Revisions and Clarification of Export and Reexport Controls for the People's Republic of China (PRC); New Authorization Validated End-User, 38313-38321 [E6-10504]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security
• Industry and Security Bureau

[Federal Register Volume 71, Number 129 (Thursday, July 6, 2006)]
[Proposed Rules]
[Pages 38313-38321]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-10504]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 740, 742, 744 and 748

[Docket No. 060622180-6180-01]
RIN 0694-AD75


Revisions and Clarification of Export and Reexport Controls for 
the People's Republic of China (PRC); New Authorization Validated End-
User

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Proposed rule.

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SUMMARY: It is the policy of the United States Government to prevent 
exports that would make a material contribution to the military 
capability of the People's Republic of China (PRC), while facilitating 
U.S. exports to legitimate civil end-users in the PRC. Consistent with 
this policy, the Bureau of Industry and Security (BIS) proposes to 
amend the Export Administration Regulations (EAR) by revising and 
clarifying United States licensing requirements and licensing policy on 
exports and reexports of goods and technology to the PRC.
    The proposed amendments include a revision to the licensing review 
policy for items controlled on the Commerce Control List (CCL) for 
reasons of national security, including a new control based on 
knowledge of a military end-use on exports to the PRC of certain CCL 
items that otherwise do not require a license to the PRC. The items 
subject to this license requirement will be set forth in a list. This 
rule further proposes to revise the licensing review policy for items 
controlled for reasons of chemical and biological proliferation, 
nuclear nonproliferation, and missile technology for export to the PRC, 
requiring that applications involving such items be reviewed in 
conjunction with the revised national security licensing policy.
    This rule proposes the creation of a new authorization for 
validated end-users in certain destinations, including the PRC, to whom 
certain, specified items may be exported or reexported. Such validated 
end-users would be placed on a list in the EAR after review

[[Page 38314]]

and approval by the United States Government.
    Finally, this rule proposes to require exporters to obtain an End-
User Certificate, issued by the PRC Ministry of Commerce, for all items 
that both require a license to the PRC for any reason and exceed a 
total value of $5,000. The current PRC End-Use Certificate applies only 
to items controlled for national security reasons. This rule also 
proposes to eliminate the current requirement that exporters submit PRC 
End-User Certificates to BIS with their license applications but 
provides that they must retain them for five years.

DATES: Comments must be received by November 3, 2006.

ADDRESSES: Written comments on this rule may be sent to the Federal 
eRulemaking Portal: https://www.regulations.gov, or by e-mail to 
publiccomments@bis.doc.gov. . Include RIN 0694-AD75 in the subject line 
of the message. Comments may be submitted by mail or hand delivery to 
Sheila Quarterman, Office of Exporter Services, Regulatory Policy 
Division, Bureau of Industry and Security, Department of Commerce, 14th 
St. & Pennsylvania Avenue, NW., Room 2705, Washington, D.C. 20230, 
ATTN: RIN 0694-AD75; or by fax to (202) 482-3355.
    Send comments regarding the collection of information to David 
Rostker, Office of Management and Budget (OMB), by e-mail to David--
Rostker@omb.eop.gov, or by fax to (202) 395-7285; and to the Regulatory 
Policy Division, Bureau of Industry and Security, Department of 
Commerce, P.O. Box 273, Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT: Bernard Kritzer, Director, Office of 
National Security and Technology Transfer Controls, Bureau of Industry 
and Security, Department of Commerce, P.O. Box 273, Washington, DC 
20044; telephone: (202) 482-0092, or e-mail: bkritzer@bis.doc.gov.

SUPPLEMENTARY INFORMATION

Background

    This rule proposes revisions and clarifications to United States 
policy on exports to the People's Republic of China (PRC) of goods and 
technologies controlled for national security and foreign policy 
reasons. As the PRC has increased its participation in the global 
economy, bilateral trade between the PRC and the United States has 
grown rapidly, and the PRC has emerged as a major market for U.S. 
exports. In addition, as the PRC also increasingly has allowed foreign 
investment, many U.S. companies have established significant business 
operations there. This greatly expanded economic relationship is 
beneficial for both nations. The United States and China share an 
interest in expanding free and fair trade, which has increased the 
prosperity of both the American and Chinese people. At the same time, 
the United States has a long standing policy of not permitting exports 
that would make a material contribution to the PRC's military 
capability. Thus, the United States seeks to facilitate trade for 
confirmed civil end-uses and end-users in the PRC, while preventing 
trade that would serve military end-uses.
    In 2005, U.S. companies exported approximately $41 billion worth of 
items to the PRC. During the same period, approximately $2.4 billion 
worth of exports were licensed for export to the PRC, while $12.5 
million worth of exports were denied. In order to strengthen U.S. 
Government confidence that these U.S. exports conform to U.S. policy 
and to determine the bona fides of potential and actual end-users, the 
U.S. Government conducts end-use visits, consisting of Pre-License 
Checks (PLCs) and Post-Shipment Verifications (PSVs). In April 2004, 
the Vice Minister of Commerce of the PRC and the U.S. Under Secretary 
of Commerce for Industry and Security exchanged letters transmitting an 
understanding on strengthened procedures for conducting such end-use 
visits. This end-use visit understanding has facilitated exports of 
items on the Commerce Control List (CCL) in Supplement No. 1 to Part 
774 of the Export Administration Regulations (EAR) by providing greater 
assurance that U.S. exports of controlled dual-use items are being used 
by their intended recipients for their intended purposes.
    This rule proposes certain revisions and clarifications to 
licensing requirements and policies with regard to the PRC to more 
precisely reflect U.S. export control policy.

Revision of Licensing Review Policy and License Requirements

    To strengthen U.S. efforts to prevent U.S. exports to the PRC that 
would make a material contribution to the PRC's military capabilities, 
this rule proposes revisions to the licensing review policy for items 
controlled on the CCL for reasons of national security (i.e., 
controlled pursuant to the Wassenaar Arrangement), set forth in section 
742.4(b)(7) of the EAR. Specifically, this rule amends section 
742.4(b)(7) to reaffirm that the overall policy of the United States 
for exports to the PRC of these items is to approve exports for civil 
applications but generally to deny exports that will contribute to the 
advancement of Chinese military capabilities.
    Consistent with this revised policy and U.S. commitments as a 
Participating State in the Wassenaar Arrangement regarding review of 
items not on that regime's dual use list that are destined for military 
end-use in a country subject to an arms embargo, this rule proposes to 
implement a new control on exports to the PRC of certain CCL items that 
otherwise do not require a license to the PRC when the exporter has 
knowledge, as defined in section 772.1 of the EAR, that such items are 
destined for military end-use in the PRC or is informed that such items 
are destined for such an end-use. The additional items that would be 
subject to this military end-use restriction are based on careful 
interagency review of items listed on the CCL that currently do not 
require a license for export to the PRC but have the potential to 
advance the military capabilities of the PRC. For purposes of serving 
this revised policy and U.S. commitments as a Participating State in 
the Wassenaar Arrangement, this rule proposes to define ``military end-
use'' as: incorporation into, or use for the production , design, 
development, maintenance, operation, installation, or deployment, 
repair, overhaul, or refurbishing of items (1) described on the U.S. 
Munitions List (USML) (22 CFR Part 121, International Traffic in Arms 
Regulations); (2) described on the Munitions List (IML) (as set out on 
the Wassenaar Arrangement Web site at https://www.wassenaar.org); or (3) 
listed under Export Control Classification Numbers (ECCNs) ending in 
``A018'' on the CCL in Supplement No. 1 to Part 774 of the EAR. This 
new control would be set forth in new section 744.21 of the EAR.
    Applications to export, reexport, or transfer items controlled 
pursuant to proposed section 744.21 would be reviewed on a case-by-case 
basis to determine whether the export, reexport, or transfer would make 
a material contribution to the military capabilities of the PRC and 
would result in advancing the country's military activities contrary to 
the national security interests of the United States. Other end-use 
controls in part 744 of the EAR will continue to apply. In addition, 
BIS proposes to also review license applications for items controlled 
for chemical and biological proliferation, nuclear nonproliferation and 
missile technology under sections 742.2, 742.3 and 742.5, respectively, 
of the EAR, in accordance with the licensing policies in both paragraph 
(b) of the particular

[[Page 38315]]

proliferation section and section 742.4(b)(7) of the EAR when those 
items are destined to the PRC.
    Items primarily affected by the revisions discussed in this section 
are items controlled for anti-terrorism reasons under the EAR. The 
specific items that are subject to the military end-use license 
requirement will be set forth, by ECCN, including specific parameters, 
in a list in Supplement No. 2 to Part 744 of the EAR.
    See sections 744.6 (Restrictions on certain activities of U.S. 
persons), 744.21 (Restrictions on Certain Military End-uses in the 
People's Republic of China (PRC)), and Supplement No. 2 to Part 744 
(Supplement No. 2 to Part 744--List of Items Subject to the Military 
End-Use License Requirement of Section 744.21) of the EAR.

Revision of End-User Certificate Requirements

    To strengthen implementation of the April 2004 end-use visit 
understanding between the Vice Minister of Commerce of the PRC and the 
U.S. Under Secretary of Commerce for Industry and Security, this rule 
proposes that the requirement for exporters to obtain PRC End-User 
Certificates from the Ministry of Commerce of the PRC be expanded to 
apply to all exports of controlled goods and technologies over a 
specific value threshold (and not merely to those exports controlled 
for national security reasons, as currently set forth in section 748.10 
of the EAR). Specifically, exporters would be required to obtain an 
End-User Certificate, issued by the PRC Ministry of Commerce, for all 
items that require a license to the PRC for any reason and exceed a 
total value of $5,000 per single ECCN entry. Consistent with the 
existing Regulations, BIS will continue to require End-User 
Certificates for all computer exports to the PRC that require license 
applications, regardless of the dollar value of the export. BIS 
anticipates that this expansion of the End-Use Certificate requirement 
will facilitate BIS's ability to conduct end-use checks on exports or 
reexports of controlled goods and technologies to the PRC, consistent 
with the existing end-use visit understanding with the Government of 
the PRC. Facilitation of end-use checks should facilitate increased 
U.S. exports to the PRC. This revised requirement would be set forth in 
revised section 748.10 of the EAR.
    To minimize the impact that this expanded support documentation 
requirement will have on exporters, this rule also proposes to 
eliminate the requirement that exporters submit PRC End-User 
Certificates to BIS as required support documentation provided with the 
license application. Instead, this rule would require exporters to 
include the serial number of the PRC End-User Certificate in an 
appropriate field of the license application, and to retain the PRC 
End-User Certificate in accordance with the recordkeeping provisions of 
the EAR. See section 762.3 (Records exempt from recordkeeping 
requirements) of the EAR. These changes would be set forth in sections 
748.9 (Support Documents for License Applications), 748.10 (Import and 
End-User Certificates), and 748.12 (Special Provisions for Support 
Documents) of the EAR.

New Authorization Validated End-User (VEU)

    To facilitate legitimate exports to civilian end-users, BIS 
proposes to establish a new authorization for validated end-users in 
section 748.15 of the EAR. This proposed authorization would allow the 
export, reexport, and transfer of eligible items to specified end-users 
in an eligible destination, including the PRC. These validated end-
users would be those who meet a number of criteria, including a 
demonstrated record of engaging only in civil end-use activities and 
not contributing to the proliferation of weapons of mass destruction or 
otherwise engaged in activity contrary to U.S. national security or 
foreign policy interests.
    In conjunction with other relevant agencies, BIS proposes to 
evaluate prospective validated end-users on the basis of a range of 
specific factors, which include the party's record of exclusive 
engagement in civil end-use activities; the party's compliance with 
U.S. export controls; the party's capability to comply with the 
requirements for VEU; the party's agreement to on-site compliance 
reviews by representatives of the United States Government; and the 
party's relationships with U.S and foreign companies. In addition, when 
evaluating the eligibility of an end-user, agencies would consider the 
status of export controls in the eligible destination and the support 
and adherence to multilateral export control regimes of the government 
of the eligible destination. The proposed rule states that requests to 
be listed as a validated end-user should be submitted in the form of an 
advisory opinion request as set forth in new section 748.15(a)(2) 
(Eligible end-users) of the EAR. In addition, requests would have to 
include a list of items identified by ECCN that would be exported, 
reexported or transferred to an eligible end-user. Those items would 
have to be specified to the extent of the applicable subparagraph of 
the ECCN entry. The request also should include a description of how 
each item would be used by the eligible end-user in an eligible 
destination. Such requests would be accepted from exporters, 
reexporters and end-users. A list of validated end-users, respective 
eligible items, and eligible destinations would appear in proposed 
Supplement No. 7 to Part 748 (Supplement No. 7 to Part 748--
Authorization Validated End-User (VEU): List of Validated End-Users, 
Respective Eligible Items and Eligible Destinations) of the EAR.
    The proposed rule also provides, as set forth in proposed section 
748.15(c) (Item restrictions), that some items would not be eligible 
for export, reexport, or transfer under this authorization. Ineligible 
items are those restricted by statute.
    Finally, under new section 748.15, exporters, reexporters and end-
users who use authorization VEU would be required to comply with 
recordkeeping and reporting requirements, as described in sections 
748.15(e) (Certification and recordkeeping) and (f) (Reporting and 
auditing requirements) of the EAR. As required in proposed section 
748.15(e), prior to the initial export or reexport under authorization 
VEU, exporters or reexporters would be required to receive and retain 
certifications from eligible end-users that state that they are 
informed of and will abide by all VEU end-use restrictions; they have 
procedures in place to ensure compliance with the terms and conditions 
of VEU; they will not use items obtained under VEU in any of the 
prohibited activities described in part 744 of the EAR; and they agree 
to allow on-site visits by U.S. Government officials to verify their 
compliance with the conditions of VEU. Validated end-users found to be 
not in compliance with the requirements of VEU as set forth in section 
748.15 will be subject to removal from the list of validated end-users 
and other action, as appropriate.
    In addition, as described in proposed section 748.15(f)(1), 
exporters and reexporters who use authorization VEU would be required 
to submit annual reports to BIS. These reports must include specific 
information regarding the export or reexport of eligible items to each 
validated end-user. Exporters, reexporters, and end-users who avail 
themselves of VEU also would be audited on a routine basis, as 
described in proposed section 748.15(f)(2) (Audits). Upon request by 
BIS, exporters, reexporters, and validated end-users would be required 
to allow

[[Page 38316]]

inspection of records or on-site compliance review. For audit purposes, 
this rule would require records and information identified in proposed 
section 748.15 to be retained in accordance with the recordkeeping 
requirements set forth in part 762 of the EAR.
    Although the Export Administration Act expired on August 20, 2001, 
the President, through Executive Order 13222 of August 17, 2001 (3 CFR, 
2001 Comp., p. 783 (2002)), as extended by the Notice of August 2, 
2005, 70 FR 45273 (August 5, 2005), has continued the Export 
Administration Regulations in effect under the International Emergency 
Economic Powers Act. BIS proposes to amend the EAR in this rule under 
the provisions of the EAA as continued in effect under IEEPA and 
Executive Order 13222.

Expansion of Foreign Policy-Based Controls

[The following language will apply at the point the rule passes the 
proposed stage: This action is taken after consultation with the 
Secretary of State. This rule imposes new export controls for foreign 
policy reasons. As required by section 6 of the Export Administration 
Act of 1979, as amended (the Act), a report on the imposition of these 
controls was delivered to the Congress on [INSERT DATE OF DELIVERY TO 
THE CONGRESS.]]. Although the Act expired on August 20, 2001, Executive 
Order 1322 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as 
extended by the Notice of August 2, 2005, 70 FR 45273 (August 5, 2005), 
has continued the Export Administration Regulations in effect under the 
International Emergency Economic Powers Act.]

Rulemaking Requirements

    1. This proposed rule has been determined to be not significant for 
purposes of E.O. 12866.
    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 Office of Management and Budget (OMB) Control Number. This 
proposed rule contains collections of information subject to the 
requirements of the PRA. These collections have been approved by OMB 
under Control Numbers 0694-0088 (Multi-Purpose Application), which 
carries a burden hour estimate of 58 minutes to prepare and submit form 
BIS-748, and 0694-0093, ``Import Certificates and End-User 
Certificates,'' which carries a burden of 15 minutes per submission. 
This proposed rule also contains a proposed revision to the existing 
collection under Control Number 0694-0088 for recordkeeping, reporting 
and auditing requirements, which would be submitted in connection with 
proposed authorization Validated End-User and would carry an estimated 
burden of 30 minutes per submission. An amendment to the existing 
collection under Control Number 0694-0088 will be submitted to OMB for 
approval. Public comment will be sought regarding the burden of the 
collection of information associated with preparation and submission of 
these proposed requirements. This proposed rule is not expected to 
result in a significant increase in license applications or other 
documentation submitted to BIS. Send comments regarding this burden 
estimate or any other aspect of this collection of information, 
including suggestions for reducing the burden, to David Rostker, Office 
of Management and Budget (OMB), and to the Regulatory Policy Division, 
Bureau of Industry and Security, Department of Commerce, as indicated 
in the ADDRESSES section of this rule.
    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 are inapplicable because this regulation involves 
a military or foreign affairs function of the United States (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 
rule. Because a notice of proposed rulemaking and an opportunity for 
public comment are not required to be given for this rule by 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. However, in 
order to obtain the benefit of a variety of viewpoints before 
publishing any final rule, BIS is issuing this proposed rule with a 
request for comments. The period for submission of comments will close 
on November 3, 2006. In developing a final rule, BIS will consider all 
comments on all aspects of this proposed rule that are received before 
the close of the comment period. Comments received after the end of the 
comment period will be considered if possible, but their consideration 
cannot be assured. BIS 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. BIS 
will return such comments and materials to the persons submitting the 
comments and will not consider them in the development of the final 
rule. All public comments on this proposed rule must be in writing 
(including fax or e-mail) and will be a matter of public record, 
available for public inspection and copying at the Federal eRulemaking 
Portal at https://www.regulations.gov and on the BIS Freedom of 
Information Act (FOIA) web site at https://www.bis.doc..gov/foia. BIS 
does not maintain a separate public inspection facility. If you have 
technical difficulties accessing this web site, please call BIS's 
Office of Administration at (202) 482-0500 for assistance.

List of Subjects

15 CFR Parts 740 and 748

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

15 CFR Part 742

    Exports, Terrorism.

15 CFR Part 744

    Exports, Foreign trade, Reporting and recordkeeping requirements.
    Accordingly, parts 740, 742, 744 and 748 of the Export 
Administration Regulations (15 CFR parts 730-799) are proposed to be 
amended as follows:

PART 742--[AMENDED]

    1. The authority citation for 15 CFR part 742 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.; 
18 U.S.C. 2510 et seq.; 22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; 
Sec. 901-911, Pub. L. 106-387; Sec. 221, Pub. L. 107-56; Sec 1503, 
Pub. L. 108-11,117 Stat. 559; E.O. 12058, 43 FR 20947, 3 CFR, 1978 
Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; 
E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 13026, 61 
FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 
2001 Comp., p. 783; Presidential Determination 2003-23 of May 7, 
2003, 68 FR 26459, May 16, 2003; Notice of August 2, 2005, 70 FR 
45273 (August 5, 2005); Notice of October 25, 2005, 70 FR 62027 
(October 27, 2005).

    2. Amend Sec.  742.2 by adding paragraph (b)(4) to read as follows:


Sec.  742.2  Proliferation of Chemical and Biological Weapons.

* * * * *

[[Page 38317]]

    (b) * * *
    (4) BIS will review license applications for items described in 
paragraph (a) of this section in accordance with the licensing policies 
described in paragraph (b) of this section and the licensing policies 
in both paragraph (b) of this section and Sec.  742.4(b)(7) when those 
items are destined to the People's Republic of China.
* * * * *
    3. Amend Sec.  742.3 by adding paragraph (b)(4) to read as follows:


Sec.  742.3  Nuclear nonproliferation.

* * * * *
    (b) * * *
    (4) BIS will also review license applications for items described 
in paragraph (a) of this section in accordance with the licensing 
policies described in paragraph (b) of this section and the licensing 
policies in both paragraph (b) of this section and Sec.  742.4(b)(7) 
when those items are destined to the People's Republic of China.
* * * * *
    4. Amend Sec.  742.4 by revising paragraph (b)(7) to read as 
follows:


Sec.  742.4  National Security.

* * * * *
    (b) * * *
    (7) For the People's Republic of China, there is a general policy 
of approval for license applications to export, reexport, or transfer 
items to civil end-uses. There is a presumption of denial for items 
that would make a material contribution to the military capabilities of 
the People's Republic of China. Thus, all license applications for 
exports, reexports, and transfers to the People's Republic of China 
will be reviewed on a case-by-case basis to determine whether the 
export, reexport, or transfer would make a material contribution to the 
military capabilities of the People's Republic of China. In addition, 
license applications may be reviewed under missile technology, nuclear 
nonproliferation, or chemical and biological weapons review policies, 
to determine if the end-user may be involved in proliferation 
activities.
* * * * *
    5. Amend Sec.  742.5 by adding paragraph (b)(4) to read as follows:


Sec.  742.5  Missile Technology.

* * * * *
    (b) * * *
    (4) BIS will also review license applications for items described 
in paragraph (a) of this section in accordance with the licensing 
policies described in paragraph (b) of this section and the licensing 
policies in both paragraph (b) of this section and section 742.4(b)(7) 
of the EAR when those items are destined to the People's Republic of 
China.
* * * * *

PART 744--[AMENDED]

    6. The authority citation for 15 CFR part 744 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. 3201 et seq.; 42 U.S.C. 2139a; Sec. 901-911, Pub. L. 106-
387; Sec. 221, Pub. L. 107-56; E.O. 12058, 43 FR 20947, 3 CFR, 1978 
Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608; 
E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 12947, 60 
FR 5079, 3 CFR, 1995 Comp., p. 356; E.O. 13026, 61 FR 58767, 3 CFR, 
1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p. 
208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13224, 
66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice of August 2, 2005, 70 
FR 45273 (August 5, 2005); Notice of October 25, 2005, 70 FR 62027 
(October 27, 2005).

    7. Amend Sec.  744.6 by revising paragraph (a)(1)(ii) to read as 
follows:


Sec.  744.6  Restrictions on certain activities of U.S. persons.

    (a) * * *
    (1) * * *
    (ii) No U.S. person, as defined in paragraph (c) of this section, 
shall, without a license from BIS, knowingly support an export or 
reexport, or transfer that does not have a license as required by this 
section or by Sec.  744.21. Support means any action, including 
financing, transportation, and freight forwarding, by which a person 
facilitates an export, reexport, or transfer without being the actual 
exporter or reexporter.
* * * * *
    8. Section 744.21 is added to read as follows:


Sec.  744.21  Restrictions on Certain Military End-uses in the People's 
Republic of China (PRC).

    (a) General prohibition. In addition to the license requirements 
for items specified on the Commerce Control List (CCL), you may not 
export, reexport, or transfer any item listed in Supplement No. 2 to 
Part 744 to the PRC without a license or under a license exception 
described in paragraph (c) of this section if, at the time of the 
export, reexport, or transfer, you know, meaning either:
    (1) You have knowledge that the item is intended, entirely or in 
part, for a ``military end-use,'' as defined in paragraph (f) of this 
section, in the PRC; or
    (2) You have been informed by BIS that the item is or may be 
intended, entirely or in part, for a ``military end-use'' in the PRC.
    (b) Additional prohibition on those informed by BIS. BIS may inform 
you either individually by specific notice, through amendment to the 
EAR published in the Federal Register, or through a separate notice 
published in the Federal Register, that a license is required for 
specific exports, reexports, or transfers of any item because there is 
an unacceptable risk of use in or diversion to military end-use 
activities in the PRC. Specific notice will be given only by, or at the 
direction of, the Deputy Assistant Secretary for Export Administration. 
When such notice is provided orally, it will be followed by written 
notice within two working days signed by the Deputy Assistant Secretary 
for Export Administration or the Deputy Assistant Secretary's designee. 
The absence of BIS notification does not excuse the exporter from 
compliance with the license requirements of paragraph (a) of this 
section.
    (c) License Exception. The only License Exception that may apply to 
the prohibitions described in paragraphs (a) and (b) of this section 
are the provisions of License Exception GOV set forth in Sec.  
740.11(b)(2)(i) or (ii) of the EAR.
    (d) License application procedure. When submitting a license 
application pursuant to this section, you must state in the 
``additional information'' section of the BIS-748P ``Multipurpose 
Application'' or its electronic equivalent that ``this application is 
submitted because of the license requirement in Sec.  744.21 of the EAR 
(Restrictions on Certain Military End-uses in the People's Republic of 
China).'' In addition, either in the additional information section of 
the application or in an attachment to the application, you must 
include all known information concerning the military end-use of the 
item(s). If you submit an attachment with your license application, you 
must reference the attachment in the additional information section.
    (e) License review standards. (1) Applications to export, reexport, 
or transfer items described in paragraph (a) of this section will be 
reviewed on a case-by-case basis to determine whether the export, 
reexport, or transfer would make a material contribution to the 
military capabilities of the PRC and would result in advancing the 
country's military activities contrary to the national security 
interests of the United States.
    (2) Applications may be reviewed under missile technology, nuclear

[[Page 38318]]

nonproliferation, or chemical and biological weapons review policies if 
the end-user may be involved in certain proliferation activities.
    (3) Applications for items requiring a license for other reasons 
that are destined to the PRC for a military end-use also will be 
subject to the review policy stated in paragraph (e) of this section.
    (f) In this section, ``military end-use'' means: incorporation 
into, or use for the production, design, development, maintenance, 
operation, installation, or deployment, repair, overhaul, or 
refurbishing of items:
    (1) Described on the U.S. Munitions List (USML) (22 CFR Part 121, 
International Traffic in Arms Regulations);
    (2) Described on the International Munitions List (IML) (as set out 
on the Wassenaar Arrangement Web site at https://www.wassenaar.org); or
    (3) Listed under ECCNs ending in ``A018'' on the Commerce Control 
List (CCL) in Supplement No. 1 to Part 774 of the EAR.


    Note to paragraph (f) of this section: For purposes of this 
section: ``production'' means integration, assembling, inspection, 
or testing; ``development'' means design, and includes testing and 
building of prototypes; ``maintenance'' means performing work to 
bring an item to its original or designed capacity and efficiency 
for its intended purpose, and includes testing, measuring, 
adjusting, inspecting, replacing parts, restoring, calibrating, 
overhauling; ``operation'' means to cause to function as intended; 
``installation'' means to make ready for use, and includes 
connecting, integrating, incorporating, loading software, and 
testing; ``deployment'' means placing in battle formation or 
appropriate strategic position.


    9. Supplement No. 2 to Part 744 is added to read as follows:

Supplement No. 2 to Part 744--List of Items Subject to the Military 
End-Use License Requirment of Sec.  744.21

    The following items are subject to the military end-use license 
requirement in Sec.  744.21.

(1) Category 1--Materials, Chemicals, Microorganisms, and Toxins

    (i) 1A290 Depleted uranium (any uranium containing less than 
0.711% of the isotope U-235) in shipments of more than 1,000 
kilograms in the form of shielding contained in X-ray units, 
radiographic exposure or teletherapy devices, radioactive 
thermoelectric generators, or packaging for the transportation of 
radioactive materials.
    (ii) 1B999 Equipment controlled by 1B999.e specially designed 
for the production of structural composites, fibers, prepregs and 
preforms controlled in Category 1, n.e.s.
    (iii) 1C990 Fibrous and filamentary materials, not controlled by 
1C010 or 1C210, for use in ``composite'' structures and with a 
specific modulus of 3.18 x 106m or greater and a specific 
tensile strength of 7.62 x 104m or greater.
    (iv) 1C995 Mixtures not controlled by 1C350, 1C355 or 1C395 that 
contain chemicals controlled by 1C350 or 1C355 and medical, 
analytical, diagnostic, and food testing kits not controlled by 
1C350 or 1C395 that contain chemicals controlled by 1C350.d, as 
follows (see List of Items Controlled), except 1C995.c ``Medical, 
analytical, diagnostic, and food testing kits.''
    (v) 1C996 Hydraulic fluids containing synthetic hydrocarbon 
oils, having all the following characteristics (see List of Items 
Controlled).
    (vi) 1D999 Specific software controlled by 1D999.b for equipment 
controlled by 1B999.e specially designed for the production of 
structural composites, fibers, prepregs and preforms controlled in 
Category 1, n.e.s.
    (vii) 1D993 ``Software'' specifically designed for the 
``development'', ``production'', or ``use'' of equipment or 
materials controlled by 1C210.b, or 1C990.
    (viii) 1E994 ``Technology'' for the ``development'', 
``production'', or ``use'' of fibrous and filamentary materials 
controlled by 1C990.

(2) Category 2--Materials Processing

    (i) 2A991 Bearings and bearing systems not controlled by 2A001.
    (ii) 2B991 Limited to machine tools controlled under 2B991 
having ``positioning accuracies'', with all compensations available, 
better than 0.010 mm along any linear axis; and machine tools having 
the characteristic of one or more contouring ``tilting spindles'' 
controlled by 2B991.d.1.a.
    (iii) 2B992 Non-''numerically controlled'' machine tools for 
generating optical quality surfaces, and specially designed 
components therefor.
    (iv) 2B993 Limited to gear making and/or finishing machinery not 
controlled by 2B003 capable of producing gears to a quality level of 
better than AGMA 12.
    (v) 2B996 Dimensional inspection or measuring systems or 
equipment not controlled by 2B006.

(3) Category 3--Electronics Design, Development and Production

    (i) 3A292 Oscilloscopes and transient recorders other than those 
controlled by 3A002.a.5, and specially designed components therefor.
    (ii) 3A999 Limited to items controlled by 3A999.c.
    (iii) 3B991 Equipment not controlled by 3B001 for the 
manufacture of electronic components and materials, and specially 
designed components and accessories therefor.
    (iv) 3B992 Equipment not controlled by 3B002 for the inspection 
or testing of electronic components and materials, and specially 
designed components and accessories therefor.
    (v) 3D991 ``Software'' specially designed for the 
``development'', ``production'', or ``use'' of electronic devices or 
components controlled by 3A991, general purpose electronic equipment 
controlled by 3A992, or manufacturing and test equipment controlled 
by 3B991 and 3B992.
    (vi) 3E292 ``Technology'' according to the General Technology 
Note for the ``development', ``production'', or ``use'' of equipment 
controlled by 3A292.
    (vii) 3E991 ``Technology'' for the ``development'', 
``production'', or ``use'' of electronic devices or components 
controlled by 3A991, general purpose electronic equipment controlled 
by 3A992, or manufacturing and test equipment controlled by 3B991 or 
3B992.

(4) Category 4--Computers

    (i) 4A994 Limited to computers not controlled by 4A003, with an 
Adjusted Peak Performance (``APP'') exceeding 0.1 Weighted TeraFLOPS 
( WT).
    (ii) 4D993 ``Program'' proof and validation ``software'', 
``software'' allowing the automatic generation of ``source codes'', 
and operating system ``software'' not controlled by 4D003 that are 
specially designed for real time processing equipment.
    (iii) 4D994 ``Software'' specially designed or modified for the 
``development'', ``production'' or ``use'' of equipment controlled 
by 4A101, 4A994 with an Adjusted Peak Performance (``APP'') 
exceeding 0.1 Weighted TeraFLOPS (WT), 4B994 and materials 
controlled by 4C994.
    (iv) 4E992 ``Technology'' for the ``development'', 
``production'', or ``use'' of equipment controlled by 4A994, as 
described in this Supplement No. 2 to Part 744, and 4B994, materials 
controlled by 4C994, or ``software'' controlled by 4D993 or 4D994.

(5) Category 5--(Part 1) Telecommunications

    (i) 5A991 Limited to items controlled by 5A991.a., 5A991.b.5., 
5A991.b.7. and 5A991.f.
    (ii) 5B991 Telecommunications test equipment, n.e.s.
    (iii) 5C991 Preforms of glass or of any other material optimized 
for the manufacture of optical fibers controlled by 5A991.
    (iv) 5D991 ``Software'' specially designed or modified for the 
``development'', ``production'', or ``use'' of equipment controlled 
by 5A991 and 5B991.
    (v) 5E991 ``Technology'' for the ``development'', ``production'' 
or ``use'' of equipment controlled by 5A991 or 5B991, or 
``software'' controlled by 5D991, and other ``technologies'' as 
follows (see List of Items Controlled).

(6) Category 5--(Part 2) Information Security

    (i) 5A992 Equipment not controlled by 5A002, except mass market 
encryption commodities and software described in Sec. Sec.  
742.15(b)(1)(i) and 742.15(b)(2); certain ``short-range wireless'' 
commodities and software described in Sec.  742.15(b)(3)(ii); and 
commodities and software with limited cryptographic functionally 
described in Sec.  742.15(b)(3)(iii).
    (ii) 5D992 ``Information Security'' ``software'' not controlled 
by 5D002, except mass market encryption commodities and software 
described in Sec. Sec.  742.15(b)(1)(i) and 742.15(b)(2); certain 
``short-range wireless'' commodities and software described in Sec.  
742.15(b)(3)(ii); and commodities and

[[Page 38319]]

software with limited cryptographic functionality described in Sec.  
742.15(b)(3)(iii).
    (iii) 5E992 ``Information Security'' ``technology'', not 
controlled by 5E002.

(7) Category 6--Sensors and Lasers

    (i) 6A995 ``Lasers'', not controlled by 6A005 or 6A205.
    (ii) 6C992 Optical sensing fibers not controlled by 6A002.d.3 
which are modified structurally to have a ``beat length'' of less 
than 500 mm (high birefringence) or optical sensor materials not 
described in 6C002.b and having a zinc content of equal to or more 
than 6% by mole fraction.

(8) Category 7--Navigation and Avionics

    (i) 7A994 Other navigation direction finding equipment, airborne 
communication equipment, all aircraft inertial navigation systems 
not controlled under 7A003 or 7A103, and other avionic equipment, 
including parts and components, n.e.s.
    (ii) 7B994 Other equipment for the test, inspection, or 
``production'' of navigation and avionics equipment.
    (iii) 7D994 ``Software'', n.e.s., for the ``development'', 
``production'', or ``use'' of navigation, airborne communication and 
other avionics.
    (iv) 7E994 ``Technology'', n.e.s., for the ``development'', 
``production'', or ``use'' of navigation, airborne communication, 
and other avionics equipment.

(9) Category 8--Marine

    (i) 8A992 Underwater systems or equipment, not controlled by 
8A002, and specially designed parts therefor.
    (ii) 8D992 ``Software'' specially designed or modified for the 
``development'', ``production'' or ``use'' of equipment controlled 
by 8A992.
    (iii) 8E992 ``Technology'' for the ``development'', 
``production'' or ``use'' of equipment controlled by 8A992.

(10) Category 9--Propulsion Systems, Space Vehicles and Related 
Equipment

    (i) 9A991 ``Aircraft'', n.e.s., and gas turbine engines not 
controlled by 9A001 or 9A101 and parts and components, n.e.s.
    (ii) 9B990 Vibration test equipment and specially designed parts 
and components, n.e.s.
    (iii) 9D990 ``Software'', n.e.s., for the ``development'' or 
``production'' of equipment controlled by 9A990 or 9B990.
    (iv) 9D991 ``Software'', for the ``development'' or 
``production'' of equipment controlled by 9A991 or 9B991.
    (v) 9E990 ``Technology'', n.e.s., for the ``development'' or 
``production'' or ``use'' of equipment controlled by 9A990 or 9B990.
    (vi) 9E991 ``Technology'', for the ``development'', 
``production'' or ``use'' of equipment controlled by 9A991 or 9B991.

PART 748--[AMENDED]

    10. The authority citation for 15 CFR part 748 continues to read as 
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 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 2, 2005, 70 FR 
45273 (August 5, 2005).
    11. Section 748.9 is amended:
    a. By revising paragraph (b)(1) introductory text;
    b. By revising paragraph (b)(2) introductory text before the list 
of countries;
    c. By revising paragraphs (b)(2)(i) and (b)(2)(ii); and
    d. By revising paragraph (c)(1).
    The revisions read as follows:


Sec.  748.9  Support Documents for License Applications.

* * * * *
    (b) * * *
    (1) Does your transaction involve items controlled for national 
security reasons?
    Does your transaction involve items destined for the People's 
Republic of China (PRC)?
* * * * *
    (2) Does your transaction involve items controlled for national 
security reasons destined for one of the following countries? (This 
applies only to those overseas destinations specifically listed.) If 
your item is destined for the PRC, does your transaction involve items 
that require a license to the PRC for any reason?
* * * * *
    (i) If yes, your transaction may require an Import or End-User 
Certificate. If your transaction involves items destined for the PRC 
that are controlled to the PRC for any reason, your transaction may 
require a PRC End-User Certificate. Note that if the destination is the 
PRC, a Statement of Ultimate Consignee and Purchaser may be substituted 
for a PRC End-User Certificate when the item to be exported (i.e., 
replacement parts and sub-assemblies) is for servicing previously 
exported items and is valued at $75,000 or less.
    (ii) If no, your transaction may require a Statement by Ultimate 
Consignee and Purchaser. Read the remainder of this section, then 
proceed to Sec.  748.11 of the EAR.
    (c) License Applications Requiring Support Documents. * * *
    (1) License applications supported by an Import or End-User 
Certificate. You may submit your license application upon receipt of a 
facsimile or other legible copy of the Import or End-User Certificate, 
provided that no shipment is made against any license issued based upon 
the Import or End-User Certificate prior to receipt and retention of 
the original statement by the applicant.
* * * * *
    12. Section 748.10 is amended:
    a. By revising the fourth sentence in paragraph (a);
    b. By redesignating paragraph (b)(4) as paragraph (b)(5) and by 
adding a new paragraph (b)(4) and revising newly designated paragraph 
(b)(5);
    c. By revising paragraph (c)(1);
    d. By revising paragraph (c) (3) introductory text; and
    e. By revising paragraph (g).
    The additions and revisions read as follows:


Sec.  748.10  Import and End-User Certificates.

    (a) Scope. * * * This section describes exceptions and 
relationships true for both Import and End-User Certificates, and 
applies only to transactions involving national security controlled 
items destined for one of the countries identified in Sec.  748.9(b)(2) 
of this part, or, in the case of the PRC, for all items that require a 
license to the PRC for any reason.
    (b) * * *
    (4) Your transaction involves an export to the People's Republic of 
China (PRC) of commodities and software classified in a single entry on 
the CCL, the total value of which exceeds $5,000. Note that this $5,000 
threshold does not apply to exports to the PRC of computers, which are 
subject to the provisions of Sec.  748.10(b)(3).
    (i) Your license application may list several separate CCL entries. 
If the total value of entries that require a license to the PRC for any 
reason on the CCL on a license application exceeds $5,000, then a PRC 
End-User Certificate covering all controlled items on your license 
application must be obtained;
    (ii) You may be specifically requested by BIS to obtain an End-User 
Certificate for a transaction valued under $5,000 or for a transaction 
that requires a license to the PRC for reasons in the EAR other than 
those listed on the CCL.
    (5) Your transaction involves a destination other than the PRC and 
your license application involves the export of commodities and 
software classified in a single entry on the CCL, the total value of 
which exceeds $5,000.
    (i) Your license application may list several separate CCL entries. 
If any entry controlled for national security reasons exceeds $5,000, 
then an Import Certificate must be obtained covering all items 
controlled for national security reasons on your license application;
    (ii) If your license application involves a lesser transaction that 
is part of a larger order for items controlled for national security 
reasons in a single ECCN exceeding $5,000, an Import Certificate must 
be obtained.
    (iii) You may be specifically requested by BIS to obtain an Import 
Certificate for a transaction valued under $5,000.
    (c) How to obtain an Import or End-User Certificate. (1) Applicants 
must

[[Page 38320]]

request that the importer (e.g., ultimate consignee or purchaser) 
obtain the Import or End-User Certificate, and that it be issued 
covering only those items that are controlled for national security 
reasons. Note that in the case of the PRC, applicants must request that 
the importer obtain an End-User Certificate for all items on a license 
application that are controlled to the PRC for any reason on the CCL. 
Importers should not be requested, except in the case of the PRC, to 
obtain an Import or End-User Certificate for items that are controlled 
for reasons other than national security. Applicants must obtain 
original Import or End-User Certificates from importers.
* * * * *
    (3) If your transaction requires the support of a PRC End-User 
Certificate, you must ensure that the following information is included 
on the PRC End-User Certificate signed by an official of the Department 
of Scientific and Technological Development and Trade in Technology of 
the PRC Ministry of Commerce (MOFCOM), with MOFCOM's seal affixed to 
it:
* * * * *
    (g) Submission of Import and End-User Certificates. Certificates 
must be retained on file by the applicant in accordance with the 
recordkeeping provisions of part 762 of the EAR, and should not be 
submitted with the license application. For more information on what 
Import and End-user Certificate information must be included in license 
applications, refer to Sec.  748.9(c) of the EAR. In addition, as set 
forth in Sec.  748.12(e), to assist in license reviews, BIS will 
require applicants, on a random basis, to submit specific original 
Import and End-user Certificates.
* * * * *


Sec.  748.12  [Amended]

    13. Section 748.12 is amended by removing and reserving paragraph 
(a).
    14. Supplement No. 4 to Part 748, is amended by revising the entry 
for ``China, People's Republic of'', to read as follows:

Supplement No. 4 to Part 748--Authorities Administering Import 
Certificate/Delivery Verification (IC/DV) and End-Use Certificate 
Systems in Foreign Countries

------------------------------------------------------------------------
           Country              IC/DV authorities    System administered
------------------------------------------------------------------------
 
                              * * * * * * *
China, People's Republic of.  Export Control        PRC End-User
                               Division I            Certificate.
                               Department of S&T
                               No. 2 Dong Chang An
                               Street Beijing
                               Phone: 8610-6519-
                               7366 Fax: 8610-6519-
                               7926.
 
                              * * * * * * *
------------------------------------------------------------------------

    15. Section 748.15 is added to read as follows:


Sec.  748.15  Authorization Validated End-User (VEU).

    Authorization Validated End-User (VEU) permits the export, 
reexport, and transfer to validated end-users of any eligible items 
that will be used in an eligible destination. Validated end-users are 
those who have been approved in advance pursuant to the requirements of 
this section. To be eligible for authorization VEU, exporters, 
reexporters, and potential validated end-users must adhere to the 
conditions and restrictions set forth in paragraphs (a) through (f) of 
this section.
    (a) Eligible end-users. The only end-users to whom eligible items 
may be exported, reexported, or transferred under VEU are those 
validated end-users identified in Supplement No. 7 to Part 748.
    (1) In evaluating an end-user for eligibility under this 
authorization, BIS, in consultation with the Departments of State, 
Energy, and Defense and other agencies, as appropriate, will consider a 
range of information, including such factors as: The party's record of 
exclusive engagement in civil end-use activities; the party's 
compliance with U.S. export controls; the party's capability to comply 
with the requirements of authorization VEU; the party's agreement to 
on-site compliance reviews by representatives of the United States 
Government; and the party's relationships with U.S and foreign 
companies. In addition, when evaluating the eligibility of an end-user, 
agencies will consider the status of export controls and the support 
and adherence to multilateral export control regimes of the government 
of the eligible destination.
    (2) Requests for authorization must be submitted in the form of an 
advisory opinion request, as described in Sec.  748.3(c), and should 
include a list of items, identified by Export Control Classification 
Number (ECCN), that exporters or reexporters intend to export, reexport 
or transfer to an eligible end-user. In addition to the information 
described in Sec.  748.3, the items identified by ECCN should be 
specified to the extent of the applicable subparagraph of the ECCN 
entry. The request also should include a description of how each item 
would be used by the eligible end-user in an eligible destination. 
Requests for authorization will be accepted from exporters, reexporters 
and end-users. Submit the request to:

The Office of Exporter Services, Bureau of Industry and Security, U.S. 
Department of Commerce, 14th Street and Pennsylvania Avenue, NW., Room 
2075, Washington, DC 20230; or to
The Office of Exporter Services, Bureau of Industry and Security, U.S. 
Department of Commerce, P.O. Box 273, Washington, DC 20044.

    Mark the package sent to either address ``Request for Authorization 
Validated End-User''.
    (3) Exports, reexports, or transfers made under authorization VEU 
may only be made to an end-user listed in Supplement No. 7 to Part 748 
if the items will be consigned to and for use by the validated end-
user.
    (b) Eligible destinations. Authorization VEU may be used for the 
following destinations:
    (1) The People's Republic of China.
    (2) [Reserved].
    (c) Item restrictions. (1) Items controlled under the EAR for 
missile technology (MT) and crime control (CC) reasons may not be 
exported or reexported under this authorization.
    (d) End-use restrictions. Items obtained under authorization VEU 
may not be used for any activities described in part 744. Eligible end-
users who obtain items under VEU may only:
    (1) Use such items at the end-user's own facility located in an 
eligible destination or at a facility located in an eligible 
destination over which the end-user demonstrates effective control;
    (2) Consume such items during use; or
    (3) Transfer or reexport such items only as authorized by BIS.

[[Page 38321]]

    (e) Certification and recordkeeping. Prior to the initial export or 
reexport under authorization VEU, exporters or reexporters must receive 
and retain end-use certifications from eligible end-users stating that:
    (1) They are informed of and will abide by all authorization VEU 
end-use restrictions;
    (2) They have procedures in place to ensure compliance with 
authorization VEU destination and end-use restrictions;
    (3) They will not use items obtained under authorization VEU in any 
of the prohibited activities described in part 744 of the EAR; and
    (4) They agree to allow on-site visits by U.S. Government officials 
to verify the end-users' compliance with the conditions of 
authorization VEU.


    Note to paragraph (e) of this section: These certifications must 
be retained by exporters or reexporters in accordance with the 
recordkeeping requirements set forth in part 762 of the EAR.

    (f) Reporting and auditing requirements--(1)(i) Reports. Exporters 
and reexporters who use authorization VEU are required to submit annual 
reports to BIS. These reports must include, for each validated end-user 
to whom the exporter or reexporter exported or reexported eligible 
items:
    (A) The name and address of any validated end-users to whom the 
exporters or reexporters exported or reexported eligible items;
    (B) The eligible destination to which the items were exported or 
reexported;
    (C) The quantity of such items;
    (D) The value of such items; and
    (E) The ECCN(s) of such items.
    (ii) Reports are due by February 15 of each year, and must cover 
the period of January 1 through December 31 of the prior year. Packages 
containing such reports should be marked ``Authorization Validated End-
User Reports.'' Reports should be sent to: Office of Export 
Enforcement, Bureau of Industry and Security, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Room H-4520, 
Washington, DC 20230.
    (2) Audits. Users of authorization VEU will be audited on a routine 
basis. Upon request by BIS, exporters, reexporters, and validated end-
users must allow inspection of records or on-site compliance reviews. 
For audit purposes, records, including information identified in 
paragraphs (e), (f)(1) and the note to paragraph (c) of this section, 
should be retained in accordance with the recordkeeping requirements 
set forth in part 762 of the EAR.
    12. Supplement No. 7 to Part 748 is added to read as follows:

Supplement No. 7 to Part 748--Authorization Validated End-User (VEU): 
List of Validated End-Users, Respective Eligible Items and Eligible 
Destinations

Validated End-Users, Respective Eligible Items and Eligible 
Destinations for Exports and Reexports Under Authorization VEU:

    Certified End-User
    Eligible Items
    Eligible Destination

    Dated: June 29, 2006.
Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
 [FR Doc. E6-10504 Filed 7-5-06; 8:45 am]
BILLING CODE 3510-33-P