SUPPLEMENTARY INFORMATION:

Background

The Government Accounting Office (GAO) Report entitled: “Export Controls: Regulatory Change Needed to Comply with Missile Technology Licensing Requirements” (GA-01-530), recommended that the Department of Commerce amend the Export Administration Regulations (EAR) to require a license for the export of dual-use items controlled pursuant to the Missile Technology Control Regime (MTCR) to Canada. The GAO based its recommendation on a provision in the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 1991, which 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 NDAA requirements in 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 Department of Commerce did not revise the EAR's existing license exemption for exports to Canada to require licenses for MT-controlled items 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 60 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 February 19, 2002. 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.