§740.1 INTRODUCTION · INTRODUCTION In this part, references to the EAR are references to 15 CFR chapter VII, subchapter C. (a) Scope!A “License Exception” is an authorization

License Exceptions Part 740-page 1

Export Administration Regulations August 2001

§740.1

INTRODUCTION

In this part, references to the EAR are referencesto 15 CFR chapter VII, subchapter C.

(a) Scope

!A “License Exception” is an authorizationcontained in this part that allows you to export orreexport under stated conditions, items subject tothe Export Administration Regulations (EAR)that would otherwise require a license underGeneral Prohibition One, Two, Three, or Eight asindicated under one or more of the Export ControlClassification Numbers (ECCNs) in theCommerce Control List (CCL) in Supplement No.1 to part 774 of the EAR and items subject to theEAR that would require a license based on theembargo policies described in part 746 of theEAR. If your export or reexport is subject toGeneral Prohibition Six fo r embargoeddestinations, refer to part 746 of the EAR todetermine the availability of any LicenseExceptions. Special commodity controls apply toshort supply items. License Exceptions for itemslisted on the CCL as controlled for Short Supplyreasons are found in part 754 of the EAR. If yourexport or reexport is to subject to GeneralProhibition Five, consult part 744 of the EAR. Ifyour export or reexport is subject to GeneralProhibitions Four, Seven, Nine, or Ten, then noLicense Exceptions apply.

(b) Certification

By using any of the License Exceptions you arecertifying that the terms, provisions, andconditions for the use of the License Exceptiondescribed in the EAR have been met. Please referto part 758 of the EAR for clearance of shipmentsand documenting the use of License Exceptions.

(c) License Exception symbols

Each License Exception bears a three lettersymbol that will be used for export clearancepurposes (see paragraph (d) of this section).

(d) Shipper's Export Declaration

You must enter on any required Shipper’s ExportDeclaration (SED) or Automated Export System(AES) record the correct License Exceptionsymbol (e.g., LVS, GBS, CIV) and the correctExport Control Classification Number (ECCN)(e.g., 4A003, 5A002) for all shipments of itemsexported under a License Exception. Itemstemporarily in the United States meeting theprovisions of License Exception TMP, under§740.9(b)(3), are excepted from this requirement. See §758.1 of the EAR for Shipper’s ExportDeclaration requirements or §758.2 of the EARfor Automated Export System (AES)requirements.

(e) Destination Control Statement

You may be required to enter an appropriateDestination Control Statement on commercialdocuments in accordance with DestinationControl Statement requirements of §758.6 of theEAR.

(f) Recordkeeping

Records of transactions involving exports underany of the License Exceptions must be maintainedin accordance with the recordkeepingrequirements of part 762 of the EAR.

§740.2

RESTRICTIONS ON ALL LICENSE EXCEPTIONS

(a) You may not use any License Exception ifany one or more of the following apply:



(1) Your authorization to use a LicenseException has been suspended or revoked, or yourintended export does not qualify for a LicenseException.

(2) The export or reexport is subject to one of theten General Prohibitions, is not eligible for aLicense Exception, and has not been authorizedby BXA.

(3) The item is for surreptitious interception ofwire or oral communications, controlled underECCN 5A980, unless you are a U.S. Governmentagency (see §740.11(b)(2)(ii) of this part,Governments (GOV)).

(4) The commodity you are shipping is aspecially designed crime control and detectioninstrument or equipment described in §742.7 ofthe EAR and you are not shipping to Iceland,New Zealand, or countries listed in CountryGroup A:1 (see Supplement No. 1 to part 740),unless the shipment is authorized under LicenseException BAG, §740.14(e) of this part (shotgunsand shotgun shells).

(5) The item is controlled for missile technology(MT) reasons, except that the items described inECCNs 6A008, 7A001, 7A002, 7A004, 7A101,7A102, 7A103, 7A104, 7B001, 7D001, 7D002,7D003, 7D101, 7D102, 7E003, or 7E101, may beexported as part of a manned aircraft, land vehicleor marine vehicle or in quantities appropriate forreplacement parts for such applications under§740.9(a)(2)(ii) (License Exception TMP for kitsconsisting of replacement parts), §740.10(License Exception RPL), §740.13 (LicenseException TSU), or §740.15(c) (LicenseException AVS for equipment and spare parts forpermanent use on a vessel or aircraft).

!(6) The export or reexport is to an embargoeddestination (Cuba, Iran, Iraq, and Libya), unless alicense exception or portion thereof is specificallylisted in the license exceptions paragraph

pertaining to a particular embargoed country inpart 746 of the EAR.

(b) All License Exceptions are subject torevision, suspension, or revocation, in whole or inpart, without notice. It may be necessary forBXA to stop a shipment or an export transactionat any stage of its progress, e.g., in order toprevent an unauthorized export or reexport. If ashipment is already en route, it may be furthernecessary to order the return or unloading of theshipment at any port of call.

(c) BXA may by informing the exporter, suspendor revoke any License Exception in order tocomply with U.S. Wassenaar obligations. Inaddition, BXA may inform an exporter, thatbefore using any License Exception, a notice besubmitted with BXA concerning the proposedexport.

§740.3

SHIPMENTS OF LIMITED VALUE (LVS)

(a) Scope

License Exception LVS authorizes the export andreexport in a single shipment of eligiblecommodities as identified by "LVS - $(valuelimit)" on the CCL.

(b) Eligible Destinations

This License Exception is available for alldestinations in Country Group B (see SupplementNo. 1 to part 740), provided that the net value ofthe commodities included in the same order andcontrolled under the same ECCN entry on theCCL does not exceed the amount specified in theLVS paragraph for that entry.

(c) Definitions



(1) Order. The term "order" as used in this §-740.3 means a communication from a person in aforeign country, or that person's representative,expressing an intent to import commodities fromthe exporter. Although all of the details of theorder need not be finally determined at the time ofexport, terms relating to the kinds and quantitiesof the commodities to be exported, as well as theselling prices of these commodities, must befinalized before the goods can be exported underLicense Exception LVS.

(2) Net value: for LVS shipments. The actualselling price of the commodities that are includedin the same order and are controlled under thesame entry on the CCL, less shipping charges, orthe current market price of the commodities to thesame type of purchaser in the United States,whichever is the larger. In determining the actualselling price or the current market price of thecommodity, the value of containers in which thecommodity is being exported may be excluded.The value for LVS purposes is that of thecontrolled commodity that is being exported, andmay not be reduced by subtracting the value ofany content that would not, if shipped separately,be subject to licensing. Where the total value ofthe containers and their contents must be shownon Shipper's Export Declarations under oneSchedule B Number, the exporter, in effecting ashipment under this License Exception, mustindicate the "net value" of the containedcommodity immediately below the description ofthe commodity.

(3) Single shipment. All commodities movingat the same time from one exporter to oneconsignee or intermediate consignee on the sameexporting carrier even though these commoditieswill be forwarded to one or more ultimateconsignees. Commodities being transported inthis manner will be treated as a single shipmenteven if the commodities represent more than oneorder or are in separate containers.

(d) Additional eligibility requirements

and restrictions

(1) Eligible orders. To be eligible for thisLicense Exception, orders must meet thefollowing criteria:

(i) Orders must not exceed the applicable"LVS" dollar value limits. An order is eligible forshipment under LVS when the "net value" of thecommodities controlled under the same entry onthe CCL does not exceed the amount specified inthe "LVS" paragraph for that entry. An LVSshipment may include more than one eligibleorder.

(ii) Orders may not be split to meet theapplicable LVS dollar limits. An order thatexceeds the applicable LVS dollar value limitmay not be misrepresented as two or more orders,or split among two or more shipments, to give theappearance of meeting the applicable LVS dollarvalue limit. However an order that meets all theLVS eligibility requirements, including theapplicable LVS dollar value limit, may be splitamong two or more shipments.

(iii) Orders must be legitimate. Exportersand consignees may not, either collectively orindividually, structure or adjust orders to meet theapplicable LVS dollar value limits. (2) Restriction on annual value of LVS orders.The total value of exports per calendar year to thesame ultimate or intermediate consignee ofcommodities classified under a single ECCN maynot exceed 12 times the LVS value limit for thatECCN; however, there is no restriction on thenumber of shipments provided that value is notexceeded. This annual value limit applies toshipments to the same ultimate consignee eventhough the shipments are made through more thanone intermediate consignee. There is norestriction on the number of orders that may beincluded in a shipment, except that the annualvalue limit per ECCN must not be exceeded.



(3) Orders where two or more LVS dollarvalue limits apply. An order may includecommodities that are controlled under more thanone entry on the CCL. In this case, the net valueof the entire order may exceed the LVS dollarvalue for any single entry on the CCL. However,the net value of the commodities controlled undereach ECCN entry shall not exceed the LVS dollarvalue limit specified for that entry.

Example to paragraph (3): An order includescommodities valued at $8,000. The order consistsof commodities controlled under two ECCNentries, each having an LVS value limit of $5000.Commodities in the order controlled under oneECCN are valued at $3,500 while thosecontrolled under the other ECCN are valued at$4,500. Since the net value of the commoditiescontrolled under each entry falls within the LVSdollar value limits applicable to that entry, theorder may be shipped under this LicenseException.

(4) Prohibition against evasion of licenserequirements. Any activity involving the use ofthis License Exception to evade licenserequirements is prohibited. Such devices include,but are not limited to, the splitting or structuringof orders to meet applicable LVS dollar valuelimits, as prohibited by paragraphs (d)(1)(ii) and(iii) of this section.

(5) Exports of encryption items. Forcomponents or spare parts controlled for “EI”reasons under ECCN 5A002, exports under thisLicense Exception must be destined to support anitem previously authorized for export.

(e) Reexports

Commodities may be reexported under thisLicense Exception, provided that they could beexported from the United States to the newcountry of destination under LVS.

(f) Reporting requirements

See §743.1 of the EAR for reporting requirementsfor exports of certain commodities under LicenseException LVS.

§740.4

SHIPMENTS TO COUNTRY GROUP B COUNTRIES (GBS)

License Exception GBS authorizes exports andreexports to Country Group B (see SupplementNo. 1 to part 740) of those commoditiescontrolled to the ultimate destination for nationalsecurity reasons only and identified by “GBS -Yes” on the CCL. See §743.1 of the EAR forreporting requirements for exports of certaincommodities under License Exception GBS.

§740.5

CIVIL END-USERS (CIV)

License Exception CIV authorizes exports andreexports controlled to the ultimate destinationfor national security reasons only and identifiedby "CIV - Yes" on the CCL, provided the itemsare destined to civil end-users for civil end-usesin Country Group D:1, except North Korea. (SeeSupplement No. 1 to part 740.) CIV may not beused for exports and reexports to military end-users or to known military uses. Such exportsand reexports will continue to require a license.In addition to conventional military activities,military uses include any proliferation activitiesdescribed and prohibited by part 744 of the EAR.A license is also required for transfer to militaryend-users or end-uses in eligible countries ofitems exported under CIV. See §743.1 of the EARfor reporting requirements for exports of certaincommodities under License Exception CIV.

§740.6



TECHNOLOGY AND SOFTWARE UNDER RESTRICTION (TSR)

(a) Scope

License Exception TSR permits exports andreexports of technology and software controlledto the ultimate destination for national securityreasons only and identified by "TSR - Yes" inentries on the CCL, provided the software ortechnology is destined to Country Group B. (SeeSupplement No. 1 to part 740.) A writtenassurance is required from the consignee beforeexporting under this License Exception.

(1) Required assurance for export oftechnology. You may not export or reexporttechnology under this License Exception untilyou have received from the importer a writtenassurance that, without a BXA license or LicenseException, the importer will not:

(i) Reexport or release the technology to anational of a country in Country Groups D:1 orE:2; or

(ii) Export to Country Groups D:1 or E:2 thedirect product of the technology, if such foreignproduced direct product is subject to nationalsecurity controls as identified on the CCL (SeeGeneral Prohibition Three, §736.2(b)(3) of theEAR); or

(iii) If the direct product of the technology isa complete plant or any major component of aplant, export to Country Groups D:1 or E:2 thedirect product of the plant or major componentthereof, if such foreign produced direct product issubject to national security controls as identifiedon the CCL or is subject to State Departmentcontrols under the U.S. Munitions List (22 CFRpart 121).

(2) Required assurance for export of software.You may not export or reexport software underthis License Exception until you have received

from the importer a written assurance that,without a BXA license or License Exception, theimporter will neither:

(i) Reexport or release the software or thesource code for the software to a national of acountry in Country Groups D:1 or E:2; nor

(ii) Export to Country Groups D:1 or E:2 thedirect product of the software, if such foreignproduced direct product is subject to nationalsecurity controls as identified on the CCL. (SeeGeneral Prohibition Three, §736.2(b)(3) of theEAR).

(3) Form of written assurance. The requiredassurance may be made in the form of a letter orany other written communication from theimporter, including communicati ons viafacsimile, or the assurance may be incorporatedinto a licensing agreement that specificallyincludes the assurances. An assurance includedin a licensing agreement is acceptable only if theagreement specifies that the assurance will behonored even after the expiration date of thelicensing agreement. If such a written assuranceis not received, License Exception TSR is notapplicable and a license is required. The licenseapplication must include a statement explainingwhy assurances could not be obtained.

(4) Other License Exceptions. The requirementsin this License Exception do not apply to theexport of technology or software under otherLicense Exceptions, or to the export oftechnology or software included in an applicationfor the foreign filing of a patent, provided thefiling is in accordance with the regulations of theU.S. Patent Office.

(b) Reporting requirements

See §743.1 of the EAR for reporting requirementsfor exports of certain items under LicenseException TSR. Note that reports are notrequired for release of technology or source code



subject to the EAR to foreign nationals in theU.S. under the provisions of License ExceptionTSR.

§740.7

COMPUTERS (CTP)

(a) Scope

License Exception CTP authorizes exports andreexports of computers and specially designedcomponents therefor, exported or reexportedseparately or as part of a system for consumptionin Computer Tier countries as provided by thissection. (Related equipment controlled under4A003.d and .g is authorized under this LicenseException, only when exported or reexported withthese computers as part of a system.) You maynot use this License Exception to export orreexport items that you know will be used toenhance the CTP beyond the eligibility limitallowed to your country of destination. Whenevaluating your computer to determine LicenseException CTP eligibility, use the CTP parameterto the exclusion of other technical parameters forcomputers classified under ECCN 4A003.a, .band .c, except of parameters specified as MissileTechnology (MT) concerns or 4A003.e(equipment performing analog-to-digitalconversions exceeding the limits in ECCN3A001.a.5.a). This License Exception does notauthorize the export or reexport of graphicaccelerators or coprocessors, or of computerscontrolled for MT reasons.

(b) Computer Tier 1

(1) Eligible countries. The countries that areeligible to receive exports under this LicenseException include Antigua and Barbuda,Argentina, Australia, Austria, Bahamas,Barbados, Bangladesh, Belgium, Belize, Benin,Bhutan, Bolivia, Botswana, Brazil, Brunei,Burkina Faso, Burma, Burundi, Cameroon, Cape

Verde, Central African Republic, Chad, CzechRepublic, Chile, Colombia, Congo, Costa Rica,Cote d'Ivoire, Cyprus, Denmark, Dominica,Dominican Republic, Ecuador, El Salvador,Equatorial Guinea, Eritrea, Estonia, Ethiopia, Fiji,Gabon, Finland, France, Gambia (The), Germany,Ghana, Greece, Grenada, Guatemala, Guinea,Guinea-Bissau, Guyana, Haiti, Honduras, HongKong, Hungary, Iceland, Indonesia, Ireland, Italy,Jamaica, Japan, Kenya, Kiribati, Korea (Republicof), Lesotho, Liberia, Liechtenstein, Luxembourg,Madagascar, Malawi, Malaysia, Maldives, Mali,Malta, Marshall Islands, Mauritius, Mexico,Micronesia (Federated States of), Monaco,Mozambique, Namibia, Nauru, Nepal,Netherlands, New Zealand, Nicaragua, Niger,Nigeria, Norway, Palau, Panama, Papua NewGuinea, Paraguay, Peru, Philippines, Poland,Portugal, Romania, Rwanda, St. Kitts & Nevis,St. Lucia, St. Vincent and Grenadines, Sao Tome& Principe, San Marino, Senegal, Seychelles,Sierra Leone, Singapore, Slovakia, Slovenia,Solomon Islands, Somalia, South Africa, Spain,Sri Lanka, Surinam, Swaziland, Sweden,Switzerland, Taiwan, Tanzania, Togo, Tonga,Thailand, Trinidad and Tobago, Turkey, Tuvalu,Uganda, United Kingdom, Uruguay, Vatican City,Venezuela, Western Sahara, Western Samoa,Zaire, Zambia, and Zimbabwe. As of May 19,2001, Lithuania is a Computer Tier 1 country.

(2) Eligible computers. The computers eligiblefor License Exception CTP to Tier 1 destinationsare those having a Composite TheoreticalPerformance (CTP) greater than 6,500 Millions ofTheoretical Operations Per Second (MTOPS).

(c) [Reserved]

(d) Computer Tier 3

(1) Eligible countries. The countries that areeligible to receive exports and reexports underthis License Exception are Afghanistan, Albania,Algeria, Andorra, Angola, Armenia, Azerbaijan,Bahrain, Belarus, Bosnia & Herzegovina,



Bulgaria, Cambodia, China (People's Republicof), Comoros, Croatia, Djibouti, Egypt, Georgia,India, Israel, Jordan, Kazakhstan, Kuwait,Kyrgyzstan, Laos, Latvia, Lebanon, Lithuania,Macau, Macedonia (The Former YugoslavRepublic of), Mauritania, Moldova, Mongolia,Morocco, Oman, Pakistan, Qatar, Russia, SaudiArabia, Tajikistan, Tunisia, Turkmenistan,Ukraine, United Arab Emirates, Uzbekistan,Vanuatu, Vietnam, Yemen, and Yugoslavia(Serbia and Montenegro), Federal Republic of .As of May 19, 2001, Lithuania is moved toComputer Tier 1.

(2) Eligible computers. The computers eligiblefor License Exception CTP to Tier 3 destinationsare those having a CTP greater than 6,500MTOPS, but less than or equal to 85,000MTOPS, subject to the restrictions in paragraph(d)(3) of this section.

(3) Eligible exports. Only exports and reexportsto permitted end-users and end-uses located incountries in Computer Tier 3. License ExceptionCTP does not authorize exports and reexports toComputer Tier 3 for nuclear, chemical, biological,or missile end-users and end-uses and militaryend-users and end-uses subject to licenserequirements under §744.2, §744.3, §744.4,§744.5, and §744.12 of the EAR. Such exportsand reexports will continue to require a licenseand will be considered on a case-by-case basis.Retransfers to these end-users and end-uses ineligible countries are strictly prohibited withoutprior authorization.

(4) Supporting documentation. Exporters arerequired to obtain a People’s Republic of China(PRC) End-User Certificate before exportingcomputers described by paragraphs (d)(5)(i)(A) or(d)(5)(i)(B) of this section to the PRC, regardlessof value. (See §748.10(b)(3) of the EAR forinformation on obtaining the PRC End-UserCertificate.) Exporters are required to provide thePRC End-User Certificate Number to BXA aspart of their post-shipment report (see paragraph

(d)(5)(v) of this section). When providing thePRC End-User Certificate Number to BXA, youmust identify the transaction in the post shipmentreport to which that PRC End-User CertificateNumber applies. The original PRC End-UserCertificate shall be retained in the exporter's filesin accordance with the recordkeeping provisionsof §762.2 of the EAR.

(5) NDAA notification.

(i) General requirement and procedures. TheNational Defense Authorization Act (NDAA) ofFY98 (Public Law 105-85, 111 Stat. 1629),enacted on November 18, 1997 requires advancenotification of certain exports and reexports ofcomputers to Computer Tier 3 countries. Foreach such transaction destined to Computer Tier3, prior to using License Exception CTP, youmust first notify BXA by submitting a completedMultipurpose Application Form (BXA-748P).The Multipurpose Application Form must becompleted including all information required fora license application according to the instructionsdescribed in Supplement No. 1 to part 748 of theEAR, with two exceptions. You (the applicant aslisted in Block 14) shall in Block 5 (Type ofApplication) mark the box “Other.” Thisdesignator will permit BXA to route the NDAAnotice into a special processing procedure.(Blocks 6 and 7, regarding supportdocumentation, may be left blank.) BXA will notinitiate the registration of an NDAA notice unlessall information on the Multipurpose Applicationform is complete.

(A) Prior to February 26, 2001, advancenotification is required for all exports andreexports of computers with a CTP greater than12,500 but less than or equal to 85,000 MTOPSto Computer Tier 3 destinations. You must alsoprovide a notice using this procedure prior toexporting or reexporting items that you know willbe used to enhance the CTP of a previouslyexported or reexported computer beyond 12,500



MTOPS, but less than or equal to 85,000MTOPS.

(B) Beginning on February 26, 2001 butprior to March 20, 2001, advanced notification isrequired for export and reexport of computerswith a CTP greater than 28,000 MTOPS, but lessthan or equal to 85,000 MTOPS to Computer Tier3 destinations. You must also provide a noticeusing this procedure prior to exporting orreexporting items that you know will be used toenhance the CTP of a previously exported orreexported computer beyond 28,000 MTOPS, butless than or equal to 85,000 MTOPS.

(ii) Action by BXA. Within 24 hours of theregistration of the NDAA notice, BXA will referthe notice for interagency review. Registration isdefined as the point at which the notice is enteredinto BXA's electronic system.

(iii) Review by other departments or agencies.The Departments of Defense, Energy, and Statehave the authority to review the NDAA notice.Objections by any department or agency must bereceived by the Secretary of Commerce withinnine days of the referral. Unlike the provisionsdescribed in §750.4(b) of the EAR, there are noprovisions for stopping the processing time of theNDAA notice. If, within 10 days after the date ofregistration, any reviewing agency provides awritten objection to the export or reexport of acomputer, License Exception CTP may not beused. In such cases, you will be notified that alicense is required for the export or reexport. TheNDAA notice will then be processed by BXA asa license application in accordance to theprovisions described in §750.4 of the EAR, andthe licensing policies set forth in the ExportAdministration Regulations. Its NDAA noticenumber will be changed to a license applicationnumber. BXA may at this time request additionalinformation to properly review the licenseapplication. If BXA confirms that no objectionhas been raised within the 10-day period (asdescribed in paragraph (d)(5)(iv) of this section),you may proceed with the transaction on the

eleventh day following date of registration. (Notethat the fact that you have been advised toproceed with the transaction does not exempt youfrom other licensing requirements under the EAR,such as those based on knowledge of a prohibitedend-use or end-user as referenced in generalprohibition five (part 736 of the EAR) and setforth in part 744 of the EAR.)

(iv) Status of pending advance notificationrequests. You must contact BXA's System forTracking Export License Applications("STELA") at (202) 482-2752. (See §750.5 of theEAR for procedures to access information onSTELA.) STELA will provide the date ofregistration of the NDAA notice. If nodepartments or agencies raise objections withinthe 10-day period, STELA will provide you onthe eleventh day following date of registrationwith confirmation that no objections have beenraised and you may proceed with the transaction.BXA will subsequ ently issue writtenconfirmation to you. If a license is required,STELA will notify you that an objection has beenraised and a license is required. The NDAAnotice will be processed as a license application.In addition, BXA may provide notice of anobjection by telephone, fax, courier service, orother means.

(v) Post-shipment verification. This sectionoutlines special post-shipment reportingrequirements for exporters of certain computers todestinations in Computer Tier 3. Post-shipmentreports must be submitted in accordance with theprovisions of this paragraph (d)(5)(v), and allrelevant records of such exports must be kept inaccordance with part 762 of the EAR.

(A) Exporters must file post-shipment reportsfor computer exports, as well as exports of itemsused to enhance previously exported orreexported computers, according to the followingschedule:



(1) For exports occurring prior to February26, 2001, where the CTP is greater than 12,500MTOPS; and

(2) For exports on or after February 26,2001, but prior to March 20, 2001, where the CTPis greater than 28,000 MTOPS.

(B) Information that must be included in eachpost-shipment report. No later than the last dayof the month following the month in which theexport takes place, the exporter must submit thefollowing information to BXA at the addresslisted in paragraph (d)(5)(v)(C) of this section:

(1) Exporter name, address, and telephonenumber;

(2) NDAA notification number;(3) Date of export;(4) End-user name, point of contact,

address, telephone number;(5) Carrier;(6) Air waybill or bill of lading number;(7) Commodity description, quantities -

listed by model numbers, serial numbers, andCTP level in MTOPS; and

(8) Certification line for exporters to signand date. The exporter must certify that theinformation contained in the report is accurate tothe best of his or her knowledge.

Note to paragraph (d)(5)(v)(B) of thissection: For exports authorized under LicenseException CTP to the People’s Republic of China(PRC), you must submit the PRC End-UserCertificate Number identifying the transaction forwhich the End-User Certificate Number applies.

(C) Mailing address. A copy of the post-shipment report[s] required under paragraph(d)(5)(v) of this section shall be delivered to oneof the following addresses. Note that BXA willnot accept reports sent C.O.D.

(1) For deliveries by U.S. postal service:

U.S. Department of Commerce Bureau of Export AdministrationP.O. Box 273 Washington, D.C. 20044Attn: Office of Enforcement Analysis HPCTeam, Room 4065

(2) For courier deliveries:

U.S. Department of CommerceOffice of Enforcement Analysis HPC Team14th Street and Constitution Ave., NWRoom 4065 Washington, DC 20230

(e) Restrictions

(1) Access by certain foreign nationals.Computers eligible for License Exception CTPmay not be accessed either physically orcomputationally by nationals of Cuba, Iran, Iraq,Libya, North Korea, Sudan or Syria, exceptcommercial consignees described in SupplementNo. 3 to part 742 of the EAR are prohibited onlyfrom giving such nationals user-accessibleprogrammability.

(2) Reexport and retransfers. Computerseligible for License Exception CTP may not bereexported/retransferred without priorauthorization from BXA i.e., a license, apermissive reexport, another License Exception,or "No License Required". This restriction mustbe conveyed to the consignee, via the DestinationControl Statement, see §758.6 of the EAR.Additional ly, the end-use and end-userrestrictions in paragraph (d)(3) of this sectionmust be conveyed to any consignee in ComputerTier 3.

(f) Reporting requirements

In addition to the reporting requirements set forthin paragraph (d) of this section, see §743.1 of the



EAR for additional reporting requirements ofcertain items under License Exception CTP.

§740.8

KEY MANAGEMENT INFRASTRUCTURE(KMI)

(a) Scope

License Exception KMI authorizes the export andreexport of certain encryption software and equip-ment.

(b) Eligible commodities and software.

(1) Recovery encryption commodities andsoftware of any key length controlled underECCNs 5A002 and 5D002 that have beenclassified after a technical review through aclassification request. Key escrow and keyrecovery commodities and software must meet thecriteria identified in Supplement No. 4 to part 742of the EAR.

(2) For such classification requests, indicate“License Exception KMI” in block 9 on FormBXA-748P. Submit the original request to BXAin accordance with §748.3 of the EAR and send acopy of the request to:

Attn: KMI Encryption Request Coordinator 9800 Savage Road, Suite 6131

Fort Meade, MD 20755-6000

!(c) Eligible destinations. License ExceptionKMI is available for all destinations, exceptdestinations in Country Group E:1.

(d) Reporting requirements.

(1) You must provide semiannual reports to BXAidentifying:

(i) Ultimate consignee; specific end-user nameand address, if available; and country of ultimatedestination; and

(ii) Quantities of each encryption item shipped.

(2) You must submit reports no later thanFebruary 1 and no later than August 1 of anygiven year.

§740.9

TEMPORARY IMPORTS, EXPORTS, ANDREEXPORTS (TMP)

This License Exception authorizes varioustemporary exports and reexports; exports andreexports of items temporarily in the UnitedStates; and exports and reexports of beta testsoftware.

(a) Temporary exports

(1) Scope. You may export and reexportcommodities and software for temporary useabroad (including use in international waters)subject to the conditions and exclusions describedin paragraph (a)(4) of this section. Commoditiesand software shipped as temporary exports andreexports under the provisions of this paragraph(a) must be returned to the country from whichthey were exported as soon as practicable but,except in circumstances described in this section,no later than one year from the date of export.This requirement does not apply if thecommodities and software are consumed ordestroyed in the normal course of authorizedtemporary use abroad or an extension or otherdisposition is permitted by the EAR or in writingby BXA.

(2) Eligible commodities and software. Thefollowing commodities and software are eligibleto be shipped under this paragraph (a):



(i) Tools of trade. Usual and reasonable kindsand quantities of tools of trade (commodities andsoftware) for use by the exporter or employees ofthe exporter in a lawful enterprise or undertakingof the exporter. Eligible tools of trade mayinclude, but are not limited to, such equipmentand software as is necessary to commission orservice goods, provided that the equipment orsoftware is appropriate for this purpose and thatall goods to be commissioned or serviced are offoreign origin, or if subject to the EAR, have beenlegally exported or reexported. The tools of trademust remain under the effective control of theexporter or the exporter's employee (see part 772of the EAR for a definition of “effectivecontrol”). The shipment of tools of trade mayaccompany the individual departing from theUnited States or may be shipped unaccompaniedwithin one month before the individual'sdeparture from the United States, or at any timeafter departure. No tools of the trade may betaken to Country Group E:2 (see SupplementNo.1 to part 740) or Sudan. For exports underthis License Exception of laptop computersloaded with encryption software, refer to iteminterpretation 13 in §770.2 of the EAR.

(ii) Kits consisting of replacement parts. Kitsconsisting of replacement parts may be exportedor reexported to all destinations, except CountryGroup E:2 (see Supplement No. 1 to part 740),provided that:

(A) The parts would qualify for shipmentunder paragraph (a)(2)(ii)(C) of this section ifexported as one-for-one replacements;

(B) The kits remain under effective controlof the exporter or an employee of the exporter;and

(C) All parts in the kit are returned, exceptthat one-for-one replacements may be made inaccordance with the requirements of LicenseException RPL and the defective parts returned(see “parts”, §740.10(a) of this part).

! (iii) Exhibition and demonstration. You mayexport or reexport under this provisioncommodities and software for exhibition ordemonstration in all countries except countrieslisted in Country Group E:1 (see Supplement No.1 to this part) provided that the exporter maintainsownership of the commodities and software whilethey are abroad and provided that the exporter, anemployee of the exporter, or the exporter'sdesignated sales representative retains “effectivecontrol” over the commodities and software whilethey are abroad (see part 772 of the EAR for adefinition of “effective control”). Thecommodities and software may not be used fortheir intended purpose while abroad, except to theminimum extent required for effectivedemonstration. The commodities and softwaremay not be exhibited or demonstrated at any onesite more than 120 days after installation anddebugging, unless authorized by BXA. However,before or after an exhibition or demonstration,pending movement to another site, return to theUnited States or the foreign reexporter, or BXAapproval for other disposition, the commoditiesand software may be placed in a bondedwarehouse or a storage facility provided that theexporter retains effective control over theirdisposition. The export documentation for thistype of transaction must show the exporter asultimate consignee, in care of the person who willhave control over the commodities and softwareabroad.

(iv) Inspection and calibration. Commoditiesto be inspected, tested, calibrated or repairedabroad may be exported or reexported to alldestinations under this section, except CountryGroup E:2, Sudan or Syria.

(v) Containers. Containers for which anotherLicense Exception is not available and that arenecessary for export of commodities. However,this License Exception does not authorize theexport of the container's contents, which, if notexempt from licensing, must be separately



authorized for export under either a LicenseException or a license.

(vi) Broadcast material.

(A) Video tape containing program materialrecorded in the country of export to be publiclybroadcast in another country.

(B) Blank video tape (raw stock) for use inrecording program material abroad.

(vii) Assembly in Mexico. Commodities to beexported to Mexico under Customs entries thatrequire return to the United States afterprocessing, assembly, or incorporation into endproducts by companies, factories, or facilitiesparticipating in Mexico's in-bond industrializationprogram (Maquiladora), provided that allresulting end-products (or the commoditiesthemselves) are returned to the United States.

(viii) News media.

(A) Commodities necessary fornews-gathering purposes (and software necessaryto use such commodities) may accompany"accredited" news media personnel (i.e., personswith credentials from a news gathering orreporting firm) to Country Groups D:1 or E:2, orSudan (see Supplement No. 1 to part 740) if thecommodities:

(1) Are retained under "effective control"of the exporting news gathering firm;

(2) Remain in the physical possession ofthe news media personnel. The term physicalpossession for purposes of this paragraph(a)(2)(viii), news media, is defined as maintainingeffective measures to prevent unauthorized access(e.g., securing equipment in locked facilities orhiring security guards to protect the equipment);and

(3) Are removed with the news mediapersonnel at the end of the trip.

(B) When exporting under this paragraph(a)(2)(viii) from the United States, the exportermust send a copy of the packing list or similaridentification of the exported commodities, to:U.S. Department of Commerce, Bureau of ExportAdministration, Office of Enforcement Support,Room H4069, 14th Street and ConstitutionAvenue, N.W., Washington, DC 20230, or any ofits field offices, specifying the destination andestimated dates of departure and return. TheOffice of Export Enforcement (OEE) may spotcheck returns to assure that the temporary exportsand reexports provisions of this LicenseException are being used properly.

(C) Commodities or software necessary fornews-gathering purposes that accompany newsmedia personnel to all other destinations shall beexported or reexported under paragraph (a)(2)(i),tools of trade, of this section if owned by thenews gathering firm, or if they are personalproperty of the individual news media personnel.Note that paragraphs (a)(2)(i), tools of trade and(a)(2)(viii), news media, of this section do notpreclude independent "accredited" contractpersonnel, who are under control of newsgathering firms while on assignment, fromutilizing these provisions, provided that the newsgathering firm designate an employee of thecontract firm to be responsible for the equipment.

(ix) Temporary exports to a U.S. subsidiary,affiliate or facility in Country Group B.

(A) Components, parts, tools or testequipment exported by a U.S. person to itssubsidiary, affiliate or facility in a country listedin Country Group B (see Supplement No. 1 to thispart) that is owned or controlled by the U.S.person, if the components, part, tool or testequipment is to be used for manufacture,assembly, testing, production or modification,provided that no components, parts, tools or test



equipment or the direct product of suchcomponents, parts, tools or test equipment aretransferred or reexported to a country other thanthe United States from such subsidiary, affiliateor facility without prior authorization by BXA.

(B) For purposes of this paragraph (a)(2)(ix),U.S. person is defined as follows: an individualwho is a citizen of the United States, anindividual who is a lawful permanent resident asdefined by 8 U.S.C. 1101(a)(2) or an individualwho is a protected individual as defined by 8U.S.C. 1324b(a)(3). U.S. person also means anyjuridical person organized under the laws of theUnited States, or any jurisdiction within theUnited States (e.g., corporation, businessassociation, partnership, society, trust, or anyother entity, organization or group that isincorporated to do business in the United States).

(3) Special restrictions.

(i) Destinations.

! (A) No commodity or software may beexported or reexported under paragraph (a) of thissection to Country Group E:2 (see SupplementNo. 1 to this part) except as permitted byparagraph (a)(2)(viii) of this section (newsmedia). These destination restrictions apply totemporary exports to and for use on any vessel,aircraft or territory under the ownership, control,lease, or charter by any country in Country GroupE:2, or any national thereof;

(B) No commodity or software may beexported under this License Exception to CountryGroup D:1 (see Supplement No. 1 to part 740)except:

(1) Commodities and software exportedunder paragraph (a)(2)(viii), news media, of thissection;

(2) Commodities and software exportedunder paragraph (a)(2)(i), tools of trade, of thissection; and

(3) Commodities exported as kits ofreplacement parts, consistent with therequirements of paragraph (a)(2)(ii) of thissection.

(C) These destination restrictions apply totemporary exports to and for use on any vessel,aircraft or territory under ownership, control,lease, or charter by any country in Country GroupD:1 or E:2, or any national thereof. (SeeSupplement No. 1 to part 740.)

(ii) Ineligible commodities or software.Commodities or software that will be used outsideof Country Group A:1 (see Supplement No. 1 topart 740), Iceland, or New Zealand, either directlyor indirectly, in any sensitive nuclear activity asdescribed in §744.2 of the EAR may not beexported or reexported to any destination underthe temporary exports and reexports provisions ofthis License Exception.

(iii) Use or disposition. No commodity orsoftware may be exported or reexported underthis paragraph (a) if:

(A) An order to acquire the commodity orsoftware has been received before shipment;

(B) The exporter has prior knowledge thatthe commodity or software will stay abroadbeyond the terms of this License Exception; or

(C) The commodity or software is for leaseor rental abroad.

(4) Return or disposal of commodities andsoftware. All commodities and softwareexported or reexported under these provisionsmust, if not consumed or destroyed in the normalcourse of authorized temporary use abroad, bereturned as soon as practicable but no later than



one year after the date of export, to the UnitedStates or other country from which thecommodities and software were so exported, orshall be disposed of or retained in one of thefollowing ways:

(i) Permanent export or reexport. If theexporter or the reexporter wishes to sell orotherwise dispose of the commodities or softwareabroad, except as permitted by this or otherapplicable License Exception, the exporter mustrequest authorization by submitting a licenseapplication to BXA at the address listed in part748 of the EAR. (See part 748 of the EAR formore information on license applications.) Therequest should comply with all applicableprovisions of the EAR covering export directlyfrom the United States to the proposeddestination. The request must also be supportedby any documents that would be required insupport of an application for export license forshipment of the same commodities or softwaredirectly from the United States to the proposeddestination. BXA will advise the exporter of itsdecision.

(ii) Use of a license. An outstanding licensemay also be used to dispose of commodities orsoftware covered by the provisions of thisparagraph (a), provided that the outstandinglicense authorizes direct shipment of the samecommodity or software to the same new ultimateconsignee in the new country of destination.

(iii) Authorization to retain abroad beyond oneyear. If the exporter wishes to retain acommodity or software abroad beyond the 12months authorized by paragraph (a) of thissection, the exporter must request authorizationby submitting Form BXA-748P, MultipurposeApplication, 90 days prior to the expiration of the12 month period. The request must be sent toBXA at the address listed in part 748 of the EARand should include the name and address of theexporter, the date the commodities or softwarewere exported, a brief product description, and

the justification for the extension. If BXAapproves the extension request, the exporter willreceive authorization for a one-time extension notto exceed six months. BXA normally will notallow an extension for commodities or softwarethat have been abroad more than 12 months, norwill a second six month extension be authorized.Any request for retaining the commodities orsoftware abroad for a period exceeding 18 monthsmust be made in accordance with therequirements of paragraph (a)(4)(i) of thissection.

(5) Reexports. Commodities and softwarelegally exported from the United States may bereexported to a new country(ies) of destinationunder this paragraph (a) provided its terms andconditions are met and the commodities andsoftware are returned to the country from whichthe reexport occurred.

(b) Exports of items temporarily in the United States

Scope. The provisions of this paragraph (b)describe the conditions for exporting foreign-origin items temporarily in the United States. Theprovisions include the export of items moving intransit through the United States, imported fordisplay at a U.S. exhibition or trade fair, returnedbecause unwanted, or returned because refusedentry.

Note 1 to paragraph (b) of this section: Acommodity withdrawn from a bonded warehousein the United States under a "withdrawal forexport" customs entry is considered as "moving intransit". It is not considered as "moving intransit" if it is withdrawn from a bondedwarehouse under any other type of customs entryor if its transit has been broken for a processingoperation, regardless of the type of customs entry.

Note 2 to paragraph (b) of this section: Itemsshipped on board a vessel or aircraft and passingthrough the United States from one foreign



country to another may be exported without alicense provided that (a) while passing in transitthrough the United States, they have not beenunladen from the vessel or aircraft on which theyentered, and (b) they are not originally manifestedto the United States.

(1) Items moving in transit through the UnitedStates. Subject to the following conditions, theprovisions of paragraph (b)(1) authorize export ofitems moving in transit through the United Statesunder a Transportation and Exportation (T.& E.)customs entry or an Immediate Exportation (I.E.)customs entry made at a U.S. Customs Office.

(i) Items controlled for national security,nuclear proliferation, missile technology, orchemical and biological weapons reasons may notbe exported to Country Group D:1, 2, 3, or 4 (seeSupplement No. 1 to part 740), respectively,under this paragraph (b)(1).

(ii) Items may not be exported to CountryGroup E:2 or Sudan under this section.

(iii) The following may not be exported intransit from the United States under thisparagraph (b)(1):

(A) Commodities shipped to the UnitedStates under an International Import Certificate,Form BXA-645P;

(B) Chemicals controlled under ECCN1C350; or

(C) Horses for export by sea (refer to shortsupply controls in part 754 of the EAR).

(iv) The provisions of this paragraph (b)(1)apply to all shipments from Canada moving intransit through the United States to any foreigndestination, regardless of the nature of thecommodities or software or their origin. For suchshipments the customs office at the U.S. port ofexport will require a copy of Form B-13,

Canadian Customs Entry, certified or stamped byCanadian customs authorities, except where theshipment is valued at less than $50.00. (In transitshipments originating in Canada that are exemptfrom U.S. licensing, or made under a U.S. licenseor applicable other U.S. License Exception do notrequire this form.) The commodity or softwaredescription, quantity, ultimate consignee, countryof ultimate destination, and all other pertinentdetails of the shipment must be the same on arequired Form B-13, as on Commerce Form7513,1 or when Form 7513 is not required, mustbe the same as on Customs Form 7512. Whenthere is a material difference, a corrected FormB-13 authorizing the shipment is required.

(2) Items imported for display at U.S.exhibitions or trade fairs. Subject to thefollowing conditions, the provisions of thisparagraph (b)(2) authorize the export of items thatwere imported into the United States for displayat an exhibition or trade fair and were eitherentered under bond or permitted temporary freeimport under bond providing for their export andare being exported in accordance with the termsof that bond.

(i) Items may be exported to the country fromwhich imported into the United States. However,items originally imported from Cuba may not beexported unless the U.S. Government hadlicensed the import from that country.

(ii) Items may be exported to any destinationother than the country from which importedexcept:

(A) Items imported into the United Statesunder an International Import Certificate;

1 The complete names of these forms are: Commerce

Form 751 3, " Shippe r's Export D eclaration fo r Intransit

Goods"; Customs F orm 75 12, "T ransporta tion Entry

and Manifest of Goods Subject to Customs Inspection

and Permit".



(B) Exports to Country Group E:2 or Sudan(see Supplement No. 1 to part 740); or

(C) Exports to Country Group D:1, 2, 3, or 4(see Supplement No. 1 to part 740) of itemscontrolled for national security, missiletechnology, chemical and biological weaponsreasons, or nuclear proliferation, respectively.

(3) Return of unwanted shipments. A foreign-origin item may be returned under this LicenseException to the country from which it wasimported if its characteristics and capabilitieshave not been enhanced while in the UnitedStates. No foreign-origin items may be returnedto Cuba or Libya.

(4) Return of shipments refused entry.Shipments of items refused entry by the U.S.Customs Service, the Food and DrugAdministration, or other U.S. Government agencymay be returned to the country of origin, exceptto:

(i) A destination in Cuba or Libya; or

(ii) A destination from which the shipment hasbeen refused entry because of the Foreign AssetsControl Regulations of the Treasury Department,unless such return is licensed or otherwiseauthorized by the Treasury Department, Office ofForeign Assets Control (31 CFR part 500).

(c) Exports of beta test software

(1) Scope. The provisions of paragraph (c)authorize exports and reexports to eligiblecountries of beta test software intended fordistribution to the general public.

(2) Eligible countries. The countries that areeligible to receive exports and reexports are allcountries except those Country Groups E:2. Inaddition, encryption software under ECCN5D002 is further restricted from being exported or

reexported to Cuba, Iran, Iraq, Libya, NorthKorea, Sudan or Syria.

(3) Eligible software. All software that iscontrolled by the Commerce Control List(Supplement No.1 to part 774 of the EAR), andunder Commerce licensing jurisdiction, is eligiblefor export and reexport, subject to the restrictionsof this paragraph (c). Encryption softwarecontrolled for EI reasons under ECCN 5D002 iseligible for export and reexport under thisparagraph (c) provided the exporter has submittedby the time of export the information described inparagraphs (a) through (e) of Supplement 6 toPart 742 to BXA, with a copy to the ENCEncryption Request Coordinator. The names andaddresses of the testing consignees, except namesand addresses of individual consumers, and thename and version of the beta software should bereported consistent with §740.17(e)(5). Any finalproduct must be reviewed and classified under therequirements of §740.17.

(4) Conditions for use. Any beta test softwareprogram may be exported or reexported toeligible countries if all of the conditions underthis section are met:

(i) The software producer intends to market thesoftware to the general public after completion ofthe beta testing, as described in the GeneralSoftware Note found in Supplement 2 to Part 774or the Cryptography Note in Category 5--Part IIof the Commerce Control List (Supplement No.1to part 774 of the EAR);

(ii) The software producer provides thesoftware to the testing consignee free-of-charge orat a price that does not exceed the cost ofreproduction and distribution; and

(iii) The software is designed for installationby the end-user without further substantialsupport from the supplier.



(5) Importer Statement. Prior to shipping anyeligible software, the exporter or reexporter mustobtain the following statement from the testingconsignee, which may be included in a contract,non-disclosure agreement, or other document thatidentifies the importer, the software to beexported, the country of destination, and thetesting consignee.

"We certify that this beta test software willonly be used for beta testing purposes, andwill not be rented, leased, sold, sublicensed,assigned, or otherwise transferred. Further,we certify that we will not transfer or exportany product, process, or service that is thedirect product of the beta test software."

(6) Use limitations. Only testing consignees thatprovide the importer statement required byparagraph (c)(5) of this section may execute anysoftware received. (7) Return or disposal of software. All betatest software exported must be destroyed abroador returned to the exporter within 30 days of theend of the beta test period as defined by thesoftware producer or, if the software producerdoes not define a test period, within 30 days ofcompletion of the consignee's role in the test.Among other methods, this requirement may besatisfied by a software module that will destroythe software and all its copies at or before the endof the beta test period.

§740.10

SERVICING AND REPLACEMENT OFPARTS AND EQUIPMENT (RPL)

This License Exception authorizes exports andreexports associated with one-for-onereplacement of parts or servicing and replacementof equipment.

(a) Parts

(1) Scope. The provisions of this paragraph (a)authorize the export and reexport of one-for-onereplacement parts for previously exportedequipment.

(2) One-for-one replacement of parts.

(i) The term "replacement parts" as used in thissection means parts needed for the immediaterepair of equipment, including replacement ofdefective or worn parts. (It includessubassemblies but does not include testinstruments or operating supplies). (The term"subassembly" means a number of componentsassembled to perform a specific function orfunctions within a commodity. One examplewould be printed circuit boards with componentsmounted thereon. This definition does notinclude major subsystems such as those composedof a number of subassemblies.) Items thatimprove or change the basic designcharacteristics, e.g., as to accuracy, capabili ty,performance or productivity, of the equipmentupon which they are installed, are not deemed tobe replacement parts. For kits consisting ofreplacement parts, consult §740.9(a)(2)(ii) of thispart.

(ii) Parts may be exported only to replace, on aone-for-one basis, parts contained in commoditiesthat were: legally exported from the UnitedStates; legally reexported; or made in a foreigncountry incorporating authorized U.S.-originparts. The conditions of the original U.S.authorization must not have been violated.Accordingly, the export of replacement parts maybe made only by the party who originallyexported or reexported the commodity to berepaired, or by a party that has confirmed theappropriate authority for the original transaction.

(iii) The parts to be replaced must either bedestroyed abroad or returned promptly to theperson who supplied the replacement parts, or to



a foreign firm that is under the effective controlof that person.

(3) Exclusions.

(i) No replacement parts may be exported torepair a commodity exported under a license ifthat license included a condition that anysubsequent replacement parts must be exportedonly under a license.

(ii) No parts may be exported to be held abroadas spare parts or equipment for future use.Replacement parts may be exported to replacespare parts that were authorized to accompany theexport of equipment, as those spare parts areutilized in the repair of the equipment. This willallow maintenance of the stock of spares at aconsistent level as parts are used.

(iii) No parts may be exported to anydestination except Iceland, New Zealand, or thecountries listed in Country Group A:1 (seeSupplement No. 1 to part 740) if the item is to beincorporated into or used in nuclear weapons,nuclear explosive devices, nuclear testing relatedto activities described in §744.2(a) of the EAR,the chemical processing of irradiated specialnuclear or source material, the production ofheavy water, the separation of isotopes of sourceand special nuclear materials, or the fabrication ofnuclear reactor fuel containing plutonium, asdescribed in §744.2(a) of the EAR.

! (iv) No replacement parts may be exported to

countries in Country Group E:1 (see SupplementNo. 1 to this part) (countries designated by theSecretary of State as supporting acts ofinternational terrorism) if the commodity to berepaired is an "aircraft" (as defined in part 772 ofthe EAR) or national security controlledcommodity.

(v) The conditions described in this paragraph(a)(3) relating to replacement of parts do notapply to reexports to a foreign country of parts as

replacements in foreign-origin products, if at thetime the replacements are furnished, the foreign-origin product is eligible for export to suchcountry under any of the License Exceptions inthis part or the exceptions in §734.4 of the EAR.

(4) Reexports. Parts exported from the UnitedStates may be reexported to a new country ofdestination, provided that the restrictions de-scribed in paragraphs (a)(2) and (3) of this sectionare met. A party reexporting U.S.-origin one-for-one replacement parts shall ensure that thecommodities being repaired were shipped to theirpresent location in accordance with U.S. law andcontinue to be legally used, and that either beforeor promptly after reexport of the replacementparts, the replaced parts are either destroyed orreturned to the United States, or to the foreignfirm in Country Group B (see Supplement No. 1to part 740) that shipped the replacement parts.

(b) Servicing and Replacement

(1) Scope. The provisions of this paragraph (b)authorize the export and reexport of items thatwere returned to the United States for servicingand the replacement of defective or unacceptableU.S.-origin commodities and software.

(2) Commodities and software sent to a UnitedStates or foreign party for servicing.

(i) Definition. "Servicing" as used in thissection means inspection, testing, calibration orrepair, including overhaul and reconditioning.The servicing shall not have improved or changedthe basic characteristics, e.g., as to accuracy,capability, performance, or productivity of thecommodity or software as originally authorizedfor export or reexport.

(ii) Return of serviced commodities andsoftware. When the serviced commodity orsoftware is returned, it may include anyreplacement or rebuilt parts necessary to its repairand may be accompanied by any spare part, tool,



accessory, or other item that was sent with it forservicing.

(iii) Commodities and software imported fromCountry Group D:1 except the PRC and NorthKorea. Commodities and software legallyexported or reexported to a consignee in CountryGroup D:1 (except the People's Republic of China(PRC) and North Korea) (see Supplement No. 1to part 740) that are sent to the United States or aforeign party for servicing may be returned underthis License Exception to the country from whichit was sent, provided that both of the followingconditions are met:

(A) The exporter making the shipment is thesame person or firm to whom the original licensewas issued; and

(B) The end-use and the end-user of theserviced commodities or software and otherparticulars of the transaction, as set forth in theapplication and supporting documentation thatformed the basis for issuance of the license havenot changed.

! (iv) Terrorist supporting countries. Norepaired commodity or software may be exportedor reexported to countries in Country Group E:1(see Supplement No. 1 to this part).

(3) Replacements for defective orunacceptable U.S.-origin equipment.

(i) Subject to the following conditions,commodities or software may be exported orreexported to replace defective or otherwiseunusable (e.g., erroneously supplied) items.

(A) The commodity or software to bereplaced must have been previously exported orreexported in its present form under a license orauthorization granted by BXA.

(B) No commodity or software may beexported or reexported to replace equipment thatis worn out from normal use, nor may anycommodity or software be exported to be held instock abroad as spare equipment for future use.

(C) The replacement item may not improvethe basic characteristic, e.g., as to accuracy,capability, performance, or productivity, of theequipment as originally approved for export orreexport under a license issued by BXA.

! (D) No shipment may be made to countriesin Country Group E:1 (see Supplement No. 1 tothis part) or to any other destination to replacedefective or otherwise unusable equipment ownedor controlled by, or leased or chartered to, anational of any of those countries.

(ii) Special conditions applicable to exports toCountry Group B and Country Group D:1. (SeeSupplement No. 1 to part 740.) In addition to thegeneral conditions in paragraph (b)(3)(i) of thissection, the following conditions apply to exportsor reexports of replacements for defective orunacceptable U.S.-origin commodities or softwareto a destination in Country Group B or CountryGroup D:1:

(A) By making such an export or reexport,the exporter represents that all the requirementsof this paragraph (b) have been met andundertakes to destroy or return the replaced partsas provided in paragraph (b)(3)(ii)(C) of thissection.

(B) The defective or otherwise unusableequipment must be replaced free of charge,except for transportation and labor charges. Ifexporting to the countries listed in Country GroupD:1 (except the PRC), the exporter shall replacethe commodity or software within the warrantyperiod or within 12 months of its shipment to theultimate consignee in the country of destination,whichever is shorter.



(C) The commodity or software to bereplaced must either be destroyed abroad orreturned to the United States, or to a foreign firmin Country Group B that is under the effectivecontrol of the exporter, or to the foreign firm thatis providing the replacement part or equipment.The destruction or return must be effected before,or promptly after, the replacement item isexported from the United States.

(D) A party reexporting replacements fordefective or unacceptable U.S.-origin equipmentmust ensure that the commodities or softwarebeing replaced were shipped to their presentlocation in accordance with U.S. law andcontinue to be legally used.

§740.11

GOVERNMENTS, INTERNATIONALORGANIZATIONS, AND

INTERNATIONAL INSPECTIONS UNDERTHE CHEMICAL WEAPONS

CONVENTION (GOV)

This License Exception authorizes exports andreexports for international nuclear safeguards;U.S. government agencies or personnel, andagencies of cooperating governments; andinternational inspections under the ChemicalWeapons Convention.

(a) International Safeguards

(1) Scope. You may export and reexportcommodities or software to the InternationalAtomic Energy Agency (IAEA) and the EuropeanAtomic Energy Community (Euratom), andreexports by IAEA and Euratom for officialinternational safeguard use, as follows:

(i) Commodities or software consigned to theIAEA at its headquarters in Vienna, Austria orfield offices in Toronto, Ontario, Canada orTokyo, Japan for official international safeguards

use. The IAEA is an international organizationthat establishes and administers safeguardsdesigned to ensure that special nuclear materialsand other related nuclear facilities, equipment,and material are not diverted from peacefulpurposes to non-peaceful purposes.

(ii) Commodities or software consigned to theEuratom Safeguards Directorate in Luxembourg,Luxembourg for official international safeguardsuse. Euratom is an international organization ofEuropean countries with headquarters inLuxembourg. Euratom establishes andadministers safeguards designed to ensure thatspecial nuclear materials and other related nuclearfacilities, equipment, and material are notdiverted from peaceful purposes to non-peacefulpurposes.

(iii) Commodities consigned to IAEA orEuratom may be reexported to any country forIAEA or Euratom international safeguards useprovided that IAEA or Euratom maintains controlof or otherwise safeguards the commodities andreturns the commodities to the locations describedin paragraphs (a)(1)(i) and (a)(1)(ii) of thissection when they become obsolete, are no longerrequired, or are replaced.

(iv) Commodity or software shipments may bemade by commercial companies under directcontract with IAEA or Euratom, or byDepartment of Energy National Laboratories asdirected by the Department of State or theDepartment of Energy.

(v) The monitoring functions of IAEA andEuratom are not subject to the restrictions onprohibited safeguarded nuclear activities de-scribed in §744.2(a)(3) of the EAR.

(vi) When commodities or software originallyconsigned to IAEA or Euratom are no longer inIAEA or Euratom official safeguards use, suchcommodities may only be disposed of inaccordance with the regulations in the EAR.



(2) The following items controlled for national

security (NS) reasons under Export ControlClassification Numbers (ECCNs) identified onthe Commerce Control List may not be exportedor reexported under this License Exception todestinations other than Austria, Belgium, Canada,Denmark, Finland, France, Germany, Greece,Ireland, Italy, Luxembourg, the Netherlands,Portugal, Spain, Sweden, and the UnitedKingdom: 1C001, 1C012, 5A001.b.4,6A001.a.2.a.1, 6A001.a.2.a.2, 6A001.a.2.a.56A001.a.2.b, 6A001.a.2.e., 6A002.a.1.c,6A008.l.3., 6B008, 8A001.b., 8A001.d.,8A002.o.3.b., 9A011; and

(i) "Composite" structures or laminatescontrolled by 1A002.a, having an organic"matrix" and made from materials listed under1C010.c or 1C010.d; and

(ii) "Digital" computers controlled by4A003.b and having a CTP exceeding 45,000MTOPS; and

(iii) "Electronic assemblies" controlled by4A003.c and capable of enhancing performanceby aggregation of "computing elements" so thatthe CTP of the aggregation exceeds 45,000MTOPS; and

(iv) Processing equipment controlled by6A001.a.2.c and specially designed for real timeapplication with towed acoustic hydrophonearrays; and

(v) Bottom or bay cable systems controlledby 6A001.a.2.f and having processing equipmentspecially designed for real time application withbottom or bay cable systems; and

(vi) "Software", as follows:

(A) Controlled by 4D001, speciallydesigned for the "development" or "production"for items controlled by 4A003.b or .c, as defined

by paragraphs (a)(2)(ii) and (iii) of this section;and

(B) Controlled by 5D001.a, speciallydesigned for items controlled by 5A001.b.4; and

(C) Controlled by 6D001 for itemscontrolled by 6A008.l.3 or 6B008; and

(D) Controlled by 6D003.a; and

(E) Controlled by 7D003.a or 7D003.b;and

(F) Controlled by 8D001, speciallydesigned for the "development" or "production"of equipment controlled by 8A001.b, 8A001.d, or8A002.o.3.b; and

(G) Controlled by 9D001, speciallydesigned for the "development" of equipment or"technology" controlled by 9A011, 9E003.a.1, orby 9E003.a.3, for items controlled by 1A002.a, asdescribed in paragraph (a)(2)(i) of this section;and

(H) Controlled by 9D002 for "software"specially designed for the "production" ofequipment controlled by 9A011; and

(I) Controlled by 9D004.a or .c.

(3) No encryption items controlled for EIreasons under ECCNs 5A002, 5D002, or 5E002may be exported under the provisions of thisparagraph (a).

(b) Governments

(1) Scope. The provisions of paragraph (b)authorize exports and reexports of the items listedin paragraph (b)(2) of this section to personneland agencies of the U.S. Government or agenciesof cooperating governments.

(2) Eligibility.



(i) Items for personal use by personnel andagencies of the U.S. Government. This provisionis available for items in quantities sufficient onlyfor the personal use of members of the U.S.Armed Forces or civilian personnel of the U.S.Government (including U.S. representatives topublic international organizations), and theirimmediate families and servants. Items forpersonal use include household effects, food,beverages, and other daily necessities.

(ii) Items for official use by personnel andagencies of the U.S. Government. This provisionis available for items consigned to and for theofficial use of any agency of the U.S.Government.

(iii)(A) Items for official use within nationalterritory by agencies of cooperating governments.This License Exception is available for all i temsconsigned to and for the official use of any a-gency of a cooperating government within theterritory of any cooperating government, exceptitems described in paragraph (a) to SupplementNo. 1 of this section:

(B) Reporting requirements. See §743.1 ofthe EAR for reporting requirements for exports ofcertain items under this paragraph (b)(2)(iii).

(iv) (A) Diplomatic and consular missions of acooperating government. This License Exceptionis available for all items consigned to and for theofficial use of a diplomatic or consular mission ofa cooperating government located in any countryin Country Group B (see Supplement No. 1 topart 740), except items described in paragraph (b)of Supplement No. 1 of this section.

(B) Reporting requirements. See §743.1 ofthe EAR for reporting requirements for exports ofcertain items under this paragraph (b)(2)(iv).

(3) Definitions.

(i) "Agency of the U.S. Government" includesall civilian and military departments, branches,missions, government-owned corporations, andother agencies of the U.S. Government, but doesnot include such national agencies as theAmerican Red Cross or internationalorganizations in which the United Statesparticipates such as the Organization of AmericanStates. Therefore, shipments may not be made tothese non-government national or internationalagencies, except as provided in (b)(2)(i) of thissection for U.S. representatives to theseorganizations.

(ii) "Agency of a cooperating government"includes all civilian and military departments,branches, missions, and other governmentalagencies of a cooperating national government.Cooperating governments are the nationalgovernments of countries listed in Country GroupA:1 (see Supplement No. 1 to part 740) and thenational governments of Argentina, Austria,Finland, Hong Kong, Ireland, Korea (Republicof), New Zealand, Singapore, Sweden,Switzerland and Taiwan.

(c) International inspections under theChemical Weapons Convention (CWC or

Convention) (1) The provisions of this paragraph (c) authorizeexports and reexports to the Organization for theProhibition of Chemical Weapons (OPCW) andexports and reexports by the OPCW for officialinternational inspection and verification use underthe terms of the Convention. The OPCW is aninternational organization that establishes andadministers an inspection and verification regimeunder the Convention designed to ensure thatcertain chemicals and related facilities are notdiverted from peaceful purposes to non-peacefulpurposes. These provisions authorize exports andreexports for official OPCW use of the following:

(i) Commodities and software consigned to theOPCW at its headquarters in The Hague forofficial international OPCW use for the



monitoring and inspection functions set forth inthe Convention, and technology relating to themaintenance, repair, and operation of suchcommodities and software. The OPCW mustmaintain effective control of such commodities,software and technology.

(ii) Controlled technology relating to thetraining of the OPCW inspectorate.

(iii) Controlled technology relating to a CWCinspection site, including technology released asa result of:

(A) Visual inspection of U.S.-originequipment or facilities by foreign nationals of theinspection team;

(B) Oral communication of controlledtechnology to foreign nationals of the inspectionteam in the U.S. or abroad; and

(C) The application to situations abroad ofpersonal knowledge or technical experienceacquired in the U.S.

(2) Exclusions. The following items may not beexported or reexported under the provisions ofthis paragraph (c):

(i) Computers with a Composite TheoreticalPerformance (CTP) greater than 45,000 MTOPS,except that no MTOPS limit applies to exports orreexports to those countries in Computer Tier 1(see §740.7(b)(1));

(ii) Inspection samples collected in the U.S.pursuant to the Convention; and

(iii) Commodities and software that are nolonger in OPCW official use. Such items must bedisposed of in accordance with the EAR.

(3) Confidentiality. The application of theprovisions of this paragraph (c) is subject to thecondition that the confidentiality of business

information is strictly protected in accordancewith applicable provisions of the EAR and otherU.S. laws regarding the use and retransfer of U.S.goods and services.

§740.12

GIFT PARCELS AND HUMANITARIANDONATIONS (GFT)

(a) Gift parcels

(1) Scope. The provisions of paragraph (a)authorize exports and reexports of gift parcels byan individual (donor) addressed to an individual,or a religious, charitable or educationalorganization (donee) located in any destinationfor the use of the donee or the donee's immediatefamily (and not for resale). The gift parcel mustbe provided free of charge to the donee.However, payment by the donee of any handlingcharges or of any fees levied by the importingcountry (e.g., import duties, taxes, etc.) is notconsidered to be a cost to the donee for purposesof this definition of "gift parcel."2

Note to paragraph (a) of this section: A giftparcel, within the context of this paragraph (a),does not include multiple parcels exported in asingle shipment for delivery to individualsresiding in a foreign country. Such multiple giftparcels, if subject to the General Prohibitionsdescribed in §734.2(b) of the EAR, must be

2 Many foreign countries permit the entry, duty-free,

of gift parcels that co nform to regulations regarding

contents and marking. To secure this advantage, the

sender should show the words "U .S.A. Gift Parcel" on

the addressee side of the package and on any required

customs declarations. Information regarding the for-

eign postal regula tions is available at local post offices.

Senders of gift parcels who wish information regarding

import duties of a foreign country should contact the

nearest Commercial Office, Consulate or Embassy of

the country concerned.



licensed by BXA. (See §748.9(e) of the EAR forlicensing of multiple gift parcels).

(2) Commodity, value and other limitations.

(i) Eligible commodities. The eligiblecommodities are as follows:

(A) The commodity must not be controlledfor chemical and biological weapons (CB),missile technology (MT), national security (NS),or nuclear proliferation (NP) (see CommerceControl List, part 774 of the EAR); and

(B) The commodity must be of a type and inquantities normally given as gifts betweenindividuals.

(1) For Cuba, the only commodities thatmay be included in a gift parcel are the followingitems: food, vitamins, seeds, medicines, medicalsupplies and devices, hospital supplies andequipment, equipment for the handicapped,clothing, personal hygiene items, veterinarymedicines and supplies, fishing equipment andsupplies, soap-making equipment, and in additionreceive-only radio equipment for reception ofcommercial/civil AM/FM and short wavepublicly available frequency bands, and batteriesfor such equipment.

(2) For all other destinations, eligiblecommodities include all items described inparagraph (a)(2)(i)(B)(1) of this section as well asall other items normally sent as gifts. Goldbullion, gold taels, and gold bars are prohibited asare items intended for resale or reexport.

Example to paragraph (a) of this section. Awatch or piece of jewelry is normally sent as agift. However, multiple watches, either in onepackage or in subsequent shipments, would notquality for such gift parcels because the quantityexceeds that normally given between individuals.Similarly, a sewing machine or bicycle, within thedollar limits of this License Exception, may be an

appropriate gift. However, subsequent shipmentsof the same item to the same donee would not bea gift normally given between individuals.

(3) For purposes of paragraph (a)(2)(ii)(B)of this section, clothing is appropriate, except thatexport of military wearing apparel to CountryGroup D:1 or E:2 under this License Exception isspecifically prohibited, regardless of whether alldistinctive U.S. military insignia, buttons, andother markings are removed.

(ii) Import requirements. The commoditiesmust be acceptable in type and quantity by therecipient country for import as gifts.Commodities exceeding the import limits may notbe included in gift parcels.

(iii) Frequency. Except for gift parcels of foodto Cuba, not more than one gift parcel may besent from the same donor to the same donee inany one calendar month. Parties seekingauthorization to exceed this limit due tocompelling humanitarian concerns (e.g., gifts ofmedicine to relatives) should submit a licenseapplication (BXA-748P) with completejustification.

(iv) Value. The combined total domestic retailvalue of all commodities included in a gift parcelmay not exceed $400, except for gift parcels toCuba where the value of non-food items may notexceed $200. There is no dollar value limit onfood contained in a gift parcel to Cuba.

(3) How to export gift parcels. (i) A gift parcelmust be sent directly to the donee by theindividual donor, or for such donor by acommercial or other gift-forwarding service ororganization. Each gift parcel must show, on theoutside wrapper, the name and address of thedonor, as well as the name and address of thedonee, regardless of whether sent by the donor orby a forwarding service.



(ii) Each parcel must have the notation "GIFT— Export License Not Required" written on theaddressee side of the package and the symbol"GFT" written on any required customsdeclaration.

(b) Humanitarian donations

(1) Scope. The provisions of paragraph (b)authorize exports or reexports by groups ororganizations of donations to meet basic humanneeds when those groups or organizations haveexperience in maintaining a verifiable system ofdistribution that ensures delivery to the intendedbeneficiaries.

(2) Basic human needs. Basic human needs aredefined as those requirements essential toindividual well-being: health, food, clothing,shelter, and education. These needs areconsidered to extend beyond those of anemergency nature and those that meet directneeds for mere subsistence.

(3) Eligible donors. Eligible donors are U.S.charitable organizations that have an establishedrecord of involvement in donative programs andexperience in maintaining and verifying a systemof distribution to ensure delivery of commoditiesand software to the intended beneficiaries.Eligible distribution arrangements may consist ofany one or more of the following:

(i) A permanent staff maintained in therecipient country to monitor the receipt anddistribution of the donations to the intendedbeneficiaries;

(ii) Periodic spot-checks in the recipientcountry by members of the exporter's staff; or

(iii) An agreement to utilize the services of acharitable organization that has a monitoringsystem in place.

(4) Donations. To qualify for export under theprovisions of this paragraph (b), the items must beprovided free of charge to the beneficiary. Thepayment by the beneficiary, however, of normalhandling charges or fees levied by the importingcountry (e.g., import duties, taxes, etc.) is notconsidered to be a cost to the beneficiary forpurposes of this section.

(5) Ineligible commodities and software. Thefollowing commodities and software are noteligible:

(i) Commodities and software controlled fornational security, chemical or biological weapons,and nuclear non-proliferation, missile technologyor crime control reasons (see Supplement No. 1 topart 774 of the EAR);

(ii) Exports for large-scale projects of the kindassociated with comprehensive economic growth,such as dams and hydroelectric plants; or

(iii) Exports to Cuba of medical items excludedby §746.2(a)(3) of the EAR.

(6) Eligible items. Eligible commodities andsoftware are those listed in Supplement No. 2 topart 740.

(7) Additional recordkeeping requirements.In addition to the recordkeeping requirements inpart 762 of the EAR, donors must keep recordscontaining the following information:

(i) The donor organization's identity and pastexperience as an exporter of goods to meet basichuman needs;

(ii) Past and current countries to which thedonative programs have been and are beingdirected, with particular reference to donativeprograms in embargoed destinations;

(iii) Types of projects and commoditiesinvolved in the donative programs;



(iv) Specific class(es) of beneficiaries ofparticular donated goods intended to be exportedunder this License Exception; and

(v) Information concerning the source offunding for the donative programs and theprojected annual value of exports of humanitariandonations.

§740.13

TECHNOLOGY AND SOFTWARE — UNRESTRICTED (TSU)

This license exception authorizes exports andreexports of operation technology and software;sales technology and software; software updates(bug fixes); “mass market” software subject to theGeneral Software Note; and unrestrictedencryption source code. Note that encryptionsoftware is not subject to the General SoftwareNote (see paragraph (d)(2) of this section).

(a) Operation technology and software

(1) Scope. The provisions of paragraph (a)permit exports and reexports of operationtechnology and software. "Operation technology"is the minimum technology necessary for theinstallation, operation, maintenance (checking),and repair of those products that are lawfullyexported or reexported under a license, a LicenseException, or NLR. The "minimum necessary"operation technology does not include technologyfor development or production and includes usetechnology only to the extent required to ensuresafe and efficient use of the product. Individualentries in the software and technologysubcategories of the CCL may further restrict theexport or reexport of operation technology.

(2) Provisions and Destinations.

(i) Provisions. Operation software may beexported or reexported provided that both of thefollowing conditions are met:

(A) The operation software is the minimumnecessary to operate equipment authorized forexport or reexport; and

(B) The operation software is in object code.

(ii) Destinations. Operation software andtechnology may be exported or reexported to anydestination to which the equipment for which it isrequired has been or is being legally exported orreexported.

(b) Sales technology

(1) Scope. The provisions of paragraph (b)authorize exports and reexports of salestechnology. "Sales technology" is datasupporting a prospective or actual quotation, bid,or offer to sell, lease, or otherwise supply anyitem.

(2) Provisions and destinations.

(i) Provisions. Sales technology may beexported or reexported provided that:

(A) The technology is a type customarilytransmitted with a prospective or actual quotation,bid, or offer in accordance with establishedbusiness practice; and

(B) Neither the export nor the reexport willdisclose the detailed design, production, ormanufacture technology, or the means ofreconstruction, of either the quoted item or itsproduct. The purpose of this limitation is toprevent disclosure of technology so detailed thatthe consignee could reduce the technology toproduction.

(ii) Destinations. Sales technology may beexported or reexported to any destination.

NOTE: Neither this section nor its use meansthat the U.S. Government intends, or iscommitted, to approve a license application for



any commodity, plant, software, or technologythat may be the subject of the transaction towhich such quotation, bid, or offer relates.Exporters are advised to include in anyquotations, bids, or offers, and in any contractsentered into pursuant to such quotations, bids, oroffers, a provision relieving themselves ofliability in the event that a license (whenrequired) is not approved by the Bureau of ExportAdministration.

(c) Software updates

The provisions of paragraph (c) authorize exportsand reexports of software updates that areintended for and are limited to correction oferrors ("fixes" to "bugs") in software lawfullyexported or reexported (original software). Suchsoftware updates may be exported or reexportedonly to the same consignee to whom the originalsoftware was exported or reexported, and suchsoftware updates may not enhance the functionalcapacities of the original software. Such softwareupdates may be exported or reexported to anydestination to which the software for which theyare required has been legally exported orreexported.

(d) General Software Note: "mass market"software

(1) Scope. The provisions of paragraph (d)authorize exports and reexports of "mass market"software subject to the General Software Note(see Supplement No. 2 to part 774 of the EAR;also referenced in this section).3

(2) Software not eligible for this LicenseException. This License Exception is notavailable for certain encryption softwarecontrolled under ECCN 5D002. (Refer to the

Cryptography Note in Category 5 - part 2 of theCommerce Control List for information on MassMarket Encryption commodities and software.Also refer to §§742.15(b)(1) and 748.3(b) of theEAR for information on item classifications forrelease from “EI” controls and “NS” controls).

(3) Provisions and destinations.

! (i) Destinations. “Mass market” software isavailable to all destinations except destinations inCountry Group E:1 (see Supplement No. 1 to thispart).

(ii) Provisions. “Mass market” treatment isavailable for software that is generally availableto the public by being:

(A) Sold from stock at retail selling points,without restriction, by means of:

(1) Over the counter transactions;

(2) Mail order transactions; or

(3) Telephone call transactions; and

(B) Designed for installation by the userwithout further substantial support by thesupplier.

(e) Unrestricted encryption source code

(1) Encryption source code controlled underECCN 5D002, which would be consideredpublicly available under §734.3(b)(3) of the EARand which is not subject to an express agreementfor the payment of a licensing fee or royalty forcommercial production or sale of any productdeveloped with the source code is released fromEI controls and may be exported or reexportedwithout review under License Exception TSU,provided you have submitted written notificationto BXA of the Internet location (e.g., URL orInternet address) or a copy of the source code bythe time of export. Send the notification to BXA

3"Mass market" software may fall under the classifica-

tion of "general use" software for export clearance

purposes. Exporters should consult the Census Bureau

FTSR for p ossible SED req uirements.



at [email protected] with a copy to ENCEncryption Request Coordinator, or see§740.17(e)(5) for the mailing addresses.Intellectual property protection (e.g., copyright,patent or trademark) will not, by itself, beconstrued as an express agreement for thepayment of a licensing fee or royalty forcommercial production or sale of any productdeveloped using the source code.

(2) Object code resulting from the compiling ofsource code which would be considered publiclyavailable can be exported under TSU if therequirements of this section are otherwise metand no fee or payment (other than reasonable andcustomary fees for reproduction and distribution)is required for the object code. See§740.17(b)(4)(i) for the treatment of object codewhere a fee or payment is required.

(3) You may not knowingly export or reexportsource code or products developed with thissource code to Cuba, Iran, Iraq, Libya, NorthKorea, Sudan or Syria.

(4) Posting of the source code or correspondingobject code on the Internet (e.g., FTP or WorldWide Web site) where it may be downloaded byanyone would not establish "knowledge" of aprohibited export or reexport, including thatdescribed in paragraph (e)(2) of this section. Inaddition, such posting would not trigger "redflags" necessitat ing the affirmative duty to inquireunder the "Know Your Customer" guidanceprovided in Supplement No. 3 to part 732 of theEAR.

§740.14

BAGGAGE (BAG)

(a) Scope

This License Exception authorizes individualsleaving the United States either temporarily (i.e.,

traveling) or longer-term (i.e., moving) and crewmembers of exporting or reexporting carriers totake to any destination, as personal baggage, theclasses of commodities and software described inthis section.

(b) Eligibility

Individuals leaving the United States may exportor reexport any of the following commodities orsoftware for personal use of the individuals ormembers of their immediate families travelingwith them to any destination or series ofdestinations. Individuals leaving the UnitedStates temporarily (i.e., traveling) must bringback items exported and reexported under thisLicense Exception unless they consume theitems abroad or are otherwise authorized todispose of them under the EAR. Crew membersmay export or reexport only commodities andsoftware described in paragraphs (b)(1) and (b)(2)of this section to any destination.

(1) Personal effects. Usual and reasonable kindsand quantities for personal use of wearingapparel, articles of personal adornment, toiletarticles, medicinal supplies, food, souvenirs,games, and similar personal effects, and theircontainers.

(2) Household effects. Usual and reasonablekinds and quantities for personal use of furniture,household effects, household furnishings, andtheir containers.

(3) Vehicles. Usual and reasonable kinds andquantities of vehicles, such as passenger cars,station wagons, trucks, trailers, motorcycles,bicycles, tricycles, perambulators, and theircontainers.

(4) Tools of trade. Usual and reasonable kindsand quantities of tools, instruments, or equipmentand their containers for use in the trade,occupation, employment, vocation, or hobby ofthe traveler or members of the household being



moved. For special provisions regardingencryption items subject to EI controls, seeparagraph (f) of this section.

(c) Limits on eligibility

The export of any commodity or software islimited or prohibited, if the kind or quantity is inexcess of the limits described in this section. Inaddition, the commodities or software must be:

(1) Owned by the individuals (or by members oftheir immediate families) or by crew members ofexporting carriers on the dates they depart fromthe United States;

(2) Intended for and necessary and appropriatefor the use of the individuals or members of theirimmediate families traveling with them, or by thecrew members of exporting carriers;

(3) Not intended for sale or other disposal; and

(4) Not exported under a bill of lading as cargo ifexported by crew members.

(d) Special provision: unaccompanied baggage

Individuals departing the United States may shipunaccompanied baggage, which is baggage sentfrom the United States on a carrier other than thaton which an individual departs. Crew membersof exporting carriers may not ship unaccompaniedbaggage. Unaccompanied shipments under thisLicense Exception shall be clearly marked"BAGGAGE." Shipments of unaccompaniedbaggage may be made at the time of, or within areasonable time before or after departure of theconsignee or owner from the United States.Personal baggage controlled for chemical andbiological weapons (CB), missile technology(MT), national security (NS) or nuclearnonproliferation (NP) must be shipped within 3months before or after the month in which theconsignee or owner departs the United States.

However, commodities controlled for CB, MT,NS, or NP may not be exported under this LicenseException to Country Groups D:1, D:2, D:3, D:4,E:2, or Sudan. (See Supplement No. 1 to part

740). No items controlled for EI reasons may beexported or reexported as unaccompaniedbaggage.

(e) Special provisions: shotguns and shotgunshells

(1) A United States citizen or a permanentresident alien leaving the United States mayexport or reexport shotguns with a barrel lengthof 18 inches or over and shotgun shells under thisLicense Exception, subject to the followinglimitations:

(i) Not more than three shotguns may be takenon any one trip.

(ii) The shotguns and shotgun shells must bewith the person's baggage but they may not bemailed.

(iii) The shotguns and shotgun shells must befor the person's exclusive use for legitimatehunting or lawful sporting purposes, scientificpurposes, or personal protection, and not forresale or other transfer of ownership or control.Accordingly, except as provided in (e)(2) of thissection, shotguns may not be exportedpermanently under this License Exception. Allshotguns and unused shotgun shells must bereturned to the United States. Note that sincecertain countries may require an ImportCertificate or a U.S. export license beforeallowing the import of a shotgun, you shoulddetermine the import requirements of yourcountry of destination in advance.

(2) A nonresident alien leaving the United Statesmay export or reexport under this LicenseException only such shotguns and shotgun shellsas he or she brought into the United States under



the provisions of Department of TreasuryRegulations (27 CFR 178.115(d)).

(f) Special provisions: encryption softwaresubject to EI controls

(1) Only a U.S. citizen or permanent resident asdefined by 8 U.S.C. 1101(a)(20) may permanentlyexport or reexport encryption items controlled forEI reasons under this License Exception.

(2) The U.S. citizen or permanent resident mustmaintain effective control of the encryption itemscontrolled for EI reasons.

(3) The encryption items controlled for EI reasonsmay not be exported or reexported to CountryGroup E:2, Iran, Iraq, Sudan, or Syria.

§740.15

AIRCRAFT AND VESSELS (AVS)

This License Exception authorizes departure fromthe United States of foreign registry civil aircrafton temporary sojourn in the United States and ofU.S. civil aircraft for temporary sojourn abroad;the export of equipment and spare parts forpermanent use on a vessel or aircraft; and exportsto vessels or planes of U.S. or Canadian registryand U.S. or Canadian Airlines' installations oragents. Generally, no License Exception symbolis necessary for export clearance purposes;however, when necessary, the symbol "AVS" maybe used.

(a) Aircraft on temporary sojourn

(1) Foreign registered aircraft. An operatingcivil aircraft of foreign registry that has been inthe United States on a temporary sojourn maydepart from the United States under its ownpower for any destination, provided that:

! (i) No sale or transfer of operational controlof the aircraft to nationals of a destination inCountry Group E:1 (see Supplement No. 1 to thispart) has occurred while in the United States;

! (ii) The aircraft is not departing for thepurpose of sale or transfer of operational controlto nationals of a destination in Country Group E:1(see Supplement No. 1 to this part); and

(iii) It does not carry from the United Statesany item for which an export license is requiredand has not been granted by the U.S. Government.

(2) U.S. registered aircraft. (i) A civil aircraftof U.S. registry operating under an Air CarrierOperating Certificate, Commercial OperatingCertificate, or Air Taxi Operating Certificateissued by the Federal Aviation Administration orconducting flights under operating specificationsapproved by the Federal Aviation Administrationpursuant to 14 CFR part 129 of the regulations ofthe Federal Aviation Administration, may departfrom the United States under its own power forany destination, provided that:

(A) The aircraft does not depart for thepurpose of sale, lease or other disposition ofoperational control of the aircraft, or itsequipment, parts, accessories, or components to aforeign country or any national thereof;

(B) The aircraft's U.S. registration will not bechanged while abroad;

(C) The aircraft is not to be used in anyforeign military activity while abroad; and

(D) The aircraft does not carry from theUnited States any item for which a license isrequired and has not been granted by the U.S.Government.

! (ii) Any other operating civil aircraft of U.S.registry may depart from the United States underits own power for any destination, except to a



destination in Country Group E:1 (seeSupplement No. 1 to this part) (flights to thesedestinations require a license), provided that:

(A) The aircraft does not depart for thepurpose of sale, lease or other disposition ofoperational control of the aircraft, or itsequipment, parts, accessories, or components to aforeign country or any national thereof;

(B) The aircraft's U.S. registration will not bechanged while abroad;

(C) The aircraft is not to be used in anyforeign military activity while abroad;

(D) The aircraft does not carry from theUnited States any item for which an exportlicense is required and has not been granted bythe U.S. Government; and

(E) The aircraft will be operated while a-broad by a U.S. licensed pilot, except that duringdomestic flights within a foreign country, theaircraft may be operated by a pilot currentlylicensed by that foreign country.

(3) Criteria. The following nine criteria eachmust be met if the flight is to qualify as atemporary sojourn. To be considered a temporarysojourn, the flight must not be for the purpose ofsale or transfer of operational control. An exportis for the transfer of operational control unless theexporter retains each of the following indicia ofcontrol:

(i) Hiring of cockpit crew. Right to hire andfire the cockpit crew.

(ii) Dispatch of aircraft. Right to dispatch theaircraft.

(iii) Selection of routes. Right to determine theaircraft's routes (except for contractualcommitments entered into by the exporter forspecifically designated routes).

! (iv) Place of maintenance. Right to performor obtain the principal maintenance on theaircraft, which principal maintenance isconducted outside a destination in Country GroupE:1 (see Supplement No. 1 to this part), under thecontrol of a party who is not a national of any ofthese countries. (The minimum necessary in-transit maintenance may be performed in anycountry).

! (v) Location of spares. Spares are notlocated in a destination in Country Group E:1 (seeSupplement No. 1 to this part).

! (vi) Place of registration. The place ofregistration is not changed to a destination inCountry Group E:1 (see Supplement No. 1 to thispart).

! (vii) No transfer of technology. Notechnology is transferred to a national of adestination in Country Group E:1 (seeSupplement No. 1 to this part), except theminimum necessary in transit maintenance toperform flight line servicing required to departsafely.

! (viii) Color and logos. The aircraft does notbear the livery, colors, or logos of a national of adestination in Country Group E:1 (seeSupplement No. 1 to this part).

! (ix) Flight number. The aircraft does not flyunder a flight number issued to a national of adestination in Country Group E:1 (seeSupplement No. 1 to this part) as such a numberappears in the Official Airline Guide.

(4) Reexports. Civil aircraft legally exportedfrom the United States may be reexported underthis section, provided the restrictions described inthis paragraph (a) are met.

(b) Equipment and spare parts for permanentuse on a vessel or aircraft, and ship and

plane stores



(1) Vessel. Equipment and spare parts forpermanent use on a vessel, when necessary for theproper operation of such vessel, may be exportedor reexported for use on board a vessel of anyregistry, except a vessel registered in CountryGroup D:1 (see Supplement No. 1 to part 740),Cuba, or owned or controlled by, or under charteror lease to any of these countries or theirnationals. In addition, other equipment andservices for necessary repair to fishing andfishery support vessels of Country Group D:1may be exported for use on board such vesselswhen admitted into the United States undergoverning international fishery agreements. (2) Aircraft. Equipment and spare parts forpermanent use on an aircraft, when necessary forthe proper operation of such aircraft, may beexported or reexported for use on board anaircraft of any registry, except an aircraftregistered in, owned or controlled by, or undercharter or lease to a country included in CountryGroup D:1, Cuba, or Libya, or a national of anyof these countries.

(3) Ship and plane stores. Usual and reasonablekinds and quantities of the following commoditiesmay be exported for use or consumption on boardan aircraft or vessel of any registry during theoutgoing and immediate return flight or voyage.(Note that fuel and related commodities thatqualify as ship or plane stores as described in thisLicense Exception must be exported under theshort supply License Exception SPR (see§754.2(h) of the EAR.)

(i) Deck, engine, and steward departmentstores, provisions, and supplies for both port andvoyage requirements;

(ii) Medical and surgical supplies;

(iii) Food stores;

(iv) Slop chest articles;

(v) Saloon stores or supplies.

(c) Shipments to U.S. or Canadian vessels,planes and airline installations or agents

(1) Exports to vessels or planes of U.S. orCanadian registry. Export may be made of thecommodities set forth in paragraph (c)(3) of thissection, for use by or on a specific vessel or planeof U.S. or Canadian registry located at anyseaport or airport outside the United States orCanada except a port in Cuba or Country GroupD:1 (excluding the PRC and Romania), (seeSupplement No. 1 to part 740) provided that suchcommodities are all of the following:4

(i) Ordered by the person in command or theowner or agent of the vessel or plane to whichthey are consigned;

(ii) Intended to be used or consumed on boardsuch vessel or plane and necessary for its properoperation;

(iii) In usual and reasonable kinds andquantities during times of extreme need; and

(iv) Shipped as cargo for which a Shipper'sExport Declaration (SED) is filed with the carrier,except that an SED is not required when any ofthe commodities, other than fuel, is exported byU.S. airlines to their own aircraft abroad for theiruse. (2) Exports to U.S. or Canadian airline'sinstallation or agent. Exports of thecommodities set forth in paragraph (c)(3) of thissection, except fuel, may be made to a U.S. orCanadian airline's5 installation or agent in anyforeign destination except Cuba or Country

4 Where a validated license is required, see

§§ 748.2 and 748.4(g) of the EAR.

5 See Part 772 of the EAR for definitions of United

States and Canad ian airlines.



Group D:1 (excluding the PRC and Romania),(see Supplement No. 1 to part 740) provided suchcommodities are all of the following:

(i) Ordered by a U.S. or Canadian airline andconsigned to its own installation or agent abroad;

(ii) Intended for maintenance, repair, oroperation of aircraft registered in either theUnited States or Canada, and necessary for theaircraft's proper operation, except where suchaircraft is located in, or owned, operated orcontrolled by, or leased or chartered to, Cuba orCountry Group D:1 (excluding the PRC) (seeSupplement No. 1 to part 740) or a national ofsuch country;

(iii) In usual and reasonable kinds andquantities; and

(iv) Shipped as cargo for which a Shipper'sExport Declaration (SED) is filed with the carrier,except that an SED is not required when any ofthese commodities is exported by U.S. airlines totheir own installations and agents abroad for usein their aircraft operations. (3) Applicable commodities. This paragraph (c)applies to the following commodities, subject tothe provisions in paragraph (c)(1) and (c)(2) ofthis section:

Note to paragraph (c)(3) of this section:Fuel and related commodities for shipment tovessels or planes of U.S. or Canadian registry asdescribed in this License Exception must beshipped under the short supply License ExceptionSPR (see §754.2(h) of the EAR);

(i) Deck, engine, and steward departmentstores, provisions, and supplies for both port andvoyage requirements;

(ii) Medical and surgical supplies;

(iii) Food stores;

(iv) Slop chest articles;

(v) Saloon stores or supplies; and

(vi) Equipment and spare parts.

§740.16

ADDITIONAL PERMISSIVE REEXPORTS(APR)

This License Exception allows the followingreexports:

(a) Reexports from Country Group A:1 andcooperating countries

Reexports may be made from Country Group A:1or from cooperating countries, provided that:

(1) The reexport is made in accordance with theconditions of an export authorization from thegovernment of the reexporting country;

(2) The commodities being reexported are notcontrolled for NP, CB, MT, SI, or CC reasons;and

(3) The reexport is destined to either:

(i) A country in Country Group B that is notalso included in Country Group D:2, D:3, or D:4;Cambodia; or Laos; and the commodity beingreexported is both controlled for national securityreasons and not controlled for export to CountryGroup A:1; or

(ii) A country in Country Group D:1(National Security) (see Supplement No. 1 to part740), other than Cambodia, Laos, or North Koreaand the commodity being reexported is controlledfor national security reasons.



(b) Reexports to and among Country GroupA:1 and cooperating countries

Reexports may be made to and among CountryGroup A:1 and cooperating countries, providedthat eligible commodities are for use orconsumption within a Country Group A:1 (seeSupplement No. 1 to part 740) or cooperatingcountry, or for reexport from such country inaccordance with other provisions of the EAR. Allcommodities except the following are eligible forreexport to and among Country Group A:1 andcooperating countries:

(1) Computers with a CTP greater than 45,000MTOPS to Hong Kong and South Korea;

(2) Commodities controlled for nuclearnonproliferation reasons or missile technologyreasons.

(c) Reexports to a destination to which directshipment from the United States is authorizedunder an unused outstanding license may be madeunder the terms of that license. Such reexportsshall be recorded in the same manner as exportsare recorded, regardless of whether the license ispartially or wholly used for reexport purposes.(See part 762 of the EAR for recordkeepingrequirements.)

(d) Reexports of any item from Canada that, atthe time of reexport, may be exported directlyfrom the United States to the new country ofdestination under any License Exception.

(e) Reexports (return) to the United States of anyitem. If the reexporting party requests writtenauthorization because the government of thecountry from which the reexport will take placerequires formal U.S. Government approval, suchauthorization will generally be given.

(f) Reexports from a foreign destination toCanada of any item if the item could be exportedto Canada without a license.

(g) Reexports between Switzerland andLiechtenstein.

(h) Shipments of foreign-made products thatincorporate U.S.-origin components may beaccompanied by U.S.-origin controlled spareparts, provided that they do not exceed 10 percentof the value of the foreign-made product, subjectto the restrictions in §734.4 of the EAR.

(i) Reexports to Sudan of items controlled byECCNs 2A994; 3A992.a; 5A991.f; 5A992;6A991; 6A998; 7A994; 8A992.d, .e, .f , and .g;9A990.a and .b; and 9A991.d and .e. In addition,items in these ECCNs are not counted ascontrolled U.S. content for purposes ofdetermining license requirements for U.S. parts,components, and materials incorporated inforeign-made products. However, the exportfrom the United States to any destination withknowledge that they will be reexported directly orindirectly, in whole or in part to Sudan isprohibited without a license.

(j) Reexports of items controlled by NP Column1 (see Supplement No. 1 to part 774 of the EAR)to, among, and from countries described inCountry Group A:4 (see Supplement No. 1 to part740), except:

(1) Reexports from countries that are notidentified in Country Group A:1 of items that arecontrolled for NS reasons to destinations inCountry Group D:1; and

(2) Reexports to destinations in Country GroupE:2 and Country Group D:2.

§740.17

ENCRYPTION COMMODITIES ANDSOFTWARE (ENC)

License Exception ENC authorizes the export andreexport of encryption items classified under



ECCNs 5A002, 5D002 and 5E002. Noencryption item(s) may be exported under thislicense exception to Cuba, Iran, Iraq, Libya,North Korea, Sudan or Syria. Reportingrequirements apply to exports made under theauthority of License Exception ENC; seeparagraph (e) of this section for theserequirements.

(a) Exports and reexports of encryption items

Exports and reexports of encryption itemsclassified under ECCNs 5A002, 5D002 and5E002 are authorized to any end-user located inthe countries listed in Supplement 3 to this part740, except for exports of cryptanalytic items (asdefined in Part 772 of the EAR) to governmentend-users. These items may also be exported orreexported to any destination for the internal useof foreign subsidiaries or offices of firms,organizations and governments headquartered inCanada or in countries listed in Supplement 3 tothis part 740.

(b) For all other countries, you may export andreexport encryption commodities, software andcomponents (as defined in part 772 of the EAR)under the provisions of License Exception ENCas enumerated in this section. For exports andreexports of encryption items which contain anopen cryptographic interface (as defined in part772 of the EAR), see paragraph (b)(5) of thissection.

(1) Encryption items for U.S. subsidiaries.Exports and reexports of any encryption itemclassified under ECCNs 5A002, 5D002 and5E002 of any key length are authorized to foreignsubsidiaries of U.S. companies (as defined in part772 of the EAR) without review andclassification. This includes source code andtechnology for internal company use, such as thedevelopment of new products. License ExceptionENC also authorizes transfers by U.S. companiesof encryption technology controlled under 5E002to foreign nationals in the United States, (except

nationals of Cuba, Iran, Iraq, Libya, North Korea,Sudan or Syria) for internal company use,including the development of new products. Allitems produced or developed by U.S. subsidiarieswith encryption commodities, software andtechnology exported under this paragraph aresubject to the EAR and require review andclassification before any sale or retransfer outsideof the U.S. company.

(2) Encryption commodities and software.

(i) Exports and reexports of any encryptioncommodity, general purpose toolkit, software andcomponent are authorized after review andclassification by BXA under ECCNs 5A002 and5D002 to any individual, commercial firm orother non-government end-user outside thecountries (except Cuba, Iraq, Iran, Libya, NorthKorea, Sudan or Syria) listed in Supplement 3 tothis part 740. Encryption products classifiedunder this paragraph require a license beforeexport and reexport to governments (as defined inpart 772 of the EAR) outside the countries listedin Supplement 3 to this part 740. The restrictionlimiting exports or reexports to internal companyproprietary use is removed.

(ii) Certain restrictions apply to Internet andtelecommunications service providers. Internetand telecommunications service providers canobtain and use any encryption product for theirinternal use and to provide any service underLicense Exception ENC. However, a license isrequired for the use of any product not classifiedas retail to provide services specific togovernment end-users outside the countries listedin Supplement 3 to this part 740, e.g., WAN,LAN, VPN, voice and dedicated-link services;application specific and e-commerce services andPKI encryption services specifically forgovernment end-users.

(3) Retail encryption commodities andsoftware. Exports and reexports to any end-userof encryption commodities, software and



components are authorized after review andclassification by BXA as retail under ECCNs5A002 and 5D002. Encryption products exportedor reexported under this paragraph (b)(3) can beused to provide services to any entity. Internet ortelecommunications service providers can obtainretail products under License Exception ENC anduse them to provide any service to any entity.Retail encryption commodities, software andcomponents are products:

(i) Generally available to the public by meansof any of the following:

(A) Sold in tangible form through retailoutlets independent of the manufacturer;

(B) Specifically designed for individualconsumer use and sold or transferred throughtangible or intangible means; or

(C) Which are sold or will be sold in largevolume without restriction through mail ordertransactions, electronic transactions, or telephonecall transactions; and

(ii) Meeting all of the fol lowing:

(A) The cryptographic functionality cannot beeasily changed by the user;

(B) Substantial support is not required forinstallation and use;

(C) The cryptographic functionality has notbeen modified or customized to customerspecification; and

(D) are not network infrastructure productssuch as high end routers or switches designed forlarge volume communications.

(iii) Subject to the criteria in paragraphs(b)(3)(i) and (ii) of this section, retail encryptionproducts include (but are not limited to) generalpurpose operating systems and their associated

user-interface client software or general purposeoperating systems with embedded networking andserver capabilities; non-programmable encryptionchips and chips that are constrained by design forretail products; low-end routers, firewalls andnetworking or cable equipment designed for smalloffice or home use; programmable databasemanagement systems and associated applicationservers; low-end servers and application-specificservers (including client-server applications, e.g.,Secure Socket Layer (SSL)-based applications)that interface directly with the user; andencryption products distributed without charge orthrough free or anonymous downloads.

(iv) Encryption products and network-basedapplications which provide functionalityequivalent to other encryption products classifiedas retail will be considered retail.

(v) 56-bit products with key exchangemechanisms greater than 512 bits and up to andincluding 1024 bits, or equivalent products notclassified as mass market, or finance-specificencryption commodities and software of any keylength restricted by design (e.g., highly field-formatted with validation procedures and noteasily diverted to other end-uses) and used tosecure financial communications such aselectronic commerce may be exported under theretail provisions of this section immediately aftersubmitting a completed classification request toBXA.

(vi) Items which would be controlled onlybecause they incorporate components or softwarewhich provide short-range wireless encryptionfunctions may be exported without review andclassification by BXA and without reportingunder the retail provisions of this section.

(4) Commercial encryption source code.Exports and reexports of encryption source codenot released under §740.13(e) are authorizedsubject to the following provisions:



(i) Encryption source code which would beconsidered publicly available under §734.3(b)(3)of the EAR and which is subject to an expressagreement for the payment of a licensing fee orroyalty for commercial production or sale of anyproduct developed using the source code (orobject code resulting from compiling of anyencryption such source code which would beconsidered publicly available) can be exported orreexported using License Exception ENC to anyend-user without review and classificationprovided you have submitted to BXA (with acopy to the ENC Encryption RequestCoordinator) by the time of export, writtennotification of the Internet location (e.g. URL orInternet address) or a copy of the source code.You may not knowingly export or reexport sourcecode, object code or products developed with thissource code to Cuba, Iran, Iraq, Libya, NorthKorea, Sudan or Syria. Posting of the sourcecode or corresponding object code on the Internet(e.g., FTP or World Wide Web site) where it maybe downloaded by anyone would not establish"knowledge" of a prohibited export or reexport.In addition, such posting would not trigger "redflags" necessitat ing the affirmative duty to inquireunder the "Know Your Customer" guidanceprovided in Supplement No. 3 to part 732 of theEAR.

(ii) Encryption source code which would not beconsidered publicly available and which does notinclude source code that when compiled providesan open cryptographic interface (see paragraph(b)(5) of this section), may be exported orreexported using License Exception ENC to anyindividual, commercial firm or other non-government end-user after submitting a completeclassification request to BXA with a copy to theENC Coordinator.

(5) Cryptographic interfaces.

(i) Exports or reexports of encryptioncommodities, software and components whichprovide an open cryptographic interface (as

defined in part 772 of the EAR) may be exportedunder License Exception ENC to any end-userlocated in any country listed in Supplement 3 tothis part 740. Exports or reexports to otherdestinations of encryption commodities, softwareand components which provide an opencryptographic interface are not eligible to useLicense Exception ENC and require a license(unless exported to a subsidiary of a U.S.company under paragraph (b)(1) of this section).This does not apply to source code that would beconsidered publicly available under §734.3(b)(3)of the EAR.

(ii) Encryption items which are limited toallowing foreign-developed cryptographicproducts to operate with U.S. products (e.g.signing) can be exported or reexported underLicense Exception ENC to any end-user. Suchexports are subject to reporting requirements (seeparagraph (e)(3) of this section). No review ofthe foreign-developed cryptography is required.

(c) Reexports and Transfers

U.S. or foreign distributors, resellers or otherentities who are not original manufacturers ofencryption commodities and software arepermitted to use License Exception ENC only ininstances where the export or reexport meets theapplicable terms and conditions of this section.Transfers of encryption items listed in paragraph(b) of this section to government end-users orend-uses within the same country are prohibitedunless otherwise authorized by license or licenseexception. Foreign products developed with orincorporating U.S.-origin encryption source code,components or toolkits remain subject to the EARbut do not require review and classification byBXA and can be exported or reexported withoutfurther authorization.

(d) Eligibility for License Exception ENC

(1) Review and classification. You may initiatereview and classification of your encryption items



as required by this section by submitting aclassification request in accordance with theprovisions of §748.3(b) and Supplement 6 to part742 of the EAR. Indicate “License ExceptionENC” in Block 9: Special purpose, on form BXA-748P. Submit the original request to BXA andsend a copy of the request to ENC EncryptionRequest Coordinator (see paragraph (e)(5) of thissection for mailing addresses).

(i) Exporters may immediately export andreexport any encryption item except“cryptanalytic items” as defined in part 772 of theEAR to any end-user located in the countrieslisted in Supplement 3 to this part 740 providedthe exporter has submitted to BXA a completedclassification request by the time of export.

(ii) Exporters may, thirty days after receipt of acompleted classification request by BXA, exportand reexport to any non-government end-userlocated outside the countries listed in Supplement3 to this part 740 any encryption product eligibleunder paragraph (b)(2), (b)(3) or (b)(4) of thissection unless otherwise notified by BXA. Noexports to government end-users located outsideof countries listed in Supplement 3 to this part740 are allowed under this provision. BXAreserves the right to suspend eligibility to exportunder this provision while a classification ispending.

(2) Grandfathering. Finance-specific and 56-bitproducts previously reviewed and classified byBXA can be exported and reexported to any end-user without further review. Other encryptioncommodities, software or components previouslyapproved for export can be exported and reexport-ed without further review to any end-user incountries listed in Supplement 3 to this part 740countries and to any non-government end-useroutside of the countries listed in Supplement 3 tothis part 740. This includes products approvedunder a license, an Encryption LicensingArrangement, or classified as eligible to useLicense Exception ENC (except for those

products which were only authorized for export toU.S. subsidiaries). Exports of products notclassified by BXA as “retail” to governments ofcountries not listed in Supplement 3 to this part740 require a license.

(3) Key length increases. Exporters can increasethe key lengths of previously classified productsand continue to export without another review.No other change in the cryptographicfunctionality is allowed.

(i) Any product previously classified as 5A002or 5D002 can, with any upgrade to the key lengthused for confidentiality or key exchangealgorithms, be exported or reexported underprovisions of License Exception ENC to any non-government end-user without an additionalreview. Another classification is necessary todetermine eligibility as a “retail” product underparagraph (b)(3) of this section.

(ii) Exporters must certify to BXA in a letterfrom a corporate official that the only change tothe encryption product is the key length forconfidentiality or key exchange algorithms andthere is no other change in cryptographicfunctionality. Certifications must include theoriginal authorization number issued by BXA andthe date of issuance. BXA must receive thiscertification prior to any export of an upgradedproduct. The certification should be sent to BXA,with a copy sent to the ENC Encryption RequestCoordinator (see paragraph (e)(5) of this sectionfor mailing addresses).

(e) Reporting requirements

(1) No reporting is required for exports of:

(i) Any encryption to U.S. subsidiaries forinternal company use;

(ii) Finance-specific products;



(iii) Encryption commodities or software with asymmetric key length not exceeding 64 bits orotherwise classified as qualifying for mass markettreatment;

(iv) Retail products exported to individualconsumers;

(v) Items exported via free or anonymous down-load;

(vi) Encryption items from or to a U.S. bank,financial institution or their subsidiaries,affiliates, customers or contractors for banking orfinancial operations;

(vii) Items which incorporate componentslimited to providing short-range wirelessencryption functions;

(viii) Retail operating systems, or desktopapplications (e.g. e-mail, browsers, games, wordprocessing, data base, financial applications orutilities) designed for, bundled with, or pre-loaded on single CPU computers, laptops or hand-held devices;

(ix) Client Internet appliance and client wirelessLAN cards;

(x) Foreign products developed by bundling orcompiling of source code.

(2) Exporters must provide all availableinformation as follows:

(i) For items exported to a distributor or otherreseller, including subsidiaries of U.S. firms, thename and address of the distributor or reseller, theitem and the quantity exported and, if collected aspart of the distribution process by the exporter,the end-user’s name and address;

(ii) For items exported through direct sale, thename and address of the recipient, the item, and

the quantity exported (except for retail products ifthe end-user is an individual consumer); and

(iii) For exports of 5E002 items to be used fortechnical assistance and which are not released by§744.9 of the EAR, the name and address of theend-user.

(3) For direct sales or transfers of encryptioncomponents, commercial source code describedunder paragraph (b)(4) of this section, technologyor general purpose encryption toolkits to foreignmanufacturers when intended for use in foreignproducts developed for commercial sale, youmust submit the names and addresses of themanufacturers using these items and, when theproduct is made available for commercial sale, anon-proprietary technical description of theforeign products for which the component, sourcecode or toolkit are being used (e.g., brochures,other documentation, descriptions or otheridentifiers of the final foreign product; thealgorithm and key lengths used; generalprogramming interfaces to the product, if known;any standards or protocols that the foreignproduct adheres to; and source code, ifavailable.).

(4) Exporters of encryption commodities,software and components which were previouslyclassified under License Exception ENC, orwhich have been licensed for export under anEncryption Licensing Arrangement, must complywith the reporting requirements of this section.

(5) You must submit reports required under thissection semi-annually to BXA, unless otherwiseprovided in this paragraph (e)(5). For exportsoccurring between January 1 and June 30, areport is due no later than August 1 of that year.For exports occurring between July 1 andDecember 31, a report is due no later thanFebruary 1 the following year. Reports mustinclude the classification or other authorizationnumber. These reports must be provided inelectronic form to BXA; suggested file formats



for electronic submission include spreadsheets,tabular text or structured text. Exporters mayrequest other reporting arrangements with BXAto better reflect their business models. Reportss h o u l d b e s e n t e l e c t r o n i c a l l y t [email protected], or disks and CDs can bemailed 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, D.C. 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

!§740.18

AGRICULTURAL COMMODITIES (AGR)

(a) Eligibility requirements

License Exception AGR permits the export ofagricultural commodities to Cuba, as well as thereexport of U.S. origin agricultural commoditiesto Cuba, provided your transaction meets all ofthe following criteria:

(1) The commodity meets the definition of“agricultural commodities” in part 772 of theEAR;

(2) The commodity is EAR99. You must have anofficial commodity classification of EAR99 fromBXA for fertilizers, western red cedar and livehorses before you submit a notification under thislicense exception. See §748.3 of the EAR forinformation on how to submit a commodityclassification request;

(3) The export or reexport is made pursuant to awritten contract, except for donations andcommercial samples which are not subject to thiscontract requirement;

(4) The export or reexport is made within 12months of the signing of the contract or within 12months of notification that no objections wereraised (if no contract is required). In the case ofmultiple partial shipments, all such shipmentsmust be made within the 12 months of the signingof the contract or within 12 months of notificationthat no objections were raised (if no contract isrequired); and

(5) You notify BXA prior to exporting orreexporting according to the procedures set forthin paragraph (c) of this section. If you intend toengage in multiple shipments during the one-yearperiod after the signing of the contract, you needonly notify BXA prior to the first shipment.

(b) Restrictions

(1) No export or reexport to any individual orentity designated as a Specially DesignatedTerrorist or Foreign Terrorist Organization maybe made under License Exception AGR (see part744 of the EAR).

(2) No export or reexport to or for use inbiological, chemical, nuclear warfare or missileproliferation activities may be made underLicense Exception AGR (see part 744 of theEAR).

(3) No U.S.-owned or controlled foreign firm mayexport from abroad to Cuba a foreign producedagricultural commodity containing more than10% U.S.-origin content. Such U.S.-owned orcontrolled foreign firms require a specific licensefrom BXA as well as the Department of theTreasury’s Office of Foreign Assets Control(OFAC). Transactions not subject to the EAR(under 10% U.S.-origin content) require a licensefrom OFAC.



(c) Prior notification

(1) General requirement. You must notifyBXA prior to any export or reexport (or prior tothe first of multiple shipments) under LicenseException AGR.

(2) Procedures. You must provide priornotification of exports and reexports underLicense Exception AGR by submitting acompleted Multipurpose Application Form(BXA-748P) or its electronic equivalent. Thefollowing blocks must be completed, asappropriate, on the Multipurpose ApplicationForm: Blocks 1, 2, 3, 4, 5 (by marking box 5“Other”), 14, 16, 17,18, 19, 21, 22 (a), (e), (f), (g),(h), (i), (j), 23, and 25 according to theinstructions described in Supplement No. 1 to part748 of the EAR. If your commodity is fertilizer,western red cedar or live horses, you mustconfirm that BXA has previously classified yourcommodity as EAR99 by placing the CommodityClassification Automatic Tracking System(CCATS) number in block 22(d). BXA will notinitiate the registration of an AGR notificationunless all requested information on theMultipurpose Application form is complete. (3) Action by BXA. Within two business days ofthe registration of the AGR notification, BXAwill refer the notification for interagency review,or if necessary return the notification withoutaction (e.g., if the information provided isincomplete). Registration is defined as the pointat which the notification is entered into BXA'selectronic system.

(4) Review by other departments or agencies.The Departments of Defense, State, and otheragencies, as appropriate, may review the AGRnotification. BXA must receive department oragency objections within nine business days ofthe referral. Unlike the provisions described in§750.4(b) of the EAR, there are no provisions forstopping the processing time of the AGRnotification. If, within 11 business days after the

date of registration, any reviewing agencyprovides a written objection that the recipientmay promote international terrorism or thetransaction raises nonproliferation concerns, youmay not use License Exception AGR. In suchcases, BXA will notify you that a license isrequired for the export or reexport. BXA willthen process the AGR notification as a licenseapplication in accordance with the provisionsdescribed in §750.4 of the EAR, and the licensingpolicies set forth in the EAR. At this time, BXAmay request additional information. When BXAconfirms that no agency has raised an objectionwithin eleven business days (as described inparagraph (c)(5) of this section), you may proceedwith the transaction provided that you satisfy allother requirements of License Exception AGR,including the requirement to have a writtencontract prior to any shipment (unless a donationor commercial sample). (Note that the fact thatyou have been advised that no agency hasobjected to the transaction does not exempt youfrom other licensing requirements under the EAR,such as those based on knowledge of a prohibitedend-use or end-user as referenced in generalprohibition five (part 736 of the EAR) and setforth in part 744 of the EAR.)

(5) Status of pending AGR notificationrequests. You must contact BXA's System forTracking Export License Applications("STELA") at (202) 482-2752 for status of yourpending AGR notification. (See §750.5 of theEAR for procedures to access information onSTELA.) STELA will provide the date ofregistration of the AGR notification. If nodepartment or agency objection is raised within11 business days, STELA will, on the twelfthbusiness day following the date of registration,provide you with confirmation of that fact. Youmay not proceed with your shipment unless youconfirm with STELA that no objection has beenraised. BXA will subsequently issue writtenconfirmation to you. If an objection is raised,STELA will indicate that a license is required.The AGR notification will then be processed as a



license application. In addition, BXA mayprovide notice of an objection by telephone, fax,courier service, or other means.

(d) Donations

(1) Donations of agricultural commodities areeligible for export and reexport to Cuba underLicense Exception AGR, provided the transactionmeets the requirements and procedures of thislicense exception (except the written contractrequirement).

(2) Donations of food items to non-governmentalorganizations (NGOs) and individuals in Cubamay also be eligible for License Exception GFT.See §740.12 for eligibility requirements of giftparcels and humanitarian donations under LicenseException GFT.

License Exceptions Supplement No. 1 to section 740.11--page 1


ADDITIONAL RESTRICTIONS ON USE OF LICENSE EXCEPTION GOV

(a) Items for official use within nationalterritory by agencies of the U.S. Government.

License Exception GOV is available for all itemsconsigned to and for the official use of anyagency of a cooperating government within theterritory of any cooperating government, except:

(1) Items identified on the Commerce ControlList as controlled for national security (NS)reasons under Export Control ClassificationNumbers (ECCNs) as follows for export orreexport to destinations other than Austria,Belgium, Canada, Denmark, Finland, France,Germany, Greece, Ireland, Italy, Luxembourg, theNetherlands, Portugal, Spain, Sweden, or theUnited Kingdom: 1C001, 1C012, 5A001.b.4,6A001.a.2.a.1, 6A001.a.2.a.2, 6A001.a.2.a.5,6A001.a.2.b, 6A001.a.2.e, 6A002.a.1.c,6A008.l.3., 6B008, 8A001.b., 8A001.d.,8A002.o.3.b., 9A011; and





(v) Bottom or bay cable systems controlledby 6A001.a.2.f and having processing equipment

specially designed for real time application withbottom or bay cable systems; and


(A) Controlled by 4D001, speciallydesigned for the "development" or "production"for items controlled by 4A003.b or .c, as definedby paragraphs (a)(1)(ii) and (iii) of thisSupplement; and






(G) Controlled by 9D001, speciallydesigned for the "development" of equipment or"technology" controlled by 9A011, 9E003.a.1, orby 9E003.a.3, for items controlled by 1A002.a, asdescribed in paragraph (a)(1)(i) of thisSupplement; and


(I) Controlled by 9D004.a or .c; and

(vii) "Technology", as follows:

(A) Controlled by 5E001.a for i temscontrolled by 5A001.b.4 or 5D001.a; and



(B) Controlled by 1E001 for itemscontrolled by 1A002.a, 1C001, or 1C102 asdescribed by paragraph (a)(1)(i) of thisSupplement; and

(C) Controlled by 6E001 for the"development" of equipment or "software" in6A001.a.2.a.1, 6A001.a.2.a.2, 6A001.a.2.a.5,6A001.a.2.b, 6A001.a.2.c, 6A001.a.2.e,6A001.a.2.f, 6A002.a.1.c, 6A008.l.3, or 6B008,as described in paragraph (a)(1) of thisSupplement; and

(D) Controlled by 6E002 for the"production" of equipment controlled by6A001.a.2.a.1, 6A001.a.2.a.2, 6A001.a.2.a.5,6A001.a.2.b, 6A001.a.2.c, 6A001.a.2.e,6A001.a.2.f, 6A002.a.1.c, 6A008.l.3, or 6B008,as described in paragraph (a)(1) of thisSupplement; and

(E) Controlled by 8E001 for itemscontrolled by 8A001.b, 8A002.o.3.b, or 8A001.d;and

(F) Controlled by 9E001 for itemscontrolled by 9A011, 9D001, or 9D002; and

(G) Controlled by 9E002 for itemscontrolled by 9A011; and

(H) Controlled by 9E003.a.1; and

(I) Controlled by 9E003.a.3 for itemscontrolled by 1A002.a as described in paragraph(a)(1) of this Supplement;

(2) Items identified on the Commerce ControlList as controlled for missile technology (MT),chemical and biological warfare (CB), or nuclearnonproliferation (NP) reasons;

(3) Regional stability items controlled underExport Control Classification Numbers (ECCNs)6A002, 6A003, 6E001, 6E002, 7D001, 7E001,

7E002, and 7E101 as described in §742.6(a)(1) ofthe EAR; or

(4) Encryption items controlled for EI reasonsas described in the Commerce Control List.

(b) Diplomatic and consular missions of a cooperating government.

License Exception GOV is available for all itemsconsigned to and for the official use of adiplomatic or consular mission of a cooperatinggovernment located in any country in CountryGroup B (see Supplement No. 1 to part 740),except:

(1) Items identified on the Commerce ControlList as controlled for national security (NS)reasons under Export Control ClassificationNumbers (ECCNs) as follows for export orreexport to destinations other than Austria,Belgium, Canada, Denmark, Finland, France,Germany, Greece, Ireland, Italy, Luxembourg, theNetherlands, Portugal, Spain, Sweden, or theUnited Kingdom: 1C001, 1C012, 5A001.b.4,6A001.a.2.a.1, 6A001.a.2.a.2, 6A001.a.2.a.5,6A001.a.2.b, 6A001.a.2.e., 6A002.a.1.c,6A008.l.3., 6B008, 8A001.b., 8A001.d.,8A002.o.3.b., 9A011; and







(v) Bottom or bay cable systems controlledby 6A001.a.2.f and having processing equipmentspecially designed for real time application withbottom or bay cable systems; and


(A) Controlled by 4D001, speciallydesigned for the "development" or "production"for items controlled by 4A003.b or .c, as definedby paragraphs (b)(1)(ii) or (iii) of thisSupplement; and






(G) Controlled by 9D001, speciallydesigned for the "development" of equipment or"technology" controlled by 9A011, 9E003.a.1, orby 9E003.a.3, for items controlled by 1A002.a, asdescribed in paragraph (b)(1)(i) of thisSupplement; and


(I) Controlled by 9D004.a or .c; and

(vii) "Technology", as follows:

(A) Controlled by 5E001.a for itemscontrolled by 5A001.b.4 or 5D001.a; and

(B) Controlled by 1E001 for items controlledby 1A002.a, 1C001, or 1C102 as described byparagraph (b)(1) of this Supplement; and

(C) Controlled by 6E001 for the"development" of equipment or "software" in6A001.a.2.a.1, 6A001.a.2.a.2, 6A001.a.2.a.5,6A001.a.2.b, 6A001.a.2.c, 6A001.a.2.e,6A001.a.2.f, 6A002.a.1.c, 6A008.l.3, or 6B008,as described in paragraph (b)(1) of thisSupplement; and

(D) Controlled by 6E002 for the"production" of equipment controlled by6A001.a.2.a.1, 6A001.a.2.a.2, 6A001.a.2.a.5,6A001.a.2.b, 6A001.a.2.c, 6A001.a.2.e,6A001.a.2.f, 6A002.a.1.c, 6A008.l.3, or 6B008,as described in paragraph (b)(1) of thisSupplement; and

(E) Controlled by 8E001 for items controlledby 8A001.b, 8A002.o.3.b, or 8A001.d; and

(F) Controlled by 9E001 for items controlledby 9A011, 9D001, or 9D002; and

(G) Controlled by 9E002 for items controlledby 9A011; and

(H) Controlled by 9E003.a.1; and

(I) Controlled by 9E003.a.3 for itemscontrolled by 1A002.a as described in paragraph(b)(1)(i) of this Supplement; and

(2) Items identified on the Commerce ControlList as controlled for missile technology (MT),chemical and biological warfare (CB), or nuclearnonproliferation (NP) reasons;



(3) Regional stability items controlled underExport Control Classification Numbers (ECCNs)6A002, 6A003, 6E001, 6E002, 7D001, 7E001,7E002, and 7E101 as described in §742.6(a)(1) ofthe EAR; or

(4) Encryption items controlled for EI reasonsas described in the Commerce Control List.


License Exceptions Supplement No. 1 Part 740

SUPPLEMENT NO. 1 TO PART 740

Supplement No. 1 to part 740 is not formatted for this document. Please see file 740spir.


License Exceptions Supplement No. 2 to part 740

ITEMS THAT MAY BE DONATED TO MEET BASIC HUMAN NEEDS UNDER THEHUMANITARIAN LICENSE EXCEPTION

(a) Health

Equipment for the Handicapped

Hospital Supplies and Equipment

Laboratory Supplies and Equipment

Medical Supplies and Devices

Medicine-Processing Equipment

Medicines

Vitamins

Water Resources Equipment

Food

Agricultural Materials and Machinery Suited toSmall-Scale Farming Operations

Agricultural Research and Testing Equipment

Fertilizers

Fishing Equipment and Supplies Suited toSmall-Scale Fishing Operations

(b) Food

Insecticides

Pesticides

Seeds

Small-Scale Irrigation Equipment

Veterinary Medicines and Supplies

(c) Clothes and Household Goods

Bedding

Clothes

Cooking Utensils

Fabric

Personal Hygiene Items

Soap-Making Equipment

Weaving and Sewing Equipment

(d) Shelter

Building Materials

Hand Tools

(e) Education

Books

Individual School Supplies

School Furniture

Special Education Supplies and Equipment forthe Handicapped

(f) Basic Support Equipment and SuppliesNecessary to Operate and Administer the

Donative Program

Audio-Visual Aids for Training

Generators

Office Supplies and Equipment

License Exceptions Supplement No. 3 to part 740


LICENSE EXCEPTION ENC COUNTRY GROUP

AustriaAustraliaBelgiumCzech RepublicDenmarkFinlandFranceGermanyGreeceHungaryIrelandItalyJapanLuxembourgNetherlandsNew ZealandNorwayPolandPortugalSpainSwedenSwitzerlandUnited Kingdom

Documents

§740.1 INTRODUCTION · INTRODUCTION In this part, references to the EAR are references to 15 CFR chapter VII, subchapter C. (a) Scope!A “License Exception” is an authorization