Billing Code: 3510-33-P

DEPARTMENT OF COMMERCE

Bureau of Export Administration

15 CFR Parts 738 and 742

[Docket No. 011019257-1257-01]

RIN: 0694-AC48

Removal of Licensing Exemption for Exports and Reexports of Missile Technology-Controlled Items Destined to Canada

AGENCY: Bureau of Export Administration, Commerce.

ACTION: Advance Notice of Proposed Rulemaking.

SUMMARY: The Bureau of Export Administration (BXA) is reviewing the existing license exemption contained within the Export Administration Regulations (EAR) for the export of missile technology (MT)-controlled items to Canada to determine whether the exemption should be rescinded, because of the recommendations contained in the Government Accounting Office Report entitled: "Export Controls: Regulatory Change Needed to Comply with Missile Technology Licensing Requirements" (GA-01-530). BXA is seeking comments on how removing the existing licensing exemption for MT-controlled exports to Canada would affect industry and more specifically the exporting community.

DATES: Comments must be received by [INSERT 90 DAYS FROM THE DATE OF PUBLICATION].

ADDRESSES: Written comments (three copies) should be sent to Sharron Cook, Regulatory Policy Division, Office of Exporter Services, Bureau of Export Administration, Department of Commerce, 14th and Pennsylvania Avenue, N.W. , P.O. Box 273, Room 2705, Washington, D.C. 20230; E-Mailed to: scook@bxa.doc.gov; or faxed to 202-482-3355.

FOR FURTHER INFORMATION CONTACT: Steven Goldman, Director, Office of Nonproliferation Controls and Treaty Compliance, Bureau of Export Administration, Telephone: (202) 482-4188. Copies of the referenced GAO Report are available at the GAO website: http://www.gao.gov.

SUPPLEMENTARY INFORMATION

Background

The Missile Technology Control Regime (MTCR) guidelines require that regime members control inter-MTCR trade as well as trade with non-MTCR member countries. In addition, the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 1991 amended the Export Administration Act (EAA) of 1979 to require a license for any export of dual-use Missile Technology Control Regime (MTCR) controlled goods or technology to any country. In 1991, the Department of Commerce implemented the requirements in the Export Administration Regulations (EAR) by controlling MTCR Annex items on the Commerce Control List (CCL) under a new designated reason for control, "missile technology (MT)" and generally requiring a license for the export or reexport of these items and technologies. Many of these items were already on the CCL and controlled under foreign policy or national security reasons. However, the EAR provides a license exemption for the export of MT-controlled technologies to Canada. The license exemption for Canada existed in the EAR many years prior to the enactment of the MT provisions of the EAA. Since the Hyde Park Declaration of 1941, the United States has authorized nearly all dual-use goods intended for consumption in Canada to be exported without a license, although any reexport of U.S.-origin items controlled for MT concerns from Canada would require a license from the U.S. Government. The Department of Commerce is interested in evaluating the impact on U.S. exporters of removing the existing licensing exemption for MT-
controlled exports to Canada.

The current missile technology (MT) controls maintained by the Bureau of Export Administration (BXA) are set forth in the Export Administration Regulations (EAR), parts 742 (CCL Based Controls) and 744 (End-User and End-Use Based Controls). A regulatory implementation would entail adding an "X" in the row for Canada under the column from "MT 1" in the "Missile Tech" column of Supplement No. 1 to part 738, Commerce Country Chart. In addition, section 742.5 of the EAR would be revised to remove the phrase "except Canada" in the third sentence of paragraph (a)(1).

To ensure maximum public participation in the review process, comments are solicited for the next 90 days on the removal of the existing licensing exemption for the export of MT-controlled goods and technologies to Canada. BXA is particularly interested in the experience of individual exporters with the licensing exemption for MT-controlled exports to Canada, with emphasis on economic impact and specific business circumstances. BXA is also interested in industry information relating to the following:

1. Information on the effect of a licensing requirement for the export of MT-controlled items (commodities, software, and technology) to Canada on sales of U.S. products and market-
share.

2. Information on joint-ventures or U.S. industry owned facilities in Canada that would be affected by the removal of a licensing exemption for the export of MT-controlled items to Canada.

3. Information on controls maintained by U.S. trade partners (i.e., to what extent do other MTCR Partners have similar exemptions for the export of MT-controlled goods and technology to other countries)?

4. Additional suggestions for revisions to the Canadian licensing exemption policy.

5. Data or other information as to the effect of a Canadian licensing requirement on overall trade, either for individual firms or for individual industrial sectors.

Parties submitting comments are asked to be as specific as possible. Accordingly, the Department encourages interested persons who wish to comment to do it at the earliest possible time.

The period for submission of comments will close [INSERT 90 DAYS AFTER DATE OF PUBLICATION] The Department will consider all comments received before the close of the comment period in developing final regulations. Comments received after the end of the comment period will be considered if possible, but their consideration cannot be assured. The Department will not accept public comments accompanied by a request that a part or all of the material be treated confidentially because of its business proprietary nature or for any other reason. The Department will return such comments and materials to the persons submitting the comments and will not consider them in the development of final regulations. All public comments on these regulations will be a matter of public record and will be available for public inspection and copying. The Department requires comments be submitted in written form, which will be a matter of public record and will be available for public review and copying.

The public record concerning these comments will be maintained in the Bureau of Export Administration, Office of Administration, U.S. Department of Commerce, Room 6883, 14th and Constitution Avenue, NW, Washington, DC 20230; (202) 482-0637. This component does not maintain a separate public inspection facility. Requesters should first view BXA's FOIA website (which can be reached through http://www.bxa.doc.gov/foia). If the records sought cannot be located at this site, or if the requester does not have access to a computer, please call the phone number above for assistance.

List of Subjects

15 CFR Parts 738 and 742

Exports, Foreign trade.

DATED:

James J. Jochum

Assistant Secretary

for Export Administration