Amendment to the International Traffic in Arms Regulations

DEPARTMENT OF STATE

Bureau of Political Military Affairs

22 CFR Parts 123 and 126

[Public Notice 2294]

Amendment to the International Traffic in Arms Regulations

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: This rule would amend the International Traffic in Arms

Regulations (ITAR) by establishing an exemption for the temporary

export of cryptographic products for personal use. The effect of the

change would be to ease the burden on U.S. citizens and lawful

permanent residents who have the need to temporarily export

cryptographic products when leaving the U.S. for brief periods of time.

EFFECTIVE DATE: February 16, 1996.

FOR FURTHER INFORMATION CONTACT:

Rose Biancaniello, Deputy Director for Licensing, Office of Defense

Trade Controls, Department of State, (703) 875-6643 or FAX (703) 875-

6647.

SUPPLEMENTARY INFORMATION: The U.S. Government has since 1993, at the

direction of the President, been reviewing the U.S. policy regarding

the domestic use of, and export controls on, cryptographic technology.

While U.S. national security and foreign policy compel maintaining

appropriate export controls on cryptography, the Department of State

has continued to reform the export control procedures applicable to

those products incorporating cryptography which are controlled by the

ITAR in Category XIII(b)(1). For example, on September 2, 1994, the

Department published (at 59 FR 45621) a final rule change which created

a new Section 124.15. The section provides for a new arrangement by

which the Department of State may provide approval for category

XIII(b)(1) cryptography products to be distributed by U.S.

manufacturers directly to foreign end users without obtaining an

individual license for each transaction.

After extensive review, the Department of State has decided to

further amend the regulations to provide for an exemption for the

temporary export of cryptographic products for personal use. The

exemption does not apply to other circumstances, for example, those in

which a person contemplates sales, marketing or demonstration. Nor does

the exemption apply to exports to destinations listed in Section 126.1

of the ITAR which are prohibited by a United Nations Security Council

Resolution or to which the export (or for which the issuance of a

[[Page 6112]]

license for the export) would be prohibited by a U.S. statute (e.g., by

Section 40 of the Arms Export Control Act, 22 U.S.C. 2780, to countries

that have been determined to have repeatedly provided support for acts

of international terrorism, i.e., Cuba, Iran, Iraq, Libya, North Korea,

Sudan and Syria).

This rule amends Part 123 to add a new Section 123.27 to reduce the

burden on individual users of cryptographic products by providing an

exemption for the temporary export for personal use of products covered

by Category XIII(b)(1) when the product remains in the possession of

the exporter or the possession of another U.S. citizen or lawful

permanent resident traveling with him/her. For purposes of this

exemption, a product is considered to be in the possession of the

exporter if the exporter takes normal precautions to ensure the

security of the product by locking the product in a hotel room, safe,

or other comparably secure location; and, while in transit, the

exporter keeps the product in his/her carry-on luggage or locked in

baggage accompanying the exporter which has been checked with the

carrier.

This amendment involves a foreign affairs function of the United

States and thus is excluded from the procedures of Executive Order

12866 (58 FR 51735) and 5 U.S.C. 553 and 554.

However, interested parties are invited to submit written comments

to the Department of State, Director, Office of Defense Trade Controls,

Attn: Regulatory Change, Personal Use Cryptographic Products, Room 200,

SA-6, Washington, DC 20520-0602.

This rule affects collection of information subject to the

Paperwork Reduction Act (44 U.S.C. 3501 et seq), and will serve to

reduce the burden on exporters by adding an exemption which will remove

the current requirement for a license.

Paperwork Reduction Act

The record-keeping requirement contained in section 123.27(b) has

been approved by OMB and has a control number of 1405-0103. An agency

may not conduct or sponsor, and a person is not required to respond to,

a collection of information unless the collection of information

displays a valid control number.

List of Subjects

22 CFR Part 123

Arms and munitions, Exports, Reporting and recordkeeping

requirements.

22 CFR Part 126

Arms and munitions, Exports.

Accordingly, for the reasons set forth in the preamble, title 22,

chapter I, subchapter M, of the Code of Federal Regulations, is amended

as set forth below:

PART 123--LICENSES FOR THE EXPORT OF DEFENSE ARTICLES

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

follows:

Authority: Secs. 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22

U.S.C. 2752, 2778); E.O. 11958, 42 FR 4311, 3 CFR 1977 Comp. 79; 22

U.S.C. 2658.

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

Sec. 123.27 Temporary export for personal use of Category XIII(b)(1)

cryptographic products.

(a) District Directors of Customs may permit a U.S. citizen or a

U.S. person who is a lawful permanent resident as defined by 8 U.S.C.

1101(a)(20) to temporarily export from the United States without a

license not more than one each of any unclassified Category XIII(b)(1)

cryptographic hardware product and not more than a single copy of each

type of unclassified Category XIII(b)(1) cryptographic software product

provided that:

(1) The software product(s) are to be used only on a simultaneously

temporarily exported Category XIII(b)(1) hardware product or a

simultaneously exported item on the Commerce Control List (CCL); and

(2) The cryptographic products covered by Category XIII(b)(1) are

not destined for export to a destination listed in Sec. 126.1 of the

ITAR (22 CFR 126.1) which is prohibited by a United Nations Security

Council Resolution or to which the export (or for which the issuance of

a license for the export) would be prohibited by a U.S. statute (e.g.,

by Section 40 of the Arms Export Control Act, 22 U.S.C. 2780, to

countries that have been determined to have repeatedly provided support

for acts of international terrorism--currently Cuba, Iran, Iraq, Libya,

North Korea, Sudan and Syria); and

(3)(i) The encryption products remain in the possession of the

exporting person or the possession of another U.S. citizen or lawful

permanent resident traveling with him/her, are for their exclusive use

and not for copying, demonstration, marketing, sale, re-export or

transfer of ownership or control. The export of cryptographic products

identified in Category XIII(b)(1) in any other circumstances, for

example, those in which a person contemplates sales, marketing, or

demonstration must be licensed in accordance with policies and

procedures established in this subchapter.

(ii) Special definition. For purposes of paragraph (a)(3)(i) of

this section, a product is considered to be in the possession of the

exporter if:

(A) The exporter takes normal precautions to ensure the security of

the product by locking the product in a hotel room, safe, or other

comparably secure location; and

(B) While in transit, the exporter keeps the product in his/her

carry-on luggage or locked in baggage accompanying the exporter which

has been checked with the carrier; and

(4) At the time of export from the U.S. and import into the U.S.,

the cryptographic products are with the individual's accompanying

baggage or effects. They may not be exported or imported in

unaccompanied baggage, mailed or transmitted by any other means (e.g.,

electronically); and, the cryptographic products must be returned to

the U.S. at the completion of the stay abroad; and

(5) The exporter, upon request of a U.S. Customs officer, will

submit the products to inspection at the time of export and/or import.

(b) Use of this exemption requires the exporter, in lieu of filing

a Shippers' Export Declaration, to maintain, for a period of 5 years

from the date of each temporary export, a record of that temporary

export and the subsequent import. Included in this record must be a

self certification that the individual complied with the conditions of

paragraph (a) of this section and a self certification that he/she has

no reason to believe that any of the temporarily exported cryptographic

products were stolen, lost, copied, sold or otherwise compromised or

transferred while abroad. The record should include the following

information: A description of the unclassified cryptographic products;

the countries entered, including the dates of entry and exit for each

foreign country; and, the dates of temporary export from and subsequent

import into the United States.

(c) In any instance where a product exported under this exemption

is stolen, lost, copied, sold or otherwise compromised or transferred

while abroad, the exporting person must, within 10 days of his/her

return to the United States, report the incident to the Department of

State, Office of Defense Trade Controls, Washington, D.C. 20520-0602.

Also, any person who knows or has reason to know that cryptographic

products exported under

[[Page 6113]]

this exemption are being transferred, exported, or used for any other

activity which must be licensed or otherwise authorized in writing by

the Department of State, should immediately inform the Department of

State, Office of Defense Trade Controls, Washington D.C. 20520-0602.

PART 126--GENERAL POLICIES AND PROVISIONS

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

follows:

Authority: Secs. 2, 38, 40, 42 and 71, Arms Export Control Act,

Pub. L. 90-629, 90 Stat. 744 (22 U.S.C. 2752, 2778, 2780, 2791 and

2797); E.O. 11958, 41 FR 4311; E.O. 11322, 32 FR 119; 22 U.S.C.

2658; 22 U.S.C. 287c; E.O. 12918, 59 FR 28205.

2. Section 126.1(a) is amended by designating the three sentences

of the undesignated paragraph as the third, fourth and fifth sentences

of paragraph (a) and by adding a new sixth sentence at the end of

paragraph (a) to read as follows:

Sec. 126.1 Prohibited exports and sales to certain countries.

(a) * * * With regard to Sec. 123.27 the exemption does not apply

with respect to articles originating in or for export to countries

prohibited by a United Nations Security Council Resolution or to which

the export (or for which the issuance of a license for the export)

would be prohibited by a U.S. statute (e.g., by Section 40 of the Arms

Export Control Act, 22 U.S.C. 2780, to countries that have been

determined to have repeatedly provided support for acts of

international terrorism, i.e., Cuba, Iran, Iraq, Libya, North Korea,

Sudan and Syria).

* * * * *

Dated: November 17, 1995.

Lynn E. Davis,

Under Secretary for Arms Control and International Security Affairs.

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

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