[Federal Register Volume 83, Number 150 (Friday, August 3, 2018)]
[Rules and Regulations]
[Pages 38018-38021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-16691]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 738, 740, 743, 758 and 772

[Docket No. 180228229-8229-01]
RIN 0694-AH49


U.S.-India Major Defense Partners: Implementation Under the 
Export Administration Regulations of India's Membership in the 
Wassenaar Arrangement and Addition of India to Country Group A:5

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Final rule.

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SUMMARY: In this rule, the Bureau of Industry and Security (BIS) amends 
the Export Administration Regulations (EAR) to formally recognize and 
implement India's membership in the Wassenaar Arrangement (Wassenaar or 
WA). Further, BIS removes India from Country Group A:6 and places it in 
Country Group A:5. This action befits India's status as a Major Defense 
Partner and recognizes the country's membership in three of the four 
export control regimes: Missile Technology Control Regime (MTCR), WA 
and Australia Group (AG). This rule is another in the series of rules 
that implement reforms to which the United States and India mutually 
agreed to promote global nonproliferation, expand high technology 
cooperation and trade, and ultimately facilitate India's full 
membership in the four multilateral export control regimes (Nuclear 
Suppliers Group, MTCR, WA, and AG). This rule also makes conforming 
amendments.

DATES: This rule is effective August 3, 2018.

FOR FURTHER INFORMATION CONTACT: Chantal Lakatos, Office of 
Nonproliferation and Treaty Compliance, Bureau of Industry and 
Security, by phone: 202-482-1739 or by email: 
[email protected].

SUPPLEMENTARY INFORMATION: 

Background

    The United States and India continue their commitment to work 
together to strengthen the global nonproliferation and export control 
framework and further transform bilateral export control cooperation to 
recognize the full potential of the global strategic partnership 
between the two countries. This commitment has been realized in the two 
countries' mutually agreed upon

[[Page 38019]]

steps to expand cooperation in civil space, defense, and other high-
technology sectors and the complementary steps of the United States to 
remove India defense and space-related entities from the Entity List, 
realign India in U.S. export control regulations, and support India's 
membership in the four multilateral export control regimes (Nuclear 
Suppliers Group, Missile Technology Control Regime, Wassenaar 
Arrangement and Australia Group).
    To date, with the effective support of the United States, India has 
been admitted to three of the four multilateral export control regimes: 
Missile Technology Control Regime (MTCR) on June 27, 2016, the 
Wassenaar Arrangement (Wassenaar or WA) on December 7, 2017 and the 
Australia Group (AG) on January 19, 2018. These memberships, important 
to the two countries' global strategic partnership, are enhanced by the 
United States' recognition of India as a Major Defense Partner in the 
India-U.S. Joint Statement of June 7, 2016, entitled, ``The United 
States and India: Enduring Global Partners in the 21st Century.'' This 
recognition facilitates and supports India's military modernization 
efforts with the United States as a reliable provider of advanced 
defense articles.
    Therefore, in this rule, the Bureau of Industry and Security (BIS), 
formally recognizes under the Export Administration Regulations (EAR) 
India's membership in the WA multilateral export control regimes and 
revises the EAR accordingly. Further, in this rule, BIS adds India to 
Country Group A:1 in Supplement No. 1 to Part 740 (Country Groups) of 
the EAR to implement under the EAR India's status as a member of the 
WA. In addition, to export control-related benefits for India as a 
result of prior amendments to the EAR in furtherance of the U.S.-India 
global strategic partnership, BIS places India in Country Group A:5, 
which provides the benefit of greater availability of License Exception 
Strategic Trade Authorization (STA) for exports and reexports to, and 
transfers within India under the EAR.
    Countries listed in Country Group A:5 are countries included in STA 
Sec.  740.20(c)(1), which authorizes exports, reexports and in-country 
transfers that are subject to multiple reasons for control. With this 
rule, India becomes the 37th country to join Country Group A:5.

Specific EAR Amendments Recognizing and Implementing India's Membership 
in Wassenaar and Adding India to Country Group A:5

Part 738
    BIS amends Supplement No. 1 to Part 738, Commerce Country Chart, by 
removing the license requirements for National Security Column 2 (NS2) 
reasons. Accordingly, this rule removes the ``X'' in NS Column 2 for 
India.
Part 740
    BIS amends Supplement No. 1 to Part 740 to add, in alphabetical 
order, India to Country Groups A:1 and A:5.
Conforming Amendments
Part 738
    Consistent with India's new multilateral export control regime 
status, this rule also removes the first sentence of footnote 7 to the 
Commerce Country Chart in Supplement No. 1 to Part 738, related to 
India. This amendment removes the requirement that exporters file in 
the Automated Export System when items controlled for Crime Control 
Columns 1 and 3 reasons, and Regional Stability Column 2 reasons were 
destined to India. As a conforming change, this rule removes the word 
``Also'' from the second sentence of footnote 7 and capitalizes the 
``n'' in ``note'' since it begins the sentence.
    Also, as a conforming change in Part 738, BIS amends paragraph 
(b)(3) of Sec.  738.4, related to a sample analysis using the Commerce 
Control List and Country Chart to determine when a license is required, 
to remove the name ``India'' and replace it with the name ``Chad.'' The 
sample analysis used India as an example of a country with NS Column 2 
controls. That reason for control no longer applies to India but 
currently applies to Chad.
Part 740
    In adding India to Country Group A:5, BIS removes India from 
Country Group A:6 to avoid creating conflicting eligibility criteria 
for STA provisions.
Part 743
    As a member of Wassenaar, India now is subject to reporting 
requirements for items controlled under Wassenaar, as set forth in Part 
743, Special Reporting and Notification. Specifically, India is added, 
in alphabetical order, to Supplement No. 1 to Part 743, Wassenaar 
Arrangement Participating States.
Part 758
    Also, consistent with India's achievements and status as a Major 
Defense Partner, BIS removes the requirement that exporters file 
certain Electronic Export Information in AES as set forth in Sec.  
758.1(b)(9). Specifically, this amendment removes the requirement that 
exporters file in AES when items controlled for CC Columns 1 and 3 
reasons and RS Column 2 reasons are destined to India. This reporting 
requirement had been instituted when the license requirement for such 
items was removed (see U.S.-India Bilateral Understanding: Additional 
Revisions to the U.S. Export and Reexport Controls Under the Export 
Administration Regulations; January 23, 2015; 80 FR 3463). BIS has 
determined that this reporting requirement is no longer necessary.
Part 772
    In this rule, BIS also adds India, in alphabetical order, to the 
list of countries under the term Australia Group in Sec.  772.1, 
Definitions of terms as used in the Export Administration Regulations 
(EAR). This updates the definition consistent with formal recognition 
of India's membership in the AG in a BIS final rule, entitled 
``Implementation of the February 2017 Australia Group (AG) 
Intersessional Decisions and June 2017 Plenary Understandings; Addition 
of India to the AG'' (83 FR 13849, April 2, 2018).

Export Administration Act

    Although the Export Administration Act of 1979 expired on August 
20, 2001, the President, through Executive Order 13222 of August 17, 
2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 
13637 of March 8, 2013, 78 FR 16129 (March 13, 2013) and as extended by 
the Notice of August 15, 2017, 82 FR 39005 (August 16, 2017), has 
continued the Export Administration Regulations in effect under the 
International Emergency Economic Powers Act. BIS continues to carry out 
the provisions of the Export Administration Act of 1979, as appropriate 
and to the extent permitted by law, pursuant to Executive Order 13222, 
as amended by Executive Order 13637.

Rulemaking Requirements

    1. Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety

[[Page 38020]]

effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
This rule has been designated a ``significant regulatory action,'' 
although not economically significant, under section 3(f) of Executive 
Order 12866. Accordingly, the rule has been reviewed by the Office of 
Management and Budget (OMB). This rule is not subject to the 
requirements of E.O. 13771 (82 FR 9339, February 3, 2017) because it is 
issued with respect to a national security function of the United 
States.
    2. Notwithstanding any other provision of law, no person is 
required to respond to, 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 of 1995 (44 U.S.C. 3501 et 
seq.) (PRA), unless that collection of information displays a currently 
valid OMB control number. This rule involves collections of information 
approved under OMB control number 0694-0088- Simplified Network 
Application Processing+ System (SNAP+) and the Multipurpose Export 
License Application, which carries an annual estimated burden of 31,833 
hours; 0694-0137--License Exceptions and Exclusions, which carries an 
annual estimated burden of 29,998 hours; and 0694-0122--Miscellaneous 
Licensing Responsibilities and Enforcement which carries an annual 
estimated burden of 104,288 hours. BIS believes that this rule will 
have no significant impact on those burdens. In fact, because India has 
been admitted to the MTCR, Wassenaar and AG multilateral regimes and is 
a Major Defense Partner, it is listed in favored country groups for 
purposes of license requirements, license application review policy and 
availability of license exceptions. Membership in favored country 
groups generally reduces the number of licenses required and increases 
the number of license exceptions available. Therefore, BIS believes 
that this rule will reduce the paperwork burden to the public.
    Send comments regarding this burden estimate or any other aspect of 
this collection of information, including suggestions for reducing the 
burden, to Jasmeet K. Seehra, Office of Management and Budget, by email 
at [email protected] or by fax to (202) 395-7285.
    3. This rule does not contain policies with Federalism implications 
as that term is defined under Executive Order 13132.
    4. The provisions of the Administrative Procedure Act (5 U.S.C. 
553) requiring notice of proposed rulemaking and the opportunity for 
public participation, and a delay in effective date, are inapplicable 
because this regulation involves a military or foreign affairs function 
of the United States (see 5 U.S.C. 553(a)(1)). This rule implements 
decisions of multilateral export control regimes, of which the United 
States is a supporting member, and the rule furthers the objectives of 
the strategic commitment established between the United States and 
India. Delay in implementing this rule to obtain public comment would 
undermine the foreign policy objectives that the rule is intended to 
implement. Further, no other law requires that a notice of proposed 
rulemaking and an opportunity for public comment be given for this 
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 requirements of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.) are not applicable.

List of Subjects

15 CFR Part 738 and 772

    Exports.

15 CFR Parts 740, 743 and 758

    Administrative practice and procedure, Exports, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, 15 CFR Chapter VII, 
Subchapter C is amended as follows:

PART 738--COMMERCE CONTROL LIST OVERVIEW AND THE COUNTRY CHART

0
1. The authority citation for part 738 continues to read as follows:

    Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 10 
U.S.C. 7420; 10 U.S.C. 7430(e); 22 U.S.C. 287c; 22 U.S.C. 3201 et 
seq.; 22 U.S.C. 6004; 42 U.S.C. 2139a; 15 U.S.C. 1824a; 50 U.S.C. 
4305; 22 U.S.C. 7201 et seq.; 22 U.S.C. 7210; E.O. 13026, 61 FR 
58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 
2001 Comp., p. 783; Notice of August 15, 2017, 82 FR 39005 (August 
16, 2017).


0
2. Section 738.4 is amended by revising paragraph (b)(3) to read as 
follows:


Sec.  738.4  Determining whether a license is required.

* * * * *
    (b) * * *
    (3) Sample analysis. After consulting the CCL, I determine my item, 
valued at $10,000, is classified under ECCN 2A000.a. I read that the 
entire entry is controlled for national security, and anti-terrorism 
reasons. Because my item is classified under paragraph .a, and not .b, 
I understand that though nuclear nonproliferation controls apply to a 
portion of the entry, they do not apply to my item. I note that the 
appropriate Country Chart column identifiers are NS Column 2 and AT 
Column 1. Turning to the Country Chart, I locate my specific 
destination, Chad, and see that an ``X'' appears in the NS Column 2 
cell for Chad, but not in the AT Column 1 cell. I understand that a 
license is required, unless my transaction qualifies for a License 
Exception. From the License Exception LVS value listed in the entry, I 
know immediately that my proposed transaction exceeds the value 
limitation associated with LVS. Noting that License Exception GBS is 
``Yes'' for this entry, I turn to part 740 of the EAR to review the 
provisions related to use of GBS.

0
3. In Supplement No. 1 to Part 738 revise the entry for India to read 
as follows:

[[Page 38021]]



                                                  Supplement No. 1 to Part 738--Commerce Country Chart
                                                                  [Reason for control]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Chemical and       Nuclear        National     Missile    Regional     Firearms   Crime control      Anti-
                                            biological   nonproliferation    security      tech      stability   convention ---------------   terrorism
                                             weapons    --------------------------------------------------------------------               -------------
                Countries                ---------------                                                                      CC   CC   CC
                                           CB   CB   CB    NP 1     NP 2    NS 1   NS 2    MT 1     RS 1   RS 2     FC 1      1    2    3    AT 1   AT 2
                                           1    2    3
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
India \7\...............................   X   ...  ...     X     .......    X    .....      X       X    .....  ..........  ...  ...  ...  .....  .....
 
                                                                      * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * *
\7\ Note that a license is still required for items controlled under ECCNs 6A003.b.4.b and 9A515.e for RS column 2 reasons when destined to India.

* * * * *

PART 740--LICENSE EXCEPTIONS

0
4. The authority citation for part 740 continues to read as follows:

    Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; 22 
U.S.C. 7201 et seq.; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 
228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of 
August 15, 2017, 82 FR 39005 (August 16, 2017).

0
5. In Supplement No. 1 to part 740, in Country Group A, revise the 
entry for ``India'' to read as follows:

                                                      Supplement No. 1 to Part 740--Country Groups
                                                                     Country Group A
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               [A:1] Wassenaar    [A:2] Missile                       [A:4] Nuclear
                   Country                      participating      technology      [A:3] Australia   suppliers group        [A:5]             [A:6]
                                                 states \1\      control regime         group              \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
India.......................................                X                 X                 X   ................                X   ................
 
                                                                      * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Country Group A:1 is a list of the Wassenaar Arrangement Participating States, except for Malta, Russia and Ukraine.
\2\ Country Group A:4 is a list of the Nuclear Suppliers Group countries, except for the People's Republic of China (PRC).

* * * * *

PART 743--SPECIAL REPORTING AND NOTIFICATION

0
6. The authority citation for part 743 continues to read as follows:

    Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; E.O. 
13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13637, 78 FR 
16129, 3 CFR, 2014 Comp., p. 223; 78 FR 16129; Notice of August 15, 
2017, 82 FR 39005 (August 16, 2017).

Supplement No. 1 to Part 743 [Amended]

0
7. Supplement No. 1 to part 743--Wassenaar Arrangement Participating 
States is amended by adding ``India'' in alphabetical order after 
``Hungary''.

PART 758--EXPORT CLEARANCE REQUIREMENTS

0
8. The authority citation for part 758 continues to read as follows:

    Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; E.O. 
13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 15, 
2017, 82 FR 39005 (August 16, 2017).


Sec.  758.1   [Amended]

0
9. Section 758.1 is amended by removing paragraph (b)(9).

PART 772--DEFINITIONS OF TERMS

0
10. The authority citation for part 772 continues to read as follows:

    Authority: 50 U.S.C. 4601 et seq.; 50 U.S.C. 1701 et seq.; E.O. 
13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 15, 
2017, 82 FR 39005 (August 16, 2017).


Sec.  772.1  [Amended]

0
11. Amend the definition of Australia Group in Sec.  772.1 by adding 
``India'', in alphabetical order, after ``Iceland,''.

    Dated: July 31, 2018.
Richard E. Ashooh,
Assistant Secretary for Export Administration.
[FR Doc. 2018-16691 Filed 8-2-18; 8:45 am]
 BILLING CODE 3510-33-P


