response 9
BIS is making no changes to the rule based on this comment. One purpose of related control notes is to alert readers to regulations published by other government agencies that control items related to those controlled on the CCL (see 15 CFR 738.2(d)(2)(iii)(B)). The four paragraphs that the commenter recommended be removed provide such alerts with respect to commodities controlled by the ITAR that are related to items controlled in ECCN 3A611. The EAR cannot define what is controlled on the ITAR, and BIS does not intend that they do so. That which is subject to the jurisdiction of the ITAR is that which is described in the ITAR's U.S. Munitions List. See 22 CFR 120.6 and 121.1. However, BIS believes that such cross references help readers who need to understand the relationship between the ITAR and the EAR--
two separate bodies of rules that regulate exports and reexports--and encourage readers to read the relevant USML categories when determining the jurisdictional and classification status of items.
Comment 10
One commenter recommended either deleting ECCN 3A611.a (and 3A611.x Note 1, 4A611, 5A611, 6A611, 7A611) or changing the phrase `` `specially designed' for military use'' to either ``having a predominant military use'' or ``having a critical military or intelligence advantage.'' This commenter stated that as defined in the EAR, the term ``specially designed'' does not make sense when applied to end items. Paragraph (a)(1) of the ``specially designed'' definition applies to end items. Under that paragraph, an item is ``specially designed'' if it is peculiarly responsible for achieving or exceeding controlled performance levels, characteristics, or functions. The commenter stated that ``military use'' is not a performance level or a characteristic. The function of ``military use'' is achieved by any military use. Therefore, under this definition, there is no difference between ``specially designed for military use'' and just ``military use.'' The commenter stated that removal of 3A611.a would be consistent with the goals of the Export Control Reform Initiative to avoid controls based simply on military use. Additionally, the commenter asserted that ```Military use' with no further modification is far broader than existing Sec. 120.3(a) of the ITAR.''
Response 10
This final rule replaces the term ``military use'' in ECCN 3A611 with the phrase ``military application'' to clarify that mere use by a military organization does not bring something within the ambit of ECCN 3A611. One of the goals of the current phase of export control reform is to control on the CCL items the President determines no longer warrant control on the USML without inadvertently decontrolling items currently on the USML. To do so, some standards must be expressed in broad terms. BIS believes that the phrase ```specially designed' for a military application'' provides adequate specificity and clarity to distinguish items that are developed in ways that enable them to perform a military role or function from items that, although used by the military, are indistinguishable from items that are widely used in civil activities. Thus, contrary to the assertion of the commenter, paragraph (a)(1) of the
Page 37556
definition is relevant to such controls because ``military application'' is the referenced ``characteristic.'' If someone does something to an item during its development to achieve the characteristic of being for a military application, then the item would be within the scope of paragraph (a)(1). The term ``characteristic'' was never limited to technical control thresholds, such as heat, speed, size, power, or strength.
Comment 11
One commenter recommended changing the phrase ``nor controlled in another ``600 series'' ECCN'' to ``nor controlled in another ECCN'' in ECCNs 3A611.a, 3A611.a Note 1, 3A611.x Note 1, 3B611.a, 3B611.x, and 7A611. This same commenter recommended inserting ``or another ECCN'' following the phrase ``not enumerated in any USML category'' in ECCNs 4A611 and 5A611. The commenter asserted that many existing ECCNs, after years of intense negotiations, have technical descriptions designed to be more precise than ``military use'' or ``specially designed.'' The commenter argued that this ``progress toward these major objectives of the ECR would be undone in these areas unless this recommendation is accepted.''
Response 11
The changes proposed by the commenter are inconsistent with the order of review in Supplement No. 4 to Part 774 of the EAR. That order specifies that ``600 series'' ECCNs take precedence over non-600 series ECCNs. Therefore, this final rule does not adopt the changes proposed in this comment. This means that if an item were ``specially designed'' for a military application or a military item not described on the USML, then it would be within the scope of a 600 series ECCN, even if the same type of item were described in an ECCN elsewhere on the CCL. This is not a change from the long-standing rule under the ITAR that if a part or component were specifically designed or modified for a defense article, then the part or component would be ITAR controlled, even if the CCL described the same item or type of item.
Comments Concerning ECCN 3A611.a--Electronic ``Equipment,'' ``End Items'' and ``Systems'' ``Specially Designed'' for Military End Use That Are Not Enumerated in Any USML Category or Controlled by Another ``600 Series'' ECCN
Comment 12
One commenter stated that electronically steerable airborne weather radar should not be controlled by USML Category XI because its use is for civil aviation. The State July 25 (military electronics) rule would have included all ``radar incorporating pulsed operation with electronics steering of transmit beam in elevation and azimuth'' in USML Category XI. This commenter proposed eight characteristics that it believed should exclude such radars from the USML. The commenter believes that if electronically steerable radar that it manufactures were not controlled in Category XI of the USML, it would be subject to the EAR and controlled in ECCN 6A998.a. The commenter pointed out the necessity of rapidly shipping replacement radar units or parts to replace or repair broken radar units in aircraft that may be on the ground in any of a large number of countries. The commenter noted that if a radar unit were classified in a ``600 series'' ECCN, the ability to use License Exception STA would be sharply curtailed. The commenter stated that a radar designed for a civil aircraft application should be eligible for License Exceptions STA and RPL.
Response 12
BIS is making no changes to the rule based on this comment.
A similar comment on the State July 25 (military electronics) rule was submitted to that department. After considering that comment, the Department of State has added a note to Category XI(a)(3)(xii) excluding radars, not otherwise controlled in the ITAR, operating with a peak transmit power less than or equal to 250 watts, and employing a design determined to be subject to the EAR via a commodity jurisdiction determination. Please see the Department of State's companion to this rule for its full response to the comment.
If an airborne radar unit has been determined to be subject to the EAR pursuant to such a commodity jurisdiction, it would be subject to the EAR. If the radar were given a CCL classification as part of that commodity jurisdiction process, the ECCN so given would govern. If the classification were not given as part of the commodity jurisdiction process, the order of review in Supplement No. 4 to Part 774 of the EAR would govern its treatment under the EAR. Following the order of review, one would proceed to the ``600 series.'' If the radar were a ``specially designed'' part for an aircraft controlled under ECCN 9A610--Military aircraft and related items, paragraph .x of that ECCN would control the radar. If it were not so ``specially designed,'' one would check 3A611.a (electronics ``specially designed'' for a military application) and 3A611.x ``specially designed'' for a commodity controlled in USML Category XI. If the radar were not so specially designed, one would look outside the ``600 series'' to CCL Category 6. BIS notes that most radars used in civil aircraft are controlled by ECCN 6A998.a.
Comment 13
One commenter recommended that proposed ECCN 3A611.a be revised to clarify that it does not control routine telecommunications or computer networks used by a military end-user for administrative functions, where such networks utilize only equipment and software that are not enumerated in a USML Category or controlled by a ``600 series'' ECCN and where such networks that do not contain, and are not designed or configured to contain, types of security as described in USML Category XIII(b).
This commenter noted that military organizations use communications networks for command and control purposes and for routine administrative matters or, in some instances, to facilitate communications home by troops stationed abroad. The commenter stated that even though operated by the military, communication networks for administrative purposes typically have no higher level of security than similar networks used by a business or even a residential end-user--
whereas command and control networks typically use special encryption devices controlled under USML Category XIII(b) to maintain a higher level of security. This commenter suggested that, based on the definition of ``system'' in the EAR, and the phrase ``specially designed for military use,'' as it appears in ECCN 3A611.a and in the note immediately following that paragraph, could be read to include administrative communications networks that do not contain, and were not designed or configured, to contain USML Category XIII(b) levels of security that would be considered ``specially designed'' for military use. The commenter recommended adding a note stating:
Page 37557
ECCN 3A611.a does not include a routine telecommunications or computer network that utilizes only equipment and software that are not enumerated in a USML Category or controlled by a ``600 series'' ECCN where the network does not contain, and is not designed or configured to contain, types of security as described in USML Category XIII(b).
Response 13
BIS does not intend that ECCN 3A611.a apply to communication networks that, although owned, leased, or operated by military organizations, have no security or technical features other than those found in ordinary commercial communications networks. However, BIS believes that the information security assurance systems described in USML Category XIII(b) are not the only features that distinguish a network that performs military functions from one that performs only routine administrative or civilian communications functions. To draw the proper distinction, this final rule replaces the term ``specially designed for military use'' in ECCN 3A611 with the phrase ``specially designed for military application.'' BIS believes that the latter phrase addresses the commenter's concerns by emphasizing that ECCN 3A611.a does not apply to electronic ``equipment,'' ``end items'' and ``systems'' merely because the military uses them. Rather, the commodity must be ``specially designed'' to perform a military function or activity. This change is consistent with the long-standing policy in the ITAR that the mere use of an item should not determine its jurisdictional or control status. See 22 CFR 120.3.
Comment 14
One commenter recommended changing ``a'' to ``another'' in the phrase ``not enumerated in any USML category or controlled by a `600 series' ECCN'' that appears in the note immediately following ECCN 3A611.a.
Response 14
BIS agrees that the recommended change more precisely states the scope of ECCN 3A611.a; therefore, this final rule adopts that change.
Comments Applicable to ECCN 3A611.c or .d.
Comment 15
One commenter stated that the definition of output power is inconsistent among ECCNs that control microwave transistors. ECCN 3A001 uses ``average output power;'' 3A982 uses both ``average output power'' and ``pulsed output power;'' and 3A611 uses ``saturated power.'' The commenter asserted that this variation will create confusion and inconsistent results.
Response 15
After the comment period for the July 25 (military electronics) rule closed, changes to the Wassenaar Arrangement's Dual Use List, Category 3 were adopted at its December 2013 plenary meeting. Those changes included new criteria for paragraphs 3.A.1.b.2 (MMIC power amplifiers) and 3.A.1.b.3 (discrete microwave transistors). The changes eliminated the need for ECCN 3A982 by expanding the operating frequency ranges in paragraphs 3.A.1.b.2 and 3.A.1.b.3 to include the operating frequency ranges currently found in the ECCN 3A982. This change made the MMIC power amplifiers and discrete microwave transistors currently controlled under ECCN 3A982 eligible for inclusion in ECCN 3A001, which is based on Wassenaar Arrangement Dual Use List paragraph 3.A.1. The Wassenaar Arrangement Dual Use List changes also revised the criteria for inclusion of MMIC power amplifiers and discrete microwave transistors in 3.A.1.b.2 and 3.A.1.b.3. Those changes, which will eliminate inconsistencies in the definitions of output power, will be incorporated into ECCN 3A001.b.2 and .b.3 by the rule implementing the Wassenaar Arrangement 2013 plenary meeting decisions, which BIS expects will be published and become effective before this final rule becomes effective. This final rule will then build on the changes made by the Wassenaar 2013 plenary meeting rule by creating ECCN 3A611 and moving some MMIC power amplifiers and discrete microwave transistors from 3A001.b.2 and .b.3 to 3A611.c and .d based on the values for power added efficiency, fractional bandwidth, or peak saturated power output (or some combination thereof).
Comment 16
One commenter noted that the frequency range from 2.7 GHz-2.9 GHz is internationally recognized as a standard band for civilian air traffic control (ATC) systems. Regulating devices in this band has the effect of limiting U.S. participation in the global civil ATC market, and providing an unfair advantage to our worldwide competitors, as well as an incentive for our foreign competitors to invest in developing their own amplifier technology. This particular frequency band is predominantly used for civil ATC rather than military applications. In addition, the international ATC band is under consideration to be expanded upwards to 3.2 GHz, due to conflicts with civil communications in the lower end of the band.
Response 16
BIS' implementation of the decisions of the Wassenaar Arrangement December 2013 plenary meeting, noted in Response 15, will, when published in the EAR revise ECCN 3A001.b.2 (MMIC power amplifiers) and b.3 (discrete microwave transistors) to encompass the frequency range noted in this comment. The additional technical parameters of power added efficiency, fractional bandwidth and peak saturated power output determine whether MMIC power amplifiers are controlled in ECCN 3A611.c. The additional technical parameters of power added efficiency and peak saturated power output determine whether discrete microwave transistors are controlled in ECCN 3A611.d. The EAR control over these devices are based on the multinational Wassenaar Arrangement, under which other member states should implement similar export controls, reducing any disadvantage faced by U.S. companies.
Comment 17
Several commenters stated that the parameters in ECCN 3A611.c and .d would cover MMIC power amplifiers and discrete microwave transistors that have civil applications now, or that are likely to have important civil applications in the near future. The civil applications mentioned were Wi Fi, Wi Max, point-to-point radios for cellular backhaul, Commercial Ka-band used in commercial satellite based wireless internet ground stations and V-Band radios used in small commercial cellular networks. The specific points raised by these are as follows.
The differences between devices that would be controlled by ECCN 3A611.c or .d and those that are controlled by ECCN 3A001.b.2 or .b.3 in many instances are only a matter of efficiency. Because increasing efficiency is driving development in both civil and military applications, higher efficiency is not a good criterion for distinguishing military from civil applications. Increasing efficiency, saturated power and bandwidth are common objectives in both military and civil applications. In commercial cellular base stations, high power efficient devices enable achieving necessary power levels without combining multiple lower power devices, thereby simplifying manufacturing, lowering costs and producing more efficient transmitter design. Increasing bandwidth is needed to handle greater data volume in commercial networks, and OEMs are requiring vendors of semiconductor
Page 37558
power devices to supply it for increased system capability and inventory management reasons. The performance levels in proposed ECCN 3A611.c and .d do not lead to a valid conclusion that a device is inherently military or that it is unlikely to be used in a commercial application.
The frequency range from 3.1-3.5 GHz is not restricted to military use. The International Telecommunication Union (ITU) designates this band for radio location, and the band is also in active use internationally as an additional civilian air traffic control (ATC) band. Today's transistors for air traffic control can exhibit efficiencies, which commonly exceed 60%. The commenter cited one example of a transistor that it stated achieved such efficiency exceeding 60%.
One commenter stated that proposed ECCN 3A611.c.9, .c.10 and .c.11 overlap with ECCN 3A001.b.2.e, .b.2.f and .b.2.g as set forth in the Wassenaar Arrangement implementation rule published in June 2013. The commenter noted that the three 3A611 paragraphs differ from the corresponding 3A001 paragraphs in that the former specify values for peak saturated output power whereas the latter specify values for average output power instead and only the former specify a value for power added efficiency. In addition, proposed 3A611.c.9 specifies a value of fractional bandwidth whereas 3A001.b.2.e does not. This commenter stated that, although its current products do not meet the threshold values for inclusion in 3A611, only a small amount of advancement would be needed for its products to do so. The commenter recommended the following changes to ECCN 3A611 to provide a reasonable allowance for improvements of commercial amplifiers. In paragraph .c.9, increase the peak saturated output power from 1 W to 3 W and the power added efficiency from 15% to 35%. In paragraph .c.10, increase the peak saturated output power form 31.62 mW to 100 mW and the power added efficiency from 25% to 35%. In paragraph .c.11, increase the peak saturated output power from 10 mW to 100 mW and the power added efficiency from 10% to 20%.
One commenter reiterated its comment made in response to the November 28 (military electronics) rule that most gallium nitride (``GaN'') MMICs and discrete transistors currently available on the commercial market (and classified as ECCN 3A982 or 3A001 or designated EAR99) perform at levels that exceed even the revised proposed power added efficiency thresholds for ECCN 3A611. Accordingly, that metric, as currently proposed, still does not sufficiently focus the proposed regulation on high performance parts. Rather, most GaN MMICs and discrete transistors that presently are used in commercial telecommunications, backhaul, point-to-point and satellite applications would still meet the proposed thresholds under ECCN 3A611.
The commenter reiterated its request for BIS to consider the power added efficiency thresholds set forth in its earlier comment, which it stated reflect the realities of the commercial market.
One commenter recommended adding the phrase ``specially designed for military use'' to paragraphs .c and .d. The commenter stated that without this change, the paragraphs would cover MMICs and transistors that currently are classified in ECCNs 3A001 and 3A982 or those that currently designated EAR99. The order of review in Supplement No. 4 to Part 774 would cause ECCN 3A611 to prevail over the others. The commenter states that it is aware of a large number of circuits and transistors that have been classified under ECCN 3A001 that would be classified under 3A611.c or .d causing a large number of commercial products that have already been exported on the global market to be controlled by ECCN 3A611.
Response 18
Experts in this area from the Departments of Defense, State, and Commerce reviewed the parameters proposed in ECCN 3A611.c (MMIC power amplifiers) and .d (discrete microwave transistors). The conclusion of that review was that, in most instances, the civil market for these devices at the parameters set forth in the proposed rule is minimal to non-existent. However, the reviewers concluded existing civil applications justify raising the power added efficiency in four instances. Accordingly, in this final rule, for the operating frequency range exceeding 2.7 GHz up to and including 2.9 GHz, the power added efficiency threshold has been raised to 55% for MMIC power amplifiers and to 60% for discrete microwave transistors from a proposed threshold of 50% for both. In the operating frequency range exceeding 2.9 GHz up to and including 3.2 GHz, the power added efficiency threshold has been raised to 55% for MMIC power amplifiers and to 60% for discrete microwave transistors from proposed thresholds of 45% for MMIC power amplifiers and 50% for discrete microwave transistors. Although more efficient and powerful MMIC power amplifiers and discrete microwave transistors may have widespread use in civil communications in the future, this rule is based on conditions as they exist at the time the rule is being written. Like any other aspect of the EAR, ECCN 3A611 paragraphs .c and .d may be modified in the future if changes in civil and military applications and concerns warrant a change.
As noted in Response 15, BIS intends to publish a rule implementing the decisions of the Wassenaar Arrangement December 2013 plenary meeting. That rule will revise ECCN 3A001.b.2 (MMIC power amplifiers) and b.3 (discrete microwave transistors) to encompass the frequency ranges used in ECCN 3A611.c and .d. The additional technical parameters of power added efficiency, fractional bandwidth and peak saturated power output will determine whether MMIC power amplifiers are controlled in ECCN 3A611.c. The additional technical parameters of power added efficiency and peak saturated power output determine whether discrete microwave transistors are controlled in ECCN 3A611.d. That rule also will remove ECCN 3A982. Thus, none of the MMIC power amplifiers or discrete microwave transistors that this final rule controls under ECCN 3A611 will be EAR99 at the time this final rule becomes effective, and therefore, no changes are being made to this rule. The EAR control over these devices is based on the multinational Wassenaar Arrangement, under which other member states should implement similar export controls, reducing any disadvantage faced by U.S.-based producers of these products.
Comment 19
One commenter stated that the broadband proposed language for each frequency range, in the definition of the broadband behavior, regulates devices that operate far below that range and whose center frequency is below the performance limits of 3A001 and 3A982 (0.0128 but
