Billing Code: 3510-DT-P

DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Parts 738, 740, and 746

Docket No. [990923261-9261-01]

RIN 0694-AB99

Exports to Kosovo

AGENCY: Bureau of Export Administration

ACTION: Final rule.

SUMMARY: The Bureau of Export Administration (BXA) is amending the Export Administration Regulations (EAR) to exempt the Serbian province of Kosovo ("Kosovo") from certain license requirements for exports and reexports to Serbia of items subject to the Export Administration Regulations (EAR).

EFFECTIVE DATE: This rule is effective [DATE OF PUBLICATION].

FOR FURTHER INFORMATION CONTACT: James A. Lewis, Director, Office of Strategic Trade and Foreign Policy Controls, Bureau of Export Administration, Telephone: (202) 482- 4196.

SUPPLEMENTARY INFORMATION:

Background

In Resolution 1203 (adopted on October 24, 1998), the United Nations Security Council (UNSC) expressed alarm at what it described as the continuing grave humanitarian situation throughout Kosovo and the impending humanitarian catastrophe there. In response to the Serbian government's continued ethnic cleansing in its Kosovo province and its rejection of the proposed peace agreement accepted by the Kosovars, NATO (including the United States) took military action intended to halt the mass killing and dislocation of ethnic Albanians in Kosovo and to prevent a widening of the conflict.

In response to the situation in Kosovo, Executive Order 13121 of April 30, 1999, tightened existing U.S. economic sanctions against Serbia, including the province of Kosovo. On May 4, 1999, BXA published a rule amending the EAR to require a license for exports and reexports of all items subject to the EAR to Serbia, including Kosovo (64 FR 24018). Executive Order 13121 delegated authority to administer the sanctions to the Department of the Treasury's Office of Foreign Assets Control (OFAC). By issuing General License 3 under the Kosovo Sanctions Regulations (31 CFR Part 586) on May 20, 1999, OFAC generally authorized certain transactions incident to exports licensed by BXA, thereby eliminating the need to seek separate authorization from two agencies for most export and reexport transactions.

In the wake of the cessation of hostilities and the withdrawal of Serbian troops from Kosovo, the United States Government is by this rule exempting Kosovo from the additional license requirements imposed on Serbia by the May 4, 1999, rule, thus returning Kosovo to the status it had prior to that date. General License No. 4, issued by the Office of Foreign Assets Control (OFAC) of the Department of the Treasury on August 17, 1999, effects a complementary exemption of Kosovo from OFAC's "Federal Republic of Yugoslavia (Serbia and Montenegro) Kosovo Sanctions Regulations" (see 31 CFR part 586).

For purposes of the EAR, this rule eliminates the term "Federal Republic of Yugoslavia" and establishes Serbia, Kosovo, and Montenegro as distinct destinations under the EAR. This distinction does not address issues of sovereignty; it merely clarifies the applicability of export controls under the EAR to different destinations. Although comprehensive sanctions on Serbia (excluding Kosovo) remain in place, both Kosovo and Montenegro retain, for License Exception eligibility purposes, membership in "Country Group B" (see Supplement No. 1 to part 740) and "Computer Tier 3" (see §740.7). Serbia, Kosovo, and Montenegro are now listed separately in the Commerce Country Chart (see Supplement No. 1 to part 738).

On July 14, 1998, BXA implemented an embargo on arms and arms-related items in the Export Administration Regulations (EAR) that applied to Serbia (including Kosovo) and Montenegro. The arms embargo continues in effect, and this rule leaves provisions regarding the arms embargo unaltered, except that "Federal Republic of Yugoslavia (Serbia and Montenegro)" is revised to read "Serbia, Kosovo, and Montenegro."

Although the Export Administration Act (EAA) expired on August 20, 1994, the President invoked the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq) and continued in effect the EAR, and to the extent permitted by law, the provisions of the EAA in Executive Order 12924 of August 19, 1994, as extended by the President's notices of August 15, 1995 (60 FR 42767), August 14, 1996 (61 FR 42527), August 13, 1997 (62 FR 43629), August 13, 1998 (63 FR 44121), and August 10, 1999 (64 FR 44101, August 13, 1999).

Rulemaking Requirements

1. This final rule has been determined to be significant for purposes of E.O. 12866.

2. This rule involves a collection of information subject to the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.). These collections have been approved by the Office of Management and Budget under control number 0694-0088, "Multi-Purpose Application," which carries a burden hour estimate of 40 minutes to prepare and submit electronically and 45 minutes to submit manually on form BXA-748P. Notwithstanding any other provision of law, no person is required to respond nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act, unless that collection of information displays a currently valid OMB Control Number.

3. This rule does not contain policies with Federalism implications sufficient to warrant preparation of a Federalism assessment under Executive Order 12612.

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military and foreign affairs function of the United States (see 5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this final rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under 5 U.S.C. 553 or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable.

Therefore, this regulation is issued in final form. Although there is no formal comment period, public comments on this regulation are welcome on a continuing basis. Comments

should be submitted to Hillary Hess, Regulatory Policy Division, Bureau of Export Administration, Department of Commerce, P.O. Box 273, Washington, DC 20044.

List of Subjects

15 CFR Part 738

Administrative practice and procedure, Exports, Foreign trade.

15 CFR Part 740

Administrative practice and procedure, Exports, Foreign trade, Reporting and Record keeping requirements.

15 CFR Part 746

Embargoes, Exports, Foreign trade, Reporting and recordkeeping requirements.

Accordingly, parts 738, 740, and 746 of the Export Administration Regulations (15 CFR parts 730-99) are amended as follows:

1. The authority citation for 15 CFR part 738 is revised to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 10 U.S.C. 7420; 10 U.S.C. 7430(e); 18 U.S.C. 2510 et seq.; 22 U.S.C. 287c; 22 U.S.C. 3201 et seq.; 22 U.S.C. 6004; 30 U.S.C. 185(s), 185(u); 42 U.S.C. 2139a; 42 U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; 50 U.S.C. app. 5; E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; and Notice of August 10, 1999, 64 FR 44101 (August 13, 1999).

2. The authority citation for 15 CFR part 740 is revised to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p. 917; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; and Notice of August 10, 1999, 64 FR 44101 (August 13, 1999).

3. The authority citation for part 746 is revised to read as follows:

Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 22 U.S.C. 287c; 22 U.S.C. 6004; E.O. 12854, 58 FR 36587, 3 CFR, 1993 Comp., p. 614; E.O. 12918, 59 FR 28205, 3 CFR, 1994 Comp., p. 899; E.O. 12924, 59 FR 43437, 3 CFR, 1994 Comp., p.917; E.O. 13088, 3 CFR, 1998 Comp., p. 191; E.O. 13121, 64 FR 24021 (May 5, 1999); and Notice of August 10, 1999, 64 FR 44101 (August 13, 1999).

PART 738 - [AMENDED]

4. Supplement No. 1 to Section 738 is amended by removing "Serbia and Montenegro" and adding, in alphabetical order, "Kosovo," "Montenegro," and "Serbia," to read as follows:

Supplement No. 1 to Part 738 - (COMMERCE COUNTRY CHART)

*	*	*	*	*

*	*	*
Commerce Country Chart
Reason for Control
Countries	Chemical & Biological

Weapons	Nuclear

Nonproliferation	National

Security	Missile

Tech	Regional

Stability	Firearms

Convention	Crime

Control	Anti-

Terrorism
CB

1	CB

2	CB

3	NP

1	NP

2	NS

1	NS

2	MT

1	RS

1	RS

2	FC

1	CC

1	CC

2	CC

3	AT

1	AT

2

Kosovo (Serbian province of)	X	X	X	X	X	X	X	X	X	X

Montenegro	X	X	X	X	X	X	X	X	X	X

Serbia (not including Kosovo)	See part 746 of the EAR to determine whether a license is required in order to export or reexport to this destination.

*	*	*	*	*

PART 740 - [AMENDED]

5. Section 740.7 is amended by removing "Serbia & Montenegro" from paragraph (d)(1) and by adding, in alphabetical order, "Kosovo (Serbian province of)," "Montenegro," and "Serbia".

6. Supplement No. 1 to part 740 is amended by removing "Serbia & Montenegro" from the list of "Country Group B" countries and by adding, in alphabetical order, "Kosovo (Serbian province of)" and "Montenegro".

PART 746 - [AMENDED]

7. Section 746.9 is revised to read as follows:

§746.9 Serbia, Kosovo, and Montenegro.

The Department of Commerce maintains a comprehensive embargo on exports and reexports to Serbia, excluding the Serbian province of Kosovo ("Kosovo"). For purposes of the EAR, Serbia (excluding Kosovo), Kosovo, and Montenegro are separate destinations under the EAR. Additionally, a United Nations mandated arms embargo applies to certain items destined to Serbia, Kosovo, and Montenegro.

(a) Serbia. (1) License requirements. You will need a license to export or reexport all items subject to the EAR to Serbia, except as specified in paragraph (a)(3) of this section. This requirement does not apply to Kosovo or Montenegro; controls set forth in other parts of the EAR (e.g., the Commerce Country Chart) remain in effect for items destined to Kosovo or Montenegro.

(2) Licensing policy. Applications for export or reexport of all items subject to the EAR to Serbia will be reviewed on a case-by-case basis, with a presumption of denial for any items other than humanitarian items. BXA will approve sales of agricultural commodities and products, medicine, and medical equipment for civilian end-use when appropriate safeguards can be developed to prevent diversion to military, paramilitary or political use.

(3) License Exceptions. Items consigned to and for use by personnel and agencies of the U.S. Government under License Exception GOV (see §740.11(b)(2) of the EAR) and individual gift parcels under License Exception GFT (see §740.12(a) of the EAR) may be exported or reexported to Serbia, and temporary exports or reexports by the news media may be made to Serbia under License Exception TMP (see §740.9(a)(2)(viii) of the EAR) . No other License Exceptions are available for Serbia.

(b) Serbia, Kosovo, and Montenegro. (1) License requirements. Under Executive Order 12918 of May 26, 1994 (59 FR 28205, 3 CFR, 1994 Comp., p. 899)(which authorizes the Secretary of State and the Secretary of Commerce, under section 5 of the United Nations Participation Act and other authorities available to the respective Secretaries, to take all actions necessary to implement any arms embargo mandated by resolution of the United Nations Security Council), and in conformity with United Nations Security Council (UNSC) Resolution 1160 of March 31, 1998, an embargo applies to the sale or supply to Serbia, Kosovo, or Montenegro of arms and related matériel of all types and regardless of origin, such as weapons and ammunition, military vehicles and equipment, and spare parts for such items. You will therefore need a license for the sale, supply or export to Serbia, Kosovo, or Montenegro from the United States of embargoed items, as listed in paragraphs (b)(1)(i) and (ii) of this section. You will also need a license for the sale, supply, export or reexport to Serbia, Kosovo, or Montenegro of such items by any United States person in any foreign country or other location. (Reexport controls imposed under this paragraph (b)(1) apply only to reexports by U.S. persons. Reexport controls on U.S.-origin items to Serbia, Kosovo, or Montenegro set forth in other parts of the EAR remain in effect.) You will also need a license for the use of any U.S.-registered aircraft or vessel to supply or transport to Serbia, Kosovo, or Montenegro any such items. These requirements apply to embargoed items specified in paragraphs (b)(1)(i) and (b)(1)(ii) of this section, regardless of origin.

(i) Crime Control and Detection Equipment as identified on the CCL under CC Columns No. 1, 2 or 3 in the Country Chart column of the "License Requirements" section of the applicable ECCN.

(ii) Items described by ECCNs ending in "018"; and 0A982, 0A983, 0A984, 0A985, 0A986, 0A988, 0A989, 0B986, 0E984, 1A005, 1A984, 1C998, 2A993, 3A980, 3A981, 3D980, 3E980, 4A980, 4D980, 4E980, 5A980, 6A002, 6A003.b.3 and b.4, 6E001, 6E002, 9A980, and 9A991.a.

(2) Date of embargo. The licensing requirements in paragraph (b) of this section were effective on July 14, 1998.

(3) License policy. Applications for export or reexport of all items listed in paragraphs (b)(1)(i) and (ii) of this section are subject to a general policy of denial. Consistent with United Nations Security Council Resolution 1160, this embargo is effective notwithstanding the existence of any rights or obligations conferred or imposed by any international agreement or any contract entered into or any license or permit granted prior to July 14, 1998, except to the extent provided in regulations, orders, directives or licenses that may be issued in the future under Executive Order 12918 or under the EAR.

(c) Related controls. The Department of State, Office of Defense Trade Controls, maintains related controls on arms and military equipment under the International Traffic in Arms Regulations (22 CFR parts 120 through 130). You should also contact the Department of the Treasury's Office of Foreign Assets Control concerning any restrictions which might apply to U.S. persons involving financial transactions with Serbia, Kosovo, or Montenegro, including those transactions related to the export or reexport of services and non-U.S.-origin items.

DATED:

R. Roger Majak

Assistant Secretary

for Export Administration