Revisions to Encryption Items
Federal RegisterJan 14, 2000
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DEPARTMENT OF COMMERCE
Bureau of Export Administration
15 CFR Parts 734, 740, 742, 770, 772, and 774
[Docket No. 000110010-0010-01]
RIN: 0694-AC11
Revisions to Encryption Items
AGENCY: Bureau of Export Administration, Commerce.
ACTION: Interim final rule; request for comments.
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SUMMARY: This rule amends the Export Administration Regulations (EAR)
to allow the export and reexport of any encryption commodity or
software to individuals, commercial firms, and other non-government
end-users in all destinations. It also allows exports and reexports of
retail encryption commodities and software to all end-users in all
destinations. Post-export reporting requirements are streamlined, and
changes are made to reflect amendments to the Wassenaar Arrangement.
This rule implements the encryption policy announced by the White House
on September 16 and will simplify U.S. encryption export rules.
Restrictions on terrorist supporting states (Cuba, Iran, Iraq, Libya,
North Korea, Sudan or Syria), their nationals and other sanctioned
entities are not changed by this rule.
DATES: This rule is effective January 14, 2000. Comments must be
received on or before May 15, 2000.
ADDRESSES: Written comments on this rule should be sent to Frank J.
Ruggiero, Regulatory Policy Division, Bureau of Export Administration,
Department of Commerce, P.O. Box 273, Washington, DC 20044. Express
mail address: Frank J. Ruggiero, Regulatory Policy Division, Bureau of
Export Administration, Department of Commerce, 14th Street and
Pennsylvania Ave, N.W., Room 2705, Washington, DC 20230.
FOR FURTHER INFORMATION CONTACT: James A. Lewis, Director, Office of
Strategic Trade, at (202) 482-0092.
SUPPLEMENTARY INFORMATION:
Background:
On September 16, 1999, the U.S. announced a new approach to its
encryption export control policy. This approach rests on three
principles: A technical review of encryption products in advance of
sale, a streamlined post-export reporting system, and a process that
permits the government to review exports of strong encryption to
foreign governments. The full range of national interests continue to
be served by this new policy: supporting law enforcement and national
security, protecting privacy and promoting electronic commerce.
Encryption export controls will be simplified and U.S. companies will
have new opportunities to sell their products in the global
marketplace.
This regulation also implements changes for encryption items made
by the Wassenaar Arrangement, including: conversion of Category 5--Part
2 (Information Security) of the Commerce Control List (CCL) to a
positive list; creation of a Cryptography Note and removal of
encryption software from the General Software Note; decontrol of 64-bit
mass market software and commodities, including components; and
decontrol of certain 512-bit key management products.
The EAR is amended as follows:
1. In Sec. 734.2, Important EAR Terms and Principles, unrestricted
encryption source code under Sec. 740.13(e), commercial encryption
source code under Sec. 740.17(a)(5)(i) and retail products under
Sec. 740.17(a)(3) are exempted from Internet download screening
requirements in Sec. 734.2 (b)(9)(iii). A revised screening mechanism
for other encryption products exported to government end-users is
added. Please note that Sec. 734.2(b)(9) contains the relevant
definitions for the export of encryption source code and object code
software. In addition, cross-referencing changes are made to
Secs. 734.7, 734.8, and 734.9.
2. In Sec. 740.13, Technology and Software Unrestricted, changes
are made to reflect amendments to the Wassenaar Arrangement.
Specifically, encryption software is no longer eligible for mass market
treatment under the General Software Note. Encryption commodities and
software are now eligible for mass market treatment under the new
Cryptography Note in Category 5--Part 2 of the CCL. This Note
multilaterally decontrols mass market encryption commodities and
software up to and including 64-bits. Such products, after review and
classification by BXA, are classified under Export Commodity Control
Numbers (ECCNs) 5A992 or 5D992, thereby releasing them from ``EI''
(Encryption Items) and ``NS'' (National Security) controls, and making
them eligible for export and reexport to all destinations (see
Sec. 742.15(b)(1)(iii) of the EAR). Once mass market encryption
software and commodities are released from ``EI'' controls they may be
eligible for de minimis and publicly available treatment (see part 734
of the EAR).
3. Also in Sec. 740.13, to, in part, take into account the ``open
source'' approach to software development, unrestricted encryption
source code not subject to an express agreement for the payment of a
licensing fee or royalty for commercial production or sale of any
product developed using the source code can, without review, be
released from ``EI'' controls and exported and reexported under License
Exception TSU. Intellectual property protection (e.g., copyright,
patent, or trademark) would not, by itself, be construed as an express
agreement for the payment of a licensing fee or royalty for commercial
production or sale of any product developed using the source code. To
qualify, exporters must notify BXA of the Internet location (e.g., URL
or Internet address) or provide a copy of the source code by the time
of export. These notifications are only required for the initial
export; there are no notification requirements for end-users
subsequently using the source code. Notification can be made by e-mail
to [email protected].
Review and classification are not required for foreign made
products using this source code. Moreover, under Sec. 744.9, exporters
of unrestricted encryption source code are not restrained from
providing technical assistance to foreign persons working with such
source code. In addition, exporters of source code are not subject to
Internet download screening requirements under Sec. 734.2(b)(9)(iii).
Posting of the source code on the Internet (e.g., FTP or World Wide Web
site), where it may be downloaded by anyone, would not establish
``knowledge'' (as that term is defined in the EAR) of a prohibited
export or reexport. Such posting would not trigger ``red flags''
necessitating the affirmative duty to inquire under the ``Know Your
Customer'' guidance provided in Supplement No. 3 to Part 732.
Otherwise, compliance with EAR requirements as to prohibited exports
and reexports still apply.
4. In Sec. 740.17, Encryption Commodities and Software, language is
added to implement the Administration's new policy. License Exception
ENC (Encryption Commodities and Software) is revised as follows:
a. Encryption items under ECCNs 5A002, 5D002 or 5E002 can be
exported and reexported to foreign subsidiaries of U.S. companies,
including the transfer of encryption technology to their foreign
employees in the U.S., without technical review and classification. Any
items developed by the U.S. company for sale or retransfer outside the
U.S. company are subject to review and classification by BXA. Foreign
companies with subsidiaries in the U.S.
[[Page 2493]]
can apply for Encryption Licensing Arrangements (ELAs) to obtain
treatment equivalent to that extended to foreign subsidiaries of U.S.
parent companies.
b. A new paragraph, entitled ``Encryption commodities and
software,'' is created to implement the broad authorization for
encryption exports contained in the September 16 announcement. Under
this paragraph, any encryption commodity, software or components of any
key length classified under ECCNs 5A002 and 5D002 can be exported and
reexported to individuals, commercial firms and other non-government
end-users. Previous sector-specific liberalizations for banks and
financial institutions, health and medical end-users and on-line
merchants are subsumed into this new paragraph. Previous restrictions
limiting exports to foreign commercial firms for internal company
proprietary use are removed. In addition, foreign products developed
from encryption components, while subject to the EAR, do not require
review and classification prior to reexport. Exports and reexports to
government end-users require a license.
c. A new paragraph entitled ``Retail encryption commodities and
software'' is created. Retail encryption commodities and software under
ECCNs 5A002 and 5D002 are those which are widely available and can be
exported and reexported to any end-user (including any Internet and
telecommunications service provider), to provide products and services
(e.g., e-commerce, client-server applications, or software
subscriptions) to any end-user. The criteria to determine eligibility
as a retail product include functionality, sales volume, distribution
methods, ability to modify products and requirements for substantial
support by the supplier. Substantial support for retail encryption
commodities and software would mean a service contract or other
significant vendor support beyond what is minimally necessary for the
product's operation. Help desk calls are not considered substantial
support. Refer to Sec. 740.17(a)(3) of the EAR for a detailed
definition of retail encryption commodities and software (which may
include components as well as encryption source code) and an
illustrative, yet non-restrictive, list of such products. Finance-
specific, 56-bit non-mass market products with a key exchange greater
than 512 bits and up to 1024 bits, network-based applications and other
products which are functionally equivalent to retail products are
considered retail products.
Encryption software patches for retail products remain eligible
under License Exception TSU and certain upgrades for retail products,
where the cryptographic functionality has not changed, are authorized
under License Exception ENC. Also, foreign products developed from
retail encryption components, while subject to the EAR, require no
technical review or license authorization prior to reexport; however,
post-export reporting requirements exist. Retail encryption products
are not subject to Internet download screening requirements listed in
Sec. 734.2(b)(9)(iii); however, all other general prohibitions, such as
those for the seven terrorist-supporting countries, apply.
d. A new paragraph is added to License Exception ENC entitled
``Telecommunications and Internet service providers.''
Telecommunications and Internet service providers can obtain and use
any encryption product under this license exception to provide
encryption services, including public key infrastructure services for
the general public; however, provision of services specific to
governments (e.g., running a virtual private network for a government
agency), will require a license.
e. A paragraph entitled ``Commercial encryption source code and
general purpose encryption toolkits'' is added. You may export and
reexport general purpose encryption toolkits and encryption source
code, not released under Sec. 740.13, classified under ECCN 5D002,
subject to the following provisions:
(1) Commercial encryption source code which would be considered
publicly available under Sec. 734.3 and which is subject to an express
agreement for the payment of a licensing fee or royalty for commercial
production or sale of any product developed using the source code, can
be exported or reexported to any end-user. This source code, which
includes some ``community'' source code, may be exported or reexported
without review and classification, provided you have submitted to BXA,
by the time of export, written notification of the Internet location
(e.g., URL or Internet address) or a copy of the source code. These
notifications are only required for the initial export; there are no
notification requirements for end-users subsequently utilizing the
source code. The notification can be sent via e-mail to
[email protected].
(2) Encryption source code which would not be considered publicly
available may be exported or reexported to any non-government end-user
after review and classification by BXA.
(3) General purpose encryption toolkits may be exported and
reexported after review and classification by BXA to any non-government
end-user.
Note to this paragraph: Neither review and classification nor
reexport licensing requirements are required under this section for
foreign finished products using U.S.-origin source code, toolkits
and components; yet the foreign finished products remain subject to
the EAR. Post-export reporting for foreign products developed for
commercial sale with source code and general purpose encryption
toolkits exported under this paragraph is limited to the name and
address of the foreign manufacturer and certain non-proprietary
technical information about the foreign product. Exporters should
always be aware of the General Prohibitions identified in part 736
of the EAR (e.g., prohibited exports and reexports to Denied Persons
and embargoed destinations).
f. Grandfathering and Upgrades in Key Length: Encryption
commodities and software previously approved under a license, or
eligible for License Exception ENC, excluding items previously approved
only to U.S. subsidiaries, can be exported and reexported to non-
government end-users without additional review and classification.
Previously classified financial-specific or certain 56-bit products are
eligible for export and reexport to any end-users without an additional
classification. All previously classified products can be upgraded
provided the only change is in the key length used for confidentiality
and key exchange. Exporters must, prior to export of an upgraded
product, certify in a letter from a corporate official the only change
is the key length for confidentiality or key exchange algorithms and
there is no other change in cryptographic functionality.
g. Exporters may export any product to any non-government end-user
30 days after receipt by BXA of a complete classification request,
unless otherwise notified by BXA. No exports to government end-users
are allowed under this provision and BXA reserves the right to suspend
eligibility in those instances where requested additional information
has not been provided or when the classification review is not
proceeding in an appropriate fashion.
h. Reporting requirements under License Exception ENC are
eliminated for many encryption items. Remaining reporting requirements
are streamlined to reflect business models normally used by exporters.
Note that reporting requirements for exports and reexports of
encryption components can be adjusted or reduced, on a case-by-case
basis, provided an exporter supplies BXA with sufficient information
during the initial technical review of the U.S.
[[Page 2494]]
encryption component concerning its incorporation into a final foreign
product. Examples include those components restricted by their design
for use in certain types of products. BXA will notify exporters of such
treatment in its classification determination. All required
notifications, upgrade certifications and reports should be sent
electronically or mailed to the addresses cited in this regulation.
Note to this paragraph: Post-export reporting is required for
certain exports to foreign banks and financial institutions.
5. In part 740, Supplement No. 3 is removed. Supplement No. 3
previously listed countries eligible to receive certain encryption
products; such products are now eligible for export and reexport to all
destinations.
6. In Sec. 742.15, the licensing policy section for exports and
reexports of encryption items is changed as follows:
a. Review and classification are required by BXA before certain
encryption items can be released from ``EI'' and ``NS'' controls under
ECCNs 5A992, 5D992 and 5E992. These items include: 64-bit mass market
encryption commodities and software; certain encryption items up to and
including 56-bits; and asymmetric key exchange algorithms not exceeding
512 bits or an elliptic curve at 112 bits. Encryption items under these
ECCNs do not require a license or license exception and may be exported
and reexported as ``NLR'' (No License Required).
b. Upgrades: 40 and 56-bit DES or equivalent mass market
commodities and software previously classified as eligible for License
Exception ENC or TSU may be upgraded to 64-bits for the confidentiality
algorithm. Exporters must, prior to export of an upgraded product,
certify to BXA in a letter from a corporate official that the only
change is the key length for confidentiality or key exchange algorithms
and there is no other change in cryptographic functionality. Note that
other mass market encryption commodities and software previously
exported under License Exception ENC or TSU are now classified as
either 5A992 or 5D992 and eligible for ``NLR'' treatment. Encryption
items under 5A992, 5D992 and 5E992 are not subject to Internet download
screening requirements listed in Sec. 734.2(b)(9)(iii).
c. The licensing policies for exports and reexports of encryption
items for banks and financial institutions, health and medical end-
users, and on-line merchants, as well as U.S. subsidiaries, are
subsumed into a new licensing policy paragraph for all encryption items
under ECCNs 5A002, 5D002 or 5E002 eligible for License Exception ENC.
For U.S. subsidiaries, any encryption item (including technology
classified under 5E002 to foreign employees located in the U.S.) is
permitted for export or reexport under License Exception ENC without
review and classification. Also, any encryption item, including
components, under ECCNs 5A002 or 5D002 can be exported and reexported
to non-government end-users in all destinations. Retail products under
5A002 or 5D002 can be exported and reexported to all end-users.
d. Licenses required for exports and reexports of encryption items
to governments, or Internet and telecommunications service providers
for the provision of services specific to governments, may be
considered favorably for civil uses.
e. Under Encryption Licensing Arrangements (ELAs), distributors and
resellers can export and reexport under ELAs as long as they comply
with restrictions contained in the ELA.
7. In Sec. 770.2, Commodity interpretations, a new interpretation
for ``Encryption commodity and software reviews'' is added. This
interpretation clarifies which encryption items require a review and
what a review entails.
8. In part 772, Definition of terms, definitions for the following
terms are added: Asymmetric Algorithm, Encryption Component, Government
End-User, Open Cryptographic Interface and Symmetric Algorithm.
9. In part 774, the Commerce Control List, ECCNs 5A002 and 5D002
are revised to reflect changes in the Wassenaar Arrangement, and the
Cryptography Note is added as Note 3 to Category 5--Part 2.
In addition to these changes, BXA is making the following
clarifications and interpretations for all encryption items subject to
the EAR.
1. The review and classification process is used to classify
encryption items for their proper licensing mechanism and not to delay
or deny a proposed transaction. Once a classification request is
received, the item's specifications are reviewed and processed in
accordance with Sec. 748.3 of the EAR to determine its classification.
Once completed, exporters will receive a document by mail informing
them of the product's technical classification and proper licensing
mechanism. The EAR also provides an appeal process for exporters
unsatisfied with BXA's product classification (see Sec. 756.2 of the
EAR).
2. It is BXA's intent to allow end-users of encryption items to
provide their customers with encryption products and services. However,
exports to Internet and telecommunications service providers are
subject to restrictions when providing services specific to government
end-users.
3. It was not the intent of the new Wassenaar language for ECCN
5A002 to be more restrictive concerning Message Authentication Codes
(MAC). ``Data authentication equipment that calculates a Message
Authentication Code (MAC) or similar result to ensure no alteration of
text has taken place, or to authenticate users, but does not allow for
encryption of data, text or other media other than that needed for the
authentication'' continues to be excluded from control under 5A002.
These commodities are controlled under ECCN 5A992.
4. Note that Sec. 740.8, Key Management Infrastructure (KMI),
authorizes the export and reexport of certain encryption software and
commodities under License Exception KMI and will continue as an
eligible licensing mechanism for encryption products.
5. A number of companies have expressed concern that the European
Union (EU) may implement a general authorization permitting encryption
items to be exported freely within the EU and other specified
countries. If and when the EU implements such an authorization, the
Administration will take the necessary steps to ensure U.S. exporters
are not disadvantaged.
6. Note that Serbia and the Taliban controlled areas of Afghanistan
are embargoed destinations.
7. Please refer to the BXA website at ``www.bxa.doc.gov'' for a
detailed explanation of the EAR, the Commerce Control List, the
licensing process and key terms used in this regulation. Although the
Export Administration Act (EAA) expired on August 20, 1994, the
President invoked the International Emergency Economic Powers Act and
continued in effect the EAR, and, to the extent permitted by law, the
provisions of the EAA in Executive Order 12924 of August 19, 1994, as
extended by the President's notices of August 15, 1995 (60 FR 42767),
August 14, 1996 (61 FR 42527), August 13, 1997 (62 FR 43629), August
13, 1998 (63 FR 44121), and August 10, 1999 (64 FR 44101).
Rulemaking Requirements
1. This interim final rule has been determined to be significant
for purposes of E.O. 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
[[Page 2495]]
Reduction Act (PRA), unless that collection of information displays a
currently valid OMB Control Number. This rule involves collections of
information subject to the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.). These collections have been approved by the Office of
Management and Budget under control numbers 0694-0088, ``Multi-Purpose
Application'' and 0694-0104, ``Commercial Encryption Items Transferred
from the Department of State to the Department of Commerce.'' The
Department has submitted to OMB an emergency request for approval of
the changes to the collection of information under OMB control number
0694-0104.
This interim final rule reduces the annual burden hours associated
with collection 0694-0104 from 703 hours to 692 hours, and reduces
collection 0694-0088 by 200 burden hours. For collection 0694-0104, it
is estimated it will take companies 5 minutes to complete notifications
for source code under License Exceptions TSU and ENC. It will take
companies 15 minutes to complete upgrade notifications. For reporting
under License Exception ENC and licenses for encryption items, it will
take companies 4 hours to complete semi-annual reporting requirements.
Comments on collection 0694-0104 are welcome, and will be accepted
until April 13, 2000. Comments are invited on: (a) Whether the
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information shall
have practical utility; (b) the accuracy of the agency's estimate of
the burden of the proposed collection of information; (c) ways to
enhance the quality, utility, and clarity of the information to be
collected; and (d) ways to minimize the burden of the collection of
information on respondents, including through the use of automated
collection techniques or other forms of information technology.
Comments regarding these burden estimates or any other aspect of the
collection of information, including suggestions for reducing the
burdens, should be forward to Frank J. Ruggiero, Regulatory Policy
Division, Office of Exporter Services, Bureau of Export Administration,
Department of Commerce, P.O. Box 273, Washington, D.C. 20044, and David
Rostker, Office of Management and Budget, OMB/OIRA, 725 17th Street,
NW, NEOB Rm. 10202, Washington, D.C. 20503.
3. This rule does not contain policies with Federalism implications
sufficient to warrant preparation of a Federalism assessment 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 (Sec. 5 U.S.C. 553(a)(1)). Further, no
other law requires that a notice of proposed rulemaking and an
opportunity for public comment be given for this interim final rule.
Because a notice of proposed rulemaking and an opportunity for public
comment are not required to be given for this rule under 5 U.S.C. or by
any other law, the analytical requirements of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.) are not applicable.
However, because of the importance of the issues raised by this
regulation, it is issued in interim final form and comments will be
considered in the development of final regulations. Accordingly, the
Department of Commerce encourages interested persons who wish to
comment to do so at the earliest possible time to permit the fullest
consideration of their views.
The period for submission of comments will close May 15, 2000. The
Department will consider all comments received before the close of the
comment period in developing final regulations. Comments received after
the end of the comment period will be considered if possible, but their
consideration cannot be assured. The Department will not accept public
comments accompanied by a request that a part or all of the material be
treated confidentially because of its business proprietary nature or
for any other reason. The Department will return such comments and
materials to the persons submitting the comments and will not consider
them in the development of final regulations. All public comments on
these regulations will be a matter of public record and will be
available for public inspection and copying. In the interest of
accuracy and completeness, the Department requires comments in written
form. Comments should be provided with 5 copies.
Oral comments must be followed by written memoranda, which will
also be a matter of public record and will be available for public
review and copying.
The public record concerning these regulations will be maintained
in the Bureau of Export Administration Freedom of Information Records
Inspection Facility, Room 6881, Department of Commerce, 14th Street and
Pennsylvania Avenue, N.W., Washington, DC 20230. Records in this
facility, including written public comments and memoranda summarizing
the substance of oral communications, may be inspected and copied in
accordance with regulations published in Part 4 of Title 15 of the Code
of Federal Regulations. Information about the inspection and copying of
records at the facility may be obtained from the Bureau of Export
Administration Freedom of Information Officer, at the above address or
by calling (202) 482-0500.
List of Subjects
15 CFR Part 734
Administrative practice and procedure, Exports, Foreign trade.
15 CFR Part 740
Administrative practice and procedure, Exports, Foreign trade,
Reporting and record keeping requirements.
15 CFR Parts 742, 770, 772, and 774
Exports, Foreign Trade.
Accordingly, parts 734, 740, 742, 770, 772, and 774 of the Export
Administration Regulations (15 CFR parts 730 through 799) are amended
as follows:
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. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; 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; Notice of November 12, 1998, 63 FR 63589, 3 CFR, 1998 Comp., p.
305; Notice of August 10, 1999, 64 FR 44101 (August 13, 1999).
2. 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.;
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 61
FR 58767, 3 CFR, 1996 Comp., p. 228; Notice of August 10, 1999, 64
FR 44101 (August 13, 1999).
3. The authority citation for part 742 continues to read as
follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
18 U.S.C. 2510 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a;
E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851, 58
FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12924, 59 FR 43437, 3 CFR,
1994 Comp., p. 917; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p.
950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; Notice of
November 12, 1998, 63 FR 63589, 3 CFR, 1998 Comp., p. 305; Notice of
August 10, 1999, 64 FR 44101 (August 13, 1999).
[[Page 2496]]
4. The authority citation for part 770 continues to read as
follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 61
FR 58767, 3 CFR, 1996 Comp., p. 228; Notice of August 10, 1999, 64
FR 44101 (August 13, 1999).
5. The authority citation for part 772 continues to read as
follows:
Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 61
FR 58767, 3 CFR, 1996 Comp., p. 228; Notice of August 10, 1999, 64
FR 44101 (August 13, 1999).
6. 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); 18 U.S.C. 2510 et seq.; 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; 46 U.S.C.
app. 466c; 50 U.S.C. app. 5; E.O. 12924, 59 FR 43437, 3 CFR, 1994
Comp., p. 917; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228;
Notice of August 10, 1999, 64 FR 44101 (August 13, 1999).
PART 734--[AMENDED]
7. Section 734.2 is amended by revising paragraph (b)(9)(ii) and
adding new paragraph (b)(9)(iii) to read as follows:
Sec. 734.2 Important EAR terms and principles.
* * * * *
(b) * * *
(9) * * *
(i) * * *
(ii) The export of encryption source code and object code software
controlled for ``EI'' reasons under ECCN 5D002 on the Commerce Control
List (see Supplement No. 1 to part 774 of the EAR), except for source
code eligible for export under Secs. 740.13(e) and 740.17(a)(5)(i),
includes downloading, or causing the downloading of, such software to
locations (including electronic bulletin boards, Internet file transfer
protocol, and World Wide Web sites) outside the U.S., or making such
software available for transfer outside the United States, over wire,
cable, radio, electromagnetic, photo optical, photoelectric or other
comparable communications facilities accessible to persons outside the
United States, including transfers from electronic bulletin boards,
Internet file transfer protocol and World Wide Web sites, unless the
person making the software available takes precautions adequate to
prevent unauthorized transfer of such code.
(iii) Subject to the General Prohibitions described in part 736 of
the EAR, such precautions for Internet transfers of products eligible
for export under Secs. 740.17(a)(2) (encryption software products),
(a)(5)(ii) (certain encryption source code) and (a)(5)(iii) (encryption
toolkits) shall include such measures as:
(A) The access control system, either through automated means or
human intervention, checks the address of every system outside of the
U.S. or Canada requesting or receiving a transfer and verifies such
systems do not have a domain name or Internet address of a foreign
government end-user (e.g., ``.gov,'' ``.gouv,'' ``.mil'' or similar
addresses);
(B) The access control system provides every requesting or
receiving party with notice that the transfer includes or would include
cryptographic software subject to export controls under the Export
Administration Regulations, and anyone receiving such a transfer cannot
export the software without a license or other authorization; and
(C) Every party requesting or receiving a transfer of such software
must acknowledge affirmatively that the software is not intended for
use by a government end-user, as defined in part 772, and he or she
understands the cryptographic software is subject to export controls
under the Export Administration Regulations and anyone receiving the
transfer cannot export the software without a license or other
authorization. BXA will consider acknowledgments in electronic form
provided they are adequate to assure legal undertakings similar to
written acknowledgments.
Sec. 734.4 [Amended]
8. Section 734.4 is amended by revising the last sentence of
paragraph (b) to read as follows: ``Certain encryption commodities,
software and technology controlled under ECCNs 5A992, 5D992, and 5E992
may be eligible for de minimis (refer to Sec. 742.15(b)(1)).''
9. Section 734.7 is amended by revising paragraph (c) to read as
follows:
Sec. 734.7 Published information and software.
* * * * *
(c) Notwithstanding paragraphs (a) and (b) of this section, note
that encryption software controlled under ECCN 5D002 for ``EI'' reasons
on the Commerce Control List (refer to Supplement No. 1 to part 774 of
the EAR) remains subject to the EAR (refer to Secs. 740.13(e) and
740.17(a)(5)(i) of the EAR for release under license exception).
Sec. 734.8 [Amended]
10. Section 734.8 is amended by revising the last sentence of
paragraph (a) to read as follows: ``Note that the provisions of this
section do not apply to encryption software controlled under ECCN 5D002
for ``EI'' reasons on the Commerce Control List (refer to
Secs. 740.13(e) and 740.17(a)(5)(i) of the EAR for release under
license exception).''
Sec. 734.9 [Amended]
11. Section 734.9 is amended by revising the last sentence to read
as follows: ``Note that the provisions of this section do not apply to
encryption software controlled under ECCN 5D002 for ``EI'' reasons on
the Commerce Control List (refer to Secs. 740.13(e) and 740.17(a)(5)(i)
of the EAR for release under license exception).''
PART 740--[AMENDED]
12. Section 740.8 is amended by revising the address in paragraph
(b)(2) to read as follows:
Sec. 740.8 Key management infrastructure (KMI).
* * * * *
(b) * * *
(2) * * *
Attn: KMI Encryption Request Coordinator, 9800 Savage Road, Suite
6131, Fort Meade, MD 20755-6000.
* * * * *
13. Section 740.13 is amended by:
a. By revising the introductory paragraph;
b. By revising paragraph (d)(2); and
c. By adding new paragraph (e) to read as follows:
Sec. 740.13 Technology and software--unrestricted (TSU)
This license exception authorizes exports and reexports of
operation technology and software; sales technology and software;
software updates (bug fixes); ``mass market'' software subject to the
General Software Note; and unrestricted encryption source code. Note
that encryption software is not subject to the General Software Note
(see paragraph (d)(2) of this section).
* * * * *
(d) * * *
(2) Software not eligible for this license exception. This license
exception is not available for certain encryption software controlled
under ECCN 5D002. (Refer to the Cryptography Note in Category 5--Part 2
of the Commerce Control List for information
[[Page 2497]]
on Mass Market Encryption commodities and software. Also refer to
Secs. 742.15(b)(1) and 748.3(b) of the EAR for information on item
classifications for release from ``EI'' controls and ``NS'' controls).
* * * * *
(e) Unrestricted encryption source code.
(1) Encryption source code controlled under 5D002, which would be
considered publicly available under Sec. 734.3(b)(3) and which is not
subject to an express agreement for the payment of a licensing fee or
royalty for commercial production or sale of any product developed with
the source code, is released from ``EI'' controls and may be exported
or reexported without review under License Exception TSU, provided you
have submitted written notification to BXA of the Internet location
(e.g., URL or Internet address) or a copy of the source code by the
time of export. Submit the notification to BXA and send a copy to ENC
Encryption Request Coordinator (see Sec. 740.17(g)(5) for mailing
addresses). Intellectual property protection (e.g., copyright, patent
or trademark) will not, by itself, be construed as an express agreement
for the payment of a licensing fee or royalty for commercial production
or sale of any product developed using the source code.
(2) You may not knowingly export or reexport source code or
products developed with this source code to Cuba, Iran, Iraq, Libya,
North Korea, Sudan or Syria.
(3) Posting of the source code on the Internet (e.g., FTP or World
Wide Web site) where the source code may be downloaded by anyone would
not establish ``knowledge'' of a prohibited export or reexport,
including that described in paragraph (e)(2) of this section. In
addition, such posting would not trigger ``red flags'' necessitating
the affirmative duty to inquire under the ``Know Your Customer''
guidance provided in Supplement No. 3 to part 732 of the EAR.
14. Section 740.17 is revised to read as follows:
Sec. 740.17 Encryption commodities and software (ENC).
(a) Exports and reexports of certain encryption commodities and
software. As enumerated in this section, you may export and reexport
encryption commodities, software and components (as defined in part 772
EAR) under License Exception ENC. License Exception ENC cannot be used
if the encryption commodity or software provides an open cryptographic
interface (as defined in part 772), unless the export is to a
subsidiary of a U.S. company, as described in paragraph (a)(1) of this
section.
(1) Encryption commodities, software, and technology for U.S.
subsidiaries. You may export and reexport any encryption item of any
key length under ECCNs 5A002, 5D002 and 5E002 to foreign subsidiaries
of U.S. companies (as defined in part 772) without review and
classification. This includes source code and technology for internal
company use, such as the development of new products. U.S. firms may
also transfer under License Exception ENC encryption technology (5E002)
to their foreign employees in the U.S. (except nationals of Cuba, Iran,
Iraq, Libya, North Korea, Sudan or Syria) for internal company use,
including the development of new products. All items produced or
developed by U.S. subsidiaries with encryption commodities, software
and technology exported under this paragraph are subject to the EAR and
require review and classification before any sale or retransfer outside
of the U.S. company.
(2) Encryption commodities and software. You may export and
reexport any encryption commodity, software and component after review
and classification by BXA under ECCNs 5A002 and 5D002 to any
individual, commercial firm or other non-government end-user.
Encryption products classified under this paragraph require a license
for export and reexport to government end-users (as defined in part
772). The former restriction limiting exports or reexports to internal
company proprietary use is removed.
(3) Retail encryption commodities and software. You may export and
reexport to any end-user encryption commodities, software and
components which have been reviewed and classified as retail under
ECCNs 5A002 and 5D002. Retail encryption commodities, software and
components are products:
(i) Generally available to the public by means of any of the
following:
(A) Sold in tangible form through retail outlets independent of the
manufacturer;
(B) Specifically designed for individual consumer use and sold or
transferred through tangible or intangible means; or
(C) Sold in large volume without restriction through mail order
transactions, electronic transactions, or telephone call transactions;
and
(ii) Meeting all of the following:
(A) The cryptographic functionality cannot be easily changed by the
user;
(B) Do not require substantial support for installation and use;
(C) The cryptographic functionality has not been modified or
customized to customer specification; and
(D) Are not network infrastructure products such as high end
routers or switches designed for large volume communications.
(iii) Subject to the criteria in paragraphs (a)(3)(i) and (ii) of
this section, retail encryption products include (but are not limited
to) general purpose operating systems and their associated user-
interface client software or general purpose operating systems with
embedded networking and server capabilities; non-programmable
encryption chips and chips that are constrained by design for retail
products; low-end routers, firewalls and networking or cable equipment
designed for small office or home use; programmable database management
systems and associated application servers; low-end servers and
application-specific servers (including client-server applications,
e.g., Secure Socket Layer (SSL)-based applications) that interface
directly with the user; and encryption products distributed without
charge or through free or anonymous downloads.
(iv) Encryption products and network-based applications which
provide functionality equivalent to other encryption products
classified as retail will be considered retail.
(v) Encryption products exported or reexported under paragraph
(a)(3) of this section can be used to provide services to any entity.
(vi) Finance-specific encryption commodities and software of any
key length restricted by design (e.g., highly field-formatted with
validation procedures and not easily diverted to other end-uses) and
used to secure financial communications such as electronic commerce
will be considered retail encryption products.
(vii) 56-bit products with key exchange mechanisms greater than 512
bits and up to and including 1024 bits, or equivalent products not
classified as mass market, will be considered retail.
(4) Internet and Telecommunications service providers. Certain
restrictions apply to Internet and telecommunications service
providers. Any Internet or telecommunications service provider can
obtain retail products under License Exception ENC and use them to
provide any service to any entity. Internet and telecommunications
service providers can obtain and use any encryption product for their
internal use and to provide any service under License Exception ENC.
However, a license is required for the use of any product not
[[Page 2498]]
classified as retail to provide services specific to government end-
users, e.g., WAN, LAN, VPN, voice and dedicated-link services;
application specific and e-commerce services and PKI encryption
services specifically for government end-users only.
(5) Commercial encryption source code and general purpose toolkits.
You may export and reexport encryption source code not released under
Sec. 740.13(e) or general purpose toolkits (application specific
toolkits are covered under components, as defined in part 772), subject
to the following provisions:
(i) Encryption source code, which would be considered publicly
available under Sec. 734.3(b)(3) of the EAR and which is subject to an
express agreement for the payment of a licensing fee or royalty for
commercial production or sale of any product developed using the source
code, can be exported or reexported using License Exception ENC to any
end-user without review and classification, provided you have submitted
to BXA, by the time of export, written notification of the Internet
location (e.g. URL or Internet address) or a copy of the source code.
You may not knowingly export or reexport source code or products
developed with this source code to Cuba, Iran, Iraq, Libya, North
Korea, Sudan or Syria. Posting of the source code on the Internet
(e.g., FTP or World Wide Web site) where the source code may be
downloaded by anyone would not establish ``knowledge'' of a prohibited
export or reexport. In addition, such posting would not trigger ``red
flags'' necessitating the affirmative duty to inquire under the ``Know
Your Customer'' guidance provided in Supplement No. 3 to part 732 of
the EAR.
(ii) Encryption source code which would neither be considered
publicly available nor includes source code that when compiled provides
an open cryptographic interface (see Sec. 740.17(f)), may be exported
or reexported using License Exception ENC to any non-government end-
user after review and classification by BXA.
(iii) General purpose encryption toolkits may be exported or
reexported after review and classification by BXA under License
Exception ENC to any non-government end-user.
(iv) Any foreign product developed for commercial sale using
encryption source code or general purpose toolkits exported under
paragraph (a)(5) of this section is subject to reporting requirements
under paragraph (g)(3) of this section. Foreign products developed by
bundling or compiling of source code are not subject to this reporting
requirement.
(b) Ineligible destinations. No encryption item(s) may be exported
or reexported under this license exception to Cuba, Iran, Iraq, Libya,
North Korea, Sudan or Syria.
(c) Transfers. Transfers of encryption items listed in paragraph
(a) of this section to government end-users or end-uses within the same
country are prohibited unless otherwise authorized by license or
license exception.
(d) Exports and reexports of foreign products incorporating U.S.
encryption source code, components or general purpose encryption
toolkits. Foreign products developed with or incorporating U.S.-origin
encryption source code, components or toolkits remain subject to the
EAR, but do not require review and classification by BXA and can be
exported or reexported without further authorization.
(e) Eligibility for License Exception ENC. (1) Review and
classification. You may initiate review and classification of your
encryption commodities and software as required by paragraph (a) of
this section by submitting a classification request in accordance with
the provisions of Sec. 748.3(b) and Supplement 6 to part 742 of the
EAR. Indicate ``License Exception ENC'' in Block 9: Special purpose, on
form BXA-748P. Submit the original request to BXA in accordance with
Sec. 748.3 of the EAR and send a copy of the request to ENC Encryption
Request Coordinator (see paragraph (g)(5) of this section for mailing
addresses). Thirty days after receipt of a complete classification
request by BXA, unless otherwise notified by BXA, exporters may export
and reexport to any non-government end-user any encryption product
eligible under paragraphs (a)(2), (a)(4) and (a)(5) of this section. No
exports to government end-users are allowed under this provision, and
BXA reserves the right to suspend eligibility to export while a
classification is pending.
(2) Grandfathering. Finance-specific and 56-bit products previously
reviewed and classified by BXA can be exported or reexported to any
end-user without further review. Other encryption commodities, software
or components previously approved for export can be exported and
reexported without further review to any non-government end-user under
the provisions of Sec. 740.17 (a). This includes products approved
under a license, an Encryption Licensing Arrangement, or previously
classified as eligible to use License Exception ENC (except for those
products which were only authorized for export to U.S. subsidiaries).
Exports to government end-users require a license unless BXA has
classified the product as a ``retail'' product under paragraph (a)(3)
of this section.
(3) Key Length Increases. Exporters can increase the key lengths of
previously classified products and continue to export without another
review. No other change in the cryptographic functionality is allowed.
(i) Any product previously classified as 5A002 or 5D002 can, with
any upgrade to the key length used for confidentiality or key exchange
algorithms, be exported or reexported under provisions of License
Exception ENC to any non-government end-user without an additional
review. Another classification is necessary to determine eligibility as
a ``retail'' product under paragraph (a)(3) of this section.
(ii) Exporters must certify to BXA in a letter from a corporate
official that the only change to the encryption product is the key
length for confidentiality or key exchange algorithms and there is no
other change in cryptographic functionality. Certifications must
include the original authorization number issued by BXA and the date of
issuance. BXA must receive this certification prior to any export of an
upgraded product. The certification should be sent to BXA, with a copy
sent to the ENC Encryption Request Coordinator (see paragraph (g)(5) of
this section for mailing addresses).
(f) Open cryptographic interfaces. License Exception ENC shall not
apply to exports or reexports of encryption commodities, software and
components (unless exported to a subsidiary of a U.S. company under
paragraph (a)(1) of this section), if the encryption product provides
an open cryptographic interface (as defined in part 772). This does not
apply to source code that would be considered publicly available under
Sec. 734.3(b)(3).
(g) Reporting requirements. (1) No reporting is required for
exports of:
(i) Any encryption to U.S. subsidiaries;
(ii) Finance-specific products;
(iii) Encryption commodities or software with a symmetric key
length not exceeding 64 bits or otherwise classified as qualifying for
mass market treatment;
(iv) Retail products exported to individual consumers;
(v) Any export made via free or anonymous download; and
(vi) Any export made from or to a U.S. bank, financial institution
or their subsidiaries, affiliates, customers or contractors for banking
or financial operations.
[[Page 2499]]
(2) Exporters must provide all available information as follows:
(i) For items exported to a distributor or other reseller, the name
and address of the distributor or reseller and the quantity exported
and, if collected in the normal course of business, the end-user's name
and address;
(ii) For items exported through direct sale, the name and address
of the recipient and the quantity exported (except for retail products
if the end-user is an individual consumer); and
(3) For direct sales or transfers of encryption components,
commercial source code described under Sec. 740.17(a)(5) or general
purpose encryption toolkits to foreign manufacturers, you must submit
the names and addresses of the manufacturers using such encryption
components, commercial source code or general purpose encryption
toolkits and a non-proprietary technical description of the products
for which the component, source code or toolkit are being used (e.g.,
brochures, other documentation, descriptions or other identifiers of
the final foreign product; the algorithm and key lengths used; general
programming interfaces to the product, if known; any standards or
protocols that the foreign product adheres to; and source code, if
available).
(4) Exporters of encryption commodities, software and components
which were previously classified under License Exception ENC, or which
have been licensed for export under an Encryption Licensing
Arrangement, must comply with the reporting requirements of this
section.
(5) Beginning January 14, 2000, you must submit reports required
under this section semi-annually to BXA, unless otherwise provided in
this paragraph. For exports occurring between January 1 and June 30, a
report is due no later than August 1. For exports occurring between
July 1 and December 31, a report is due no later than February 1. For
exports and reexports to Internet and telecommunications service
providers of network infrastructure products (e.g., high-end routers or
switches designed for large volume communications), reports are due by
the time of export. Reports must include the classification or other
authorization number. These reports must be provided in electronic form
to BXA; suggested file formats for electronic submission include
spreadsheets, tabular text or structured text. Exporters may request
other reporting arrangements with BXA to better reflect their business
models. Reports should be sent electronically to [email protected], or
disks and CDs can be mailed to the following addresses:
(i) Department of Commerce, Bureau of Export Administration, Office
of Strategic Trade and Foreign Policy Controls, 14th Street and
Pennsylvania Ave., N.W., Room 2705, Washington, DC 20230, Attn:
Encryption Reports.
(ii) A copy of the report should be sent to: Attn: ENC Encryption
Request Coordinator, 9800 Savage Road, Suite 6131, Ft. Meade, MD 20755-
6000.
(h) Distributors and resellers. U.S. or foreign distributors,
resellers or other entities who are not original manufacturers of
encryption commodities and software are permitted to use License
Exception ENC only in instances where the export or reexport meets the
applicable terms and conditions of Sec. 740.17.
PART 742--[AMENDED]
15. Section 742.15 is revised to read as follows:
Sec. 742.15 Encryption items.
Encryption items can be used to maintain the secrecy of
information, and thereby may be used by persons abroad to harm national
security, foreign policy and law enforcement interests. The U.S. has a
critical interest in ensuring that important and sensitive information
of the public and private sector is protected. Consistent with our
international obligations as a member of the Wassenaar Arrangement, the
U.S. has a responsibility to maintain control over the export of
encryption items. As the President indicated in Executive Order 13026
and in his Memorandum of November 15, 1996, export of encryption
software, like export of encryption hardware, is controlled because of
this functional capacity to encrypt information on a computer system,
and not because of any informational or theoretical value that such
software may reflect, contain, or represent, or that its export may
convey to others abroad. For this reason, export controls on encryption
software are distinguished from controls on other software regulated
under the EAR.
(a) License requirements. Licenses are required for exports and
reexports to all destinations, except Canada, for items controlled
under ECCNs having an ``EI'' (for ``encryption items'') under the
``Control(s)'' paragraph. Such items include: encryption commodities
controlled under ECCN 5A002; encryption software controlled under ECCN
5D002; and encryption technology controlled under ECCN 5E002. Refer to
part 772 of the EAR for the definition of ``encryption items''.
(b) Licensing policy. The following licensing policies apply to
items identified in paragraph (a) of this section. Except as otherwise
noted, applications will be reviewed on a case-by-case basis by BXA, in
conjunction with other agencies, to determine whether the export or
reexport is consistent with U.S. national security and foreign policy
interests. For subsequent bundling and updates of these items see
paragraph (n) of Sec. 770.2 of the EAR.
(1) Encryption commodities, software and technology under ECCNs
5A992, 5D992 and 5E992. Certain encryption commodities, software and
technology may, after classification by BXA as ECCNs 5A992, 5D992 or
5E992, be released from ``EI'' or ``NS'' controls. Items controlled
under these ECCNs are eligible for export and reexport to all
destinations except Cuba, Iran, Iraq, Libya, North Korea, Sudan or
Syria. Refer to Sec. 748.3(b)(3) of the EAR for additional information
regarding classification requests. The following encryption items may
be eligible for such treatment:
(i) 56-bit encryption commodities, software and technology.
Encryption commodities, software and technology up to and including 56-
bits with an asymmetric key exchange algorithm not exceeding 512 bits
may be classified under ECCNs 5A992, 5D992 or 5E992.
(ii) Key management products. Products which only provide key
management with asymmetric key exchange algorithms not exceeding 512
bits may be eligible for classification under ECCNs 5A992 or 5D992.
(iii) 64-bit mass market encryption commodities and software. (A)
Mass market encryption commodities and software with key lengths not
exceeding 64-bit for the symmetric algorithm may be eligible for
classification by BXA under ECCNs 5A992 or 5D992.
Refer to the Cryptography Note (Note 3) to part 2 of Category 5 of
the CCL for a definition of mass market encryption commodities and
software. Key exchange mechanisms, proprietary key exchange mechanisms,
or company proprietary commodities and software implementations may
also be eligible for this treatment. Refer to Supplement No. 6 to part
742 and Sec. 748.3(b)(3) of the EAR for additional information.
(B) Mass market encryption commodities and software (e.g., 40 and
56-bit DES or equivalent) previously eligible for License Exception TSU
(or for hardware, ENC) may increase key lengths for the confidentiality
algorithm up to 64 bits and still be exported as a mass market product
without an additional review. Exporters must
[[Page 2500]]
certify to BXA in a letter from a corporate official the only change to
the encryption product is the key length for confidentiality or key
exchange algorithms and there is no other change in cryptographic
functionality. Certifications must include the original authorization
number issued by BXA and the date of issuance. BXA must receive this
certification prior to any export of upgraded products. The
certification should be sent to BXA, with a copy to ENC Encryption
Request Coordinator at the following addresses:
(1) Department of Commerce, Bureau of Export Administration, Office
of Strategic Trade and Foreign Policy Controls, 14th Street and
Pennsylvania Ave., N.W., Room 2705, Washington, DC 20230.
(2) A copy of the report should be sent to: Attn: ENC Encryption
Request Coordinator, 9800 Savage Road, Suite 6131, Ft. Meade, MD 20755-
6000.
(iv) For classification of these encryption items under these
ECCNs, mark ``NLR'' in Block 9: Special purpose, on Form BXA-748P, of
your classification request.
(2) Encryption commodities and software eligible for classification
under ECCNs 5A002, 5D002 and 5E002 and qualified for License Exception
ENC. Items classified by BXA as retail products under ECCNs 5A002 and
5D002 are permitted for export and reexport to any end-user. All other
encryption commodities, software and components classified by BXA under
ECCNs 5A002 and 5D002 may be exported to any individual, commercial
firm or other non-government end-user. Any encryption item (including
technology classified under 5E002) will be permitted for export or
reexport to U.S. subsidiaries (as defined in part 772). Products
developed using U.S. encryption items are subject to the EAR. No
exports are authorized to Cuba, Iran, Iraq, Libya, North Korea, Sudan
or Syria.
(3) Encryption licensing. Exporters may submit applications for
licenses or Encryption Licensing Arrangements for exports and reexports
of encryption items not eligible for license exception, including
exports and reexports of encryption technology to strategic partners of
U.S. companies (as defined in part 772). For Encryption Licensing
Arrangements, the applicant must specify the sales territory and class
of end-user. Encryption Licensing Arrangements granted for exports of
unlimited quantities for all destinations except Cuba, Iran, Iraq,
Libya, North Korea, Sudan or Syria, are valid for four years, and may
require reporting.
Licenses are required for exports of encryption items to
governments, or Internet and telecommunications service providers for
the provision of services specific to governments, and may be favorably
considered for civil uses, e.g., social or financial services to the
public; civil justice; social insurance, pensions and retirement; taxes
and communications between governments and their citizens.
16. Supplement No. 6 to Part 742 is revised to read as follows:
Supplement No. 6 to Part 742--Guidelines for Submitting a
Classification Request for Encryption Items
Classification requests for encryption items must be submitted on
Form BXA-748P, in accordance with Sec. 748.3 of the EAR. Insert in
Block 9: Special Purpose of the Form BXA-748P, the phrase ``License
Exception ENC'' or ``NLR'', based on your classification request.
Failure to insert this phrase will delay processing. In addition, the
Bureau of Export Administration recommends that such requests be
delivered via courier service to: Bureau of Export Administration,
Office of Exporter Services, Room 2705, 14th Street and Pennsylvania
Ave., NW, Washington, DC 20230. In addition, you must send a copy of
the request and all supporting documents to: Attn: ENC Encryption
Request Coordinator, 9800 Savage Road, Suite 6131, Fort Meade, MD
20755-6000.
(a) Requests for encryption items will be processed in thirty (30)
days from receipt of a properly completed request.
(b) To submit a classification request for a technical review of
commodities and software, ensure that the information provided includes
brochures or other documentation or specifications (to include
applicable cryptographic source code) related to the technology,
commodity or software, as well as any additional information which you
believe would assist the review process. You must provide the following
information in a cover letter to the classification request:
(1) Clearly state at the top of the page either ``ENC'' or
``NLR''--``30 Day Technical Review Requested;''
(2) State that you have reviewed and determined that the commodity
or software subject to the classification request meets the criteria of
this Supplement;
(3) State the name of the commodity or software product being
submitted for review;
(4) State how the commodity or software has been written to
preclude user modification of the encryption algorithm, key management
mechanism, and key space;
(5) State that a duplicate copy has been sent to the ENC Encryption
Request Coordinator;
(6) Provide the following information for the commodity or software
product:
(i) Description of all encryption algorithms and key lengths, e.g.
source code, and how the algorithms are used. If any combination of
different algorithms are used in the same product, also state how each
is applied to the data.
(ii) Pre-processing information of plaintext data before encryption
(e.g. compression of the data).
(iii) Post-processing information of cipher text data after
encryption (e.g. packetization of the encrypted data).
(iv) For classification requests regarding object code or Java byte
code, describe what techniques (including obfuscation, private access
modifiers, final classes) are used to protect against decompilation and
misuse.
(v) For classification requests regarding components:
(A) Reference the application for the components if known;
(B) State if there is a general programming interface to the
component;
(C) State whether the component is constrained by function;
(D) List any standards and protocols that the component adheres to;
(E) Include a complete description of all functionalities and their
accessibility; and
(F) Encryption components need to be clearly identified to include
the name of the manufacturer, component model number, or other
identifier.
(vi) For classification requests regarding source code:
(A) If applicable, reference the executable product that has
already received a technical review;
(B) Include whether the source code has been modified and, if
modified, provide the technical details on how the source code was
modified;
(C) Include a copy of the sections of the source code that contain
the encryption algorithm, key management routines, and their related
calls.
PART 770--[AMENDED]
17. Section 770.2 is amended by adding new paragraph (n) to read as
follows:
Sec. 770.2 Item interpretations.
* * * * *
(n) Interpretation 14: Encryption commodity and software reviews.
Classification of encryption
[[Page 2501]]
commodities or software is required to determine eligibility for all
licensing mechanisms except source code (see Secs. 740.13(e) and
740.17(a)(5)(i) of the EAR) and exports to subsidiaries of U.S. firms
(see Sec. 740.17(a)(1)). Note that subsequent bundling, patches,
upgrades or releases, including name changes, may be exported or
reexported under the applicable provisions of the EAR without further
technical review as long as the functional encryption capacity of the
originally reviewed encryption product has not been modified or
enhanced. This does not extend to products controlled under a different
category on the CCL.
18. Part 772 is amended by removing the definitions for ``Health/
medical end-user'' and ``On-line merchant'' and adding definitions for
``asymmetric algorithm'', ``encryption component'', ``government end-
user'', ``open cryptographic interface'', and ``symmetric algorithm''
in alphabetical order, to read as follows:
PART 772--DEFINITIONS OF TERMS
* * * * *
``Asymmetric algorithm''. (Cat 5, Part II) A cryptographic
algorithm using different, mathematically-related keys for encryption
and decryption. A common use of ``asymmetric algorithms'' is key
management.
* * * * *
``Encryption component''. Any encryption commodity or software
(except source code), including encryption chips, integrated circuits,
application specific encryption toolkits, or executable or linkable
modules that alone are incapable of performing complete cryptographic
functions, and is designed or intended for use in or the production of
another encryption item.
* * * * *
Government end-user (as applied to encryption items). A government
end-user is any foreign central, regional or local government
department, agency, or other entity performing governmental functions;
including governmental research institutions, governmental corporations
or their separate business units (as defined in part 772 of the EAR)
which are engaged in the manufacture or distribution of items or
services controlled on the Wassenaar Munitions List, and international
governmental organizations. This term does not include: utilities
(including telecommunications companies and Internet service
providers); banks and financial institutions; transportation; broadcast
or entertainment; educational organizations; civil health and medical
organizations; retail or wholesale firms; and manufacturing or
industrial entities not engaged in the manufacture or distribution of
items or services controlled on the Wassenaar Munitions List.
* * * * *
``Open cryptographic interface''. A mechanism which is designed to
allow a customer or other party to insert cryptographic functionality
without the intervention, help or assistance of the manufacturer or its
agents, e.g., manufacturer's signing of cryptographic code or
proprietary interfaces. If the cryptographic interface implements a
fixed set of cryptographic algorithms, key lengths or key exchange
management systems, that cannot be changed, it will not be considered
an ``open'' cryptographic interface. All general application
programming interfaces (e.g., those that accept either a cryptographic
or non-cryptographic interface but do not themselves maintain any
cryptographic functionality) will not be considered ``open''
cryptographic interfaces.
* * * * *
``Symmetric algorithm''. (Cat 5, Part II) A cryptographic algorithm
using an identical key for both encryption and decryption. A common use
of ``symmetric algorithms'' is confidentiality of data.
* * * * *
PART 774--[AMENDED]
Supplement No. 1 to Part 774 [Amended]
19. Supplement No. 1 to Part 774, Category 5--Telecommunications
and Information Security, is amended:
a. By revising, immediately following EAR 99, the heading for
``Part 2--`Information Security,' '' removing the Note, and inserting
in its place three new Notes;
b. By revising the heading and the ``List of Items Controlled'' for
ECCN 5A002; and
c. By revising the Licensing Requirements section of ECCN 5D002 to
read as follows:
Category 15--Telecommunications and ``Information Security''
* * * * *
II. ``Information Security''
Note 1: The control status of ``information security''
equipment, ``software'', systems, application specific ``electronic
assemblies'', modules, integrated circuits, components, or functions
is determined in Category 5, Part 2 even if they are components or
``electronic assemblies'' of other equipment.
Note 2: Category 5, Part 2 encryption products, when
accompanying their user for the user's personal use, are eligible
for License Exceptions TMP or BAG.
Note 3: Cryptography Note: ECCNs 5A002 and 5D002 do not control
items that meet all of the following:
a. Generally available to the public by being sold, without
restriction, from stock at retail selling points by means of any of
the following:
1. Over-the-counter transactions;
2. Mail order transactions;
3. Electronic transactions; or
4. Telephone call transactions;
b. The cryptographic functionality cannot be easily changed by
the user;
c. Designed for installation by the user without further
substantial support by the supplier;
d. Does not contain a ``symmetric algorithm'' employing a key
length exceeding 64-bits; and
e. When necessary, details of the items are accessible and will
be provided, upon request, to the appropriate authority in the
exporter's country in order to ascertain compliance with conditions
described in paragraphs (a) through (d) of this note. See
Sec. 742.15(b)(1) of the EAR.
* * * * *
5A002 Systems, equipment, application specific ``electronic
assemblies'', modules and integrated circuits for ``information
security'', and other specially designed components therefor.
* * * * *
List of Items Controlled
Unit: $ value.
Related Controls: See also 5A992. This entry does not control: (a)
``Personalized smart cards'' where the cryptographic capability is
restricted for use in equipment or systems excluded from control
paragraphs (b) through (f) of this note. Note that if a ``personalized
smart card'' has multiple functions, the control status of each
function is assessed individually; (b) receiving equipment for radio
broadcast, pay television or similar restricted audience television of
the consumer type, without digital encryption except that exclusively
used for sending the billing or program-related information back to the
broadcast providers; (c) portable or mobile radiotelephones for civil
use (e.g., for use with commercial civil cellular radio communications
systems) that are not capable of end-to-end encryption; (d) equipment
where the cryptographic capability is not user-accessible and which is
specially designed and limited to allow any of the following: (1)
Execution of copy-protected ``software''; (2) access to any of the
following: (a) Copy-protected read-only media; or (b) information
stored in encrypted form on media (e.g., in connection with the
protection of intellectual property rights) where the media is offered
for sale in identical sets
[[Page 2502]]
to the public; or (3) one-time encryption of copyright protected audio/
video data; (e) cryptographic equipment specially designed and limited
for banking use or money transactions; (f) cordless telephone equipment
not capable of end-to-end encryption where the maximum effective range
of unboosted cordless operation (e.g., a single, unrelayed hop between
terminal and home basestation) is less than 400 meters according to the
manufacturer's specifications.
Related Definitions: (1) The term money transactions in paragraph
(e) of Related Controls includes the collection and settlement of fares
or credit functions.
(2) For the control of global navigation satellite systems
receiving equipment containing or employing decryption (e.g., GPS or
GLONASS) see 7A005.
Items
Technical Note: Parity bits are not included in the key length.
a. Systems, equipment, application specific ``electronic
assemblies'', modules and integrated circuits for ``information
security'', and other specially designed components therefor:
a.1. Designed or modified to use ``cryptography'' employing digital
techniques performing any cryptographic function other than
authentication or digital signature having any of the following:
Technical Notes: 1. Authentication and digital signature
functions include their associated key management function.
2. Authentication includes all aspects of access control where
there is no encryption of files or text except as directly related
to the protection of passwords, Personal Identification Numbers
(PINs) or similar data to prevent unauthorized access.
3. ``Cryptography'' does not include ``fixed'' data compression
or coding techniques.
Note: 5A002.a.1 includes equipment designed or modified to use
``cryptography'' employing analogue principles when implemented with
digital techniques.
a.1.a. A ``symmetric algorithm'' employing a key length in excess
of 56-bits; or
a.1.b. An ``asymmetric algorithm'' where the security of the
algorithm is based on any of the following:
a.1.b.1. Factorization of integers in excess of 512 bits (e.g.,
RSA);
a.1.b.2. Computation of discrete logarithms in a multiplicative
group of a finite field of size greater than 512 bits (e.g., Diffie-
Hellman over Z/pZ); or
a.1.b.3. Discrete logarithms in a group other than mentioned in
5A002a.1.b.2 in excess of 112 bits (e.g., Diffie-Hellman over an
elliptic curve);
a.2. Designed or modified to perform crypto analytic functions;
a.3. [Reserved]
a.4. Specially designed or modified to reduce the compromising
emanations of information-bearing signals beyond what is necessary for
the health, safety or electromagnetic interference standards;
a.5. Designed or modified to use cryptographic techniques to
generate the spreading code for ``spread spectrum'' or the hopping code
for ``frequency agility'' systems;
a.6. Designed or modified to provide certified or certifiable
``multilevel security'' or user isolation at a level exceeding Class B2
of the Trusted Computer System Evaluation Criteria (TCSEC) or
equivalent;
a.7. Communications cable systems designed or modified using
mechanical, electrical or electronic means to detect surreptitious
intrusion.
* * * * *
5D002 Information Security--``Software''.
License Requirements
Reason for Control: NS, AT, EI.
------------------------------------------------------------------------
Control(s) Country chart
------------------------------------------------------------------------
NS applies to entire entry................ NS Column 1
AT applies to entire entry................ AT Column 1
------------------------------------------------------------------------
EI applies to encryption items transferred from the U.S. Munitions
List to the Commerce Control List consistent with E.O. 13026 of
November 15, 1996 (61 FR 58767) and pursuant to the Presidential
Memorandum of that date. Refer to Sec. 742.15 of the EAR.
Note: Encryption software is controlled because of its
functional capacity, and not because of any informational value of
such software; such software is not accorded the same treatment
under the EAR as other ``software''; and for export licensing
purposes, encryption software is treated under the EAR in the same
manner as a commodity included in ECCN 5A002.
Note: Encryption software controlled for ``EI'' reasons under
this entry remains subject to the EAR even when made publicly
available in accordance with part 734 of the EAR. See
Secs. 740.13(e) and 740.17(5)(i) of the EAR for information on
releasing certain source code which may be considered publicly
available from ``EI'' controls.
Note: After a technical review, 56-bit items, key management
products not exceeding 512 bits and mass market encryption
commodities and software eligible for the Cryptography Note (see
Sec. 742.15(b)(1) of the EAR) may be released from ``EI'' and ``NS''
controls.
License Exceptions: * * *
* * * * *
20. Supplement No. 2 to part 774 (General Technology and Software
Notes) is amended by revising the Note at the end of the Supplement to
read as follows:
Supplement No. 2 to Part 774--General Technology and Software Notes
* * * * *
Note: The General Software Note does not apply to ``software''
controlled by Category 5, Part 2 (``Information Security''). For
``software'' controlled by Category 5, Part 2, see Supplement No. 1
to Part 774, Category 5, Part 2, Note 3--Cryptography Note.
Dated: January 11, 2000.
R. Roger Majak,
Assistant Secretary for Export Administration.
[FR Doc. 00-983 Filed 1-12-00; 9:04 am]
BILLING CODE 3510-33-P
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