60 Fed. Reg. 6111 (February 16, 1996) (emphasis added)

DEPARTMENT OF STATE

Bureau of Political Military Affairs

22 CFR Parts 123 and 126

[Public Notice 2294]

Amendment to the International Traffic in Arms Regulations

AGENCY: Department of State.

ACTION: Final rule.

SUMMARY: This rule would amend the International Traffic in Arms Regulations (ITAR) by establishing an exemption for the temporary export of cryptographic products for personal use. The effect of the change would be to ease the burden on U.S. citizens and lawful permanent residents who have the need to temporarily export cryptographic products when leaving the U.S. for brief periods of time.

EFFECTIVE DATE: February 16, 1996.

FOR FURTHER INFORMATION CONTACT:

Rose Biancaniello, Deputy Director for Licensing, Office of Defense Trade Controls, Department of State, (703) 875-6643 or FAX (703) 875-6647.

SUPPLEMENTARY INFORMATION: The U.S. Government has since 1993, at the direction of the President, been reviewing the U.S. policy regarding the domestic use of, and export controls on, cryptographic technology. While U.S. national security and foreign policy compel maintaining appropriate export controls on cryptography, the Department of State has continued to reform the export control procedures applicable to those products incorporating cryptography which are controlled by the ITAR in Category XIII(b)(1). For example, on September 2, 1994, the Department published (at 59 FR 45621) a final rule change which created a new Section 124.15. The section provides for a new arrangement by which the Department of State may provide approval for category XIII(b)(1) cryptography products to be distributed by U.S. manufacturers directly to foreign end users without obtaining an individual license for each transaction.

After extensive review, the Department of State has decided to further amend the regulations to provide for an exemption for the temporary export of cryptographic products for personal use. The exemption does not apply to other circumstances, for example, those in which a person contemplates sales, marketing or demonstration. Nor does the exemption apply to exports to destinations listed in Section 126.1 of the ITAR which are prohibited by a United Nations Security Council Resolution or to which the export (or for which the issuance of a license for the export) would be prohibited by a U.S. statute (e.g., by Section 40 of the Arms Export Control Act, 22 U.S.C. 2780, to countries that have been determined to have repeatedly provided support for acts of international terrorism, i.e., Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria).

This rule amends Part 123 to add a new Section 123.27 to reduce the burden on individual users of cryptographic products by providing an exemption for the temporary export for personal use of products covered by Category XIII(b)(1) when the product remains in the possession of the exporter or the possession of another U.S. citizen or lawful permanent resident traveling with him/her. For purposes of this exemption, a product is considered to be in the possession of the exporter if the exporter takes normal precautions to ensure the security of the product by locking the product in a hotel room, safe, or other comparably secure location; and, while in transit, the exporter keeps the product in his/her carry-on luggage or locked in baggage accompanying the exporter which has been checked with the carrier.

This amendment involves a foreign affairs function of the United States and thus is excluded from the procedures of Executive Order 12866 (58 FR 51735) and 5 U.S.C. 553 and 554.

However, interested parties are invited to submit written comments to the Department of State, Director, Office of Defense Trade Controls, Attn: Regulatory Change, Personal Use Cryptographic Products, Room 200, SA-6, Washington, DC 20520-0602.

This rule affects collection of information subject to the Paperwork Reduction Act (44 U.S.C. 3501 et seq), and will serve to reduce the burden on exporters by adding an exemption which will remove the current requirement for a license.

Paperwork Reduction Act

The record-keeping requirement contained in section 123.27(b) has been approved by OMB and has a control number of 1405-0103. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

List of Subjects

22 CFR Part 123

Arms and munitions, Exports, Reporting and recordkeeping requirements.

22 CFR Part 126

Arms and munitions, Exports.

Accordingly, for the reasons set forth in the preamble, title 22, chapter I, subchapter M, of the Code of Federal Regulations, is amended as set forth below:

PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

1. The authority citation for part 123 continues to read as follows:

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

2. A new § 123.27 is added to read as follows:

§ 123.27 Temporary export for personal use of Category XIII(b)(1) cryptographic products.

(a) District Directors of Customs may permit a U.S. citizen or a U.S. person who is a lawful permanent resident as defined by 8 U.S.C. 1101(a)(20) to temporarily export from the United States without a license not more than one each of any unclassified Category XIII(b)(1) cryptographic hardware product and not more than a single copy of each type of unclassified Category XIII(b)(1) cryptographic software product provided that:

(1) The software product(s) are to be used only on a simultaneously temporarily exported Category XIII(b)(1) hardware product or a simultaneously exported item on the Commerce Control List (CCL); and

(2) The cryptographic products covered by Category XIII(b)(1) are not destined for export to a destination listed in § 126.1 of the ITAR (22 CFR 126.1) which is prohibited by a United Nations Security Council Resolution or to which the export (or for which the issuance of a license for the export) would be prohibited by a U.S. statute (e.g., by Section 40 of the Arms Export Control Act, 22 U.S.C. 2780, to countries that have been determined to have repeatedly provided support for acts of international terrorism--currently Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria); and

(3)(i) The encryption products remain in the possession of the exporting person or the possession of another U.S. citizen or lawful permanent resident traveling with him/her, are for their exclusive use and not for copying, demonstration, marketing, sale, re-export or transfer of ownership or control. The export of cryptographic products identified in Category XIII(b)(1) in any other circumstances, for example, those in which a person contemplates sales, marketing, or demonstration must be licensed in accordance with policies and procedures established in this subchapter.

(ii) Special definition. For purposes of paragraph (a)(3)(i) of this section, a product is considered to be in the possession of the exporter if:

(A) The exporter takes normal precautions to ensure the security of the product by locking the product in a hotel room, safe, or other comparably secure location; and

(B) While in transit, the exporter keeps the product in his/her carry-on luggage or locked in baggage accompanying the exporter which has been checked with the carrier; and

(4) At the time of export from the U.S. and import into the U.S., the cryptographic products are with the individual's accompanying baggage or effects. They may not be exported or imported in unaccompanied baggage, mailed or transmitted by any other means (e.g., electronically); and, the cryptographic products must be returned to the U.S. at the completion of the stay abroad; and

(5) The exporter, upon request of a U.S. Customs officer, will submit the products to inspection at the time of export and/or import.

(b) Use of this exemption requires the exporter, in lieu of filing a Shippers' Export Declaration, to maintain, for a period of 5 years from the date of each temporary export, a record of that temporary export and the subsequent import. Included in this record must be a self certification that the individual complied with the conditions of paragraph (a) of this section and a self certification that he/she has no reason to believe that any of the temporarily exported cryptographic products were stolen, lost, copied, sold or otherwise compromised or transferred while abroad. The record should include the following information: A description of the unclassified cryptographic products; the countries entered, including the dates of entry and exit for each foreign country; and, the dates of temporary export from and subsequent import into the United States.

(c) In any instance where a product exported under this exemption is stolen, lost, copied, sold or otherwise compromised or transferred while abroad, the exporting person must, within 10 days of his/her return to the United States, report the incident to the Department of State, Office of Defense Trade Controls, Washington, D.C. 20520-0602. Also, any person who knows or has reason to know that cryptographic products exported under this exemption are being transferred, exported, or used for any other activity which must be licensed or otherwise authorized in writing by the Department of State, should immediately inform the Department of State, Office of Defense Trade Controls, Washington D.C. 20520-0602.

PART 126--GENERAL POLICIES AND PROVISIONS

1. The authority citation for part 126 continues to read as follows:

Authority: Secs. 2, 38, 40, 42 and 71, Arms Export Control Act, Pub. L. 90- 629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791 and 2797); E.O. 11958, 41 FR 4311; E.O. 11322, 32 FR 119; 22 U.S.C. 2658; 22 U.S.C. 287c; E.O. 12918, 59 FR 28205.

2. Section 126.1(a) is amended by designating the three sentences of the undesignated paragraph as the third, fourth and fifth sentences of paragraph (a) and by adding a new sixth sentence at the end of paragraph (a) to read as follows:

§ 126.1 Prohibited exports and sales to certain countries.

(a) * * * With regard to § 123.27 the exemption does not apply with respect to articles originating in or for export to countries prohibited by a United Nations Security Council Resolution or to which the export (or for which the issuance of a license for the export) would be prohibited by a U.S. statute (e.g., by Section 40 of the Arms Export Control Act, 22 U.S.C. 2780, to countries that have been determined to have repeatedly provided support for acts of international terrorism, i.e., Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria).

* * * * *

Dated: November 17, 1995.

Lynn E. Davis,

Under Secretary for Arms Control and International Security Affairs.

[FR Doc. 96-3190 Filed 2-15-96; 8:45 am]

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