Exports to South Africa; Revision of Foreign Policy Controls

DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Parts 771 and 785

[Docket No. 940384-4084]

RIN 0694-AA88

Exports to South Africa; Revision of Foreign Policy Controls

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Final rule.

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SUMMARY: With the significant political changes underway in South

Africa, the rationale for prohibiting all exports to South African

military and police entities no longer applies. The controls necessary

to implement the mandatory U.N. arms embargo against South Africa

remain. In addition, restrictions on certain exports to the South

African military and police continue. This final rule amends the Export

Administration Regulations (EAR) by revising the export licensing

policy for exports to South African military and police entities in the

following ways: By clarifying exemptions from general prohibitions on

certain technology and software; by revising policy to permit the

consideration of certain license applications; and by updating the list

of South African military and police entities in the special country

policies and provisions. These changes, while not diminishing U.S.

compliance with the U.N. mandatory embargo against South Africa, and

while maintaining U.S. ability to implement U.N. voluntary controls on

certain exports to the South African military and police, will allow

U.S. businesses to begin to compete with foreign suppliers, who are no

longer bound by similar restrictions in their own countries. Thus,

although it will likely result in an increase in export license

applications submitted, this rule will be generally beneficial to U.S.

exporters.

EFFECTIVE DATE: This rule is effective March 28, 1994.

FOR FURTHER INFORMATION CONTACT: David Schlechty, Office of Technology

and Policy Analysis, Bureau of Export Administration, Telephone: (202)

482-4252.

SUPPLEMENTARY INFORMATION:

Background

In conformity with the United Nations Security Council Resolutions

of 1977 and 1986, the United States maintains an embargo on the export

of arms, munitions and military equipment, and items used in their

manufacture and maintenance to the Republic of South Africa, as well as

on certain items to the South African military or police that have a

military capacity and are intended for military purposes. These

controls continue. Beyond these controls related to U.N. Security

Council resolutions, the United States has also maintained an embargo

on virtually all exports to South African military and police entities.

The recent historic political changes in the Republic of South Africa

argue against the continuation of such global restrictions. This rule

modifies existing controls to allow certain exports to the South

African military and police under an individual validated license. For

example, applications to export food, medicine, or items to meet

emergency humanitarian needs, prevent acts of unlawful interference

with international civil aviation, or counter international narcotics

trafficking will generally receive favorable consideration on a case-

by-case basis. Applications for export of items relating to arms,

munitions, military equipment and their manufacture or maintenance, or

that have a military capacity and are intended for military purposes,

will be subject to either a strict or general policy of denial. All

other exports will be considered on a case-by-case basis.

Regardless of expanded opportunities to export under an individual

validated license, return, repair or replacement commodities may not be

exported under General License GLR at this time. Therefore, exporters

should include an allowance for replacement parts on their original

license applications. Repairs should be arranged in-country when

practical, since GLR will not be available for returning the item to

South Africa after repair elsewhere, and the need for a validated

license could delay the return.

Additionally, this rule clarifies the opportunity to use General

License GTDU for exports destined to South African military and police

entities of sales data that are the minimum necessary to support a

proposal; operation technical data that are the minimum necessary to

operate equipment authorized for export; or software updates (bug

fixes) that do not enhance the capabilities of the initially authorized

package. While such exports have been allowed under the provisions of

Sec. 779.4(e), the availability of GTDU for these shipments was

obscured by Sec. 771.2(c)(11), which broadly prohibits use of general

licenses for exports to South African military and police entities.

This rule clarifies the exemption of sales data, operation data and

software updates from the general prohibitions.

General License GIT may now be used for shipments in transit

through the United States destined to the Republic of South Africa,

provided that the commodities are not related to arms and munitions or

destined for military and police entities.

This rule also updates the list of military and police entities.

This rule adds the company Denel (Pty) Ltd. and certain of its

subsidiaries to the list of South African military and police entities,

and removes Musgrave, a former subsidiary of Armscor, from the list.

Denel was formed from several former Armscor subsidiaries, and produces

a variety of products for the South African military as well as the

civilian population.

Finally, this rule removes remaining restrictions on exports to

Walvis Bay. On February 28, 1994, South Africa returned Walvis Bay to

Namibia.

Rulemaking Requirements

1. This rule was not subject to review by Office of Management and

Budget under Executive Order 12866.

2. This rule involves collections of information subject to the

Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.). These

collections have been approved by the Office of Management and Budget

under control numbers 0694-0005, 0694-0007, and 0694-0010.

3. This rule does not contain policies with Federalism implications

sufficient to warrant preparation of a Federalism assessment under

Executive Order 12612.

4. Because a notice of proposed rulemaking and an opportunity for

public comment are not required to be given for this rule by section

553 of the Administrative Procedure Act (5 U.S.C. 553) or by any other

law, under section 3(a) of the Regulatory Flexibility Act (5 U.S.C.

603(a) and 604(a)) no initial or final Regulatory Flexibility Analysis

has to be or will be prepared.

5. 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. Further, no other law requires that a

notice of proposed rulemaking and an opportunity for public comment be

given for this rule.

Therefore, this regulation is issued in final form. Although there is

no formal comment period, public comments on this regulation are

welcome on a continuing basis. Comments should be submitted to Hillary

Hess, Office of Technology and Policy Analysis, Bureau of Export

Administration, Department of Commerce, P.O. Box 273, Washington, DC

20044.

List of Subjects

15 CFR Part 771

Exports, Reporting and recordkeeping requirements.

15 CFR Part 785

Exports.

Accordingly, parts 771 and 785 of the Export Administration

Regulations (15 CFR parts 730-799) are amended as follows:

1. The authority citation for 15 CFR part 771 continues to read as

follows:

Authority: Pub. L. 90-351, 82 Stat. 197 (18 U.S.C. 2510 et

seq.), as amended; sec. 101, Pub. L. 93-153, 87 Stat. 576 (30 U.S.C.

185), as amended; sec. 103, Pub. L. 94-163, 89 Stat. 877 (42 U.S.C.

6212), as amended; secs. 201 and 201(11)(e), Pub. L. 94-258, 90

Stat. 309 (10 U.S.C. 7420 and 7430(e)), as amended; Pub. L. 95-223,

91 Stat. 1626 (50 U.S.C. 1701 et seq.); Pub. L. 95-242, 92 Stat. 120

(22 U.S.C. 3201 et seq. and 42 U.S.C. 2139a); sec. 208, Pub. L. 95-

372, 92 Stat. 668 (43 U.S.C. 1354); Pub. L. 96-72, 93 Stat. 503 (50

U.S.C. app. 2401 et seq.), as amended (extended by Pub. L. 103-10,

107 Stat. 40); sec. 125, Pub. L. 99-64, 99 Stat. 156 (46 U.S.C.

466c); E.O. 11912 of April 13, 1976 (41 FR 15825, April 15, 1976);

E.O. 12002 of July 7, 1977 (42 FR 35623, July 7, 1977), as amended;

E.O. 12058 of May 11, 1978 (43 FR 20947, May 16, 1978); E.O. 12214

of May 2, 1980 (45 FR 29783, May 6, 1980); E.O. 12735 of November

16, 1990 (55 FR 48587, November 20, 1990), as continued by Notice of

November 12, 1993 (58 FR 60361, November 15, 1993); E.O. 12867 of

September 30, 1993 (58 FR 51747, October 4, 1993); and E.O. 12868 of

September 30, 1993 (58 FR 51749, October 4, 1993).

2. The authority citation for 15 CFR part 785 continues to read as

follows:

Authority: Pub. L. 90-351, 82 Stat. 197 (18 U.S.C. 2510 et

seq.), as amended; Pub. L. 95-223, 91 Stat. 1626 (50 U.S.C. 1701 et

seq.); Pub. L. 95-242, 92 Stat. 120 (22 U.S.C. 3201 et seq. and 42

U.S.C. 2139a); Pub. L. 96-72, 93 Stat. 503 (50 U.S.C. App. 2401 et

seq.), as amended (extended by Pub. L. 103-10, 107 Stat. 40); E.O.

12002 of July 7, 1977 (42 FR 35623, July 7, 1977), as amended; E.O.

12058 of May 11, 1978 (43 FR 20947, May 16, 1978); E.O. 12214 of May

2, 1980 (45 FR 29783, May 6, 1980); E.O. 12735 of November 16, 1990

(55 FR 48587, November 20, 1990), as continued by Notice of November

11, 1992 (57 FR 53979, November 13, 1992); E.O. 12867 of September

30, 1993 (58 FR 51747, October 4, 1993); and E.O. 12868 of September

30, 1993 (58 FR 51749, October 4, 1993).

PART 771--[AMENDED]

3. Section 771.2 is amended by revising paragraph (c)(11) to read

as follows:

Sec. 771.2 General provisions.

* * * * *

(c) * * *

(11) The exporter or reexporter knows or has reason to know that

the item is for delivery, directly or indirectly, to or for use by or

for military or police entities in the Republic of South Africa. This

includes items for servicing equipment owned, controlled or used by or

for such entities. However, this prohibition does not apply to exports

of sales technical data, operation technical data, and software updates

as described in Sec. 779.4(b)(1), (b)(2), and (b)(3) of this

subchapter; or to generally available software as described in the

General Software Note, Supplement No. 2 to Sec. 799.1 of this

subchapter unless the exporter knows or has reason to know it would

contribute to the manufacture or maintenance of items to which a strict

policy of denial applies under Sec. 785.4(a)(5) of this subchapter, or

to which a general policy of denial applies under Sec. 785.4(a)(6) of

this subchapter. Note that ability to provide sales data does not

confer a presumption that a license will be issued should an order be

received.

* * * * *

4. Section 771.4 is amended by revising paragraph (b)(3) to read as

follows:

Sec. 771.4 General License GIT; intransit shipments

* * * * *

(b) * * *

(3) Commodities destined for the Republic of South Africa that are

listed in Supplement No. 2 to part 779 of this subchapter, commodities

described by any ECCN ending in ``18A'', or commodities for export to

or for use by or for the South African military or police.

* * * * *

PART 785--[AMENDED]

5. Section 785.4 is amended by revising paragraphs (a)(2) through

(a)(6) and by removing paragraph (a)(7) to read as follows:

Sec. 785.4 Country Groups T & V.

(a) * * *

* * * * *

(2) An individual validated license is required for the export or

reexport to the Republic of South Africa of any commodity, where the

exporter or reexporter knows or has reason to know that the commodity

will be sold to or used by or for military or police entities in South

Africa or used to service equipment owned, controlled or used by or for

such military or police entities.

(3) An individual validated license is required for the export or

reexport to the Republic of South Africa of software or technology--

except software or technology generally available to the public that

meets the conditions of General License GTDA--where:

(i) The software or technology relates to the commodities listed in

Supplement No. 2 to part 779 of this subchapter; or

(ii) The exporter or reexporter knows or has reason to know that

the technology or software, or their direct product, are for delivery

to or for use by or for military or police entities of the Republic of

South Africa or for use in servicing equipment owned, controlled or

used by or for these entities, with the following exceptions: (A) Sales

technical data, operation technical data, and software updates as

described in Sec. 779.4(b)(1), (b)(2), and (b)(3) of this subchapter;

or

(B) Generally available software as described in the General

Software Note, Supplement No. 2 to Sec. 799.1 of this subchapter,

unless the exporter knows or has reason to know it would contribute to

the manufacture or maintenance of items to which a strict policy of

denial applies under paragraph (a)(5) of this section, or to which a

general policy of denial applies under paragraph (a)(6) of this

section.

(4) Parts, components, materials, and other commodities exported

from the United States under either a general or validated export

license may not be incorporated abroad into foreign-made end-products

where it is known or there is reason to know that the end product will

be sold to or used by or for military or police entities in the

Republic of South Africa. (See Sec. 776.12(b)(4) of this subchapter for

general exceptions and paragraph (a)(6) of this section for case-by-

case exceptions.)

(5) Applications for validated licenses for arms, munitions,

military equipment and materials, and materials and machinery for use

in the manufacture and maintenance of such equipment, as described in

Supplement No. 2 to part 779 of this subchapter, and related software

or technology, will be subject to a strict policy of denial, in

conformity with the embargo policy set out in paragraph (a)(1) of this

section.

(6) Licensing policy for items not subject to Sec. 785.4(a)(5) that

are destined to or for use by or for the South African military or

police is as follows:

(i) Applications will generally be denied for items described by

any ECCN ending in ``18A''; items that are or will be used to

manufacture or maintain arms, munitions, military equipment, or

paramilitary police equipment; and items that have military capacity

and are intended for military purposes.

(ii) Applications will generally be considered favorably on a case-

by-case basis for: (A) Food and other agricultural commodities;

(B) Medicine, medical supplies, medical equipment, and parts and

components therefor;

(C) Items to be used in efforts to prevent acts of unlawful

interference with international civil aviation;

(D) Items to counter international narcotics trafficking; and

(E) Items to be used to meet emergency humanitarian needs.

(iii) All other applications will be considered on a case-by-case

basis.

* * * * *

6. Supplement No. 2 to part 785 is revised to read as follows:

Supplement No. 2 to Part 785--Interpretations

(1) The Department has received inquiries as to whether certain

entities in the Republic of South Africa are considered police or

military entities and hence subject to the policies set forth in

Sec. 785.4.

(a) In addition to the military and police of the Republic of South

Africa, the following entities are considered to be police and military

entities:

Aeronautical Systems Technology (AEROTEK) Division of the Council for

Scientific and Industrial Research (CSIR)

ARMSCOR (Armaments Development and Production Corporation) and all of

its subsidiaries (including Specialist B Vehicles (SBV), Institute of

Maritime Technology, and Milistan)

Denel (Pty) Ltd. (including the following of its subsidiaries: Advena,

Armatron, Atlas Aircraft, Eloptro, Gennan, Gerotek, Infoplan, Kentron,

Lyttleton Engineering Works (LIW), Mechem, Naschem, Nimrod

International, Overberg Test Range (OTR), Pretoria Metal Pressing

(PMP), Simera, Somchem, Swartklip Products)

Department of Correctional Services

``Homeland'' Police and Armed Forces

National Intelligence Services

Weapons Research activities of the Council for Scientific and

Industrial Research (CSIR)

(b) This list is not necessarily inclusive, and is subject to

change. When dealing with any South African entity, exporters should be

sensitive to the potential for prohibited diversion of their products

to police and military entities, and the potential for illegal use of

their exports in the manufacture or maintenance of arms or related

materials.

Sue E. Eckert,

Assistant Secretary for Export Administration.

[FR Doc. 94-7234 Filed 3-25-94; 8:45 am]

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