[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR500.206]

[Page 493-494]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
 CHAPTER V--OFFICE OF FOREIGN ASSETS CONTROL, DEPARTMENT OF THE TREASURY
 
PART 500--FOREIGN ASSETS CONTROL REGULATIONS--Table of Contents
 
                         Subpart B--Prohibitions
 
Sec. 500.206  Exemption of information and informational materials.

    (a) The importation from any country and the exportation to any 
country of information or informational materials as defined in 
Sec. 500.332, whether commercial or otherwise, regardless of format or 
medium of transmission, are exempt from the prohibitions and regulations 
of this part.
    (b) All transactions of common carriers incident to the importation 
or exportation of information or informational materials, including 
mail, between the United States and any foreign country designated under 
Sec. 500.201, are exempt from the prohibitions and regulations of this 
part.
    (c) This section does not authorize transactions related to 
information or informational materials not fully created and in 
existence at the date of the transaction, or to the substantive or 
artistic alteration or enhancement of

[[Page 494]]

information or informational materials, or to the provision of marketing 
and business consulting services by a person subject to the jurisdiction 
of the United States. Such prohibited transactions include, without 
limitation, payment of advances for information or informational 
materials not yet created and completed, provision of services to 
market, produce or co-produce, create or assist in the creation of 
information or informational materials, and payment or royalties to a 
designated national with respect to income received for enhancements or 
alterations made by persons subject to the jurisdiction of the United 
States to information or informational materials imported from a 
designated national.
    (d) This section does not authorize transactions incident to the 
exportation of restricted technical data as defined in section 799 of 
the Export Administration Regulations, 15 CFR parts 768-799, or to the 
exportation of goods for use in the transmission of any data. The 
exportation of such goods to designated foreign countries is prohibited, 
as provided in Sec. 500.201 of this part and Sec. 785.1 of the Export 
Administration Regulations.

    Example #1: A U.S. publisher ships 500 copies of a book to Vietnam 
directly from San Francisco aboard a chartered aircraft, and receives 
payment by means of a letter of credit issued by a Vietnamese bank and 
confirmed by an American bank. These are permissible transactions under 
this section.
    Example #2: A Vietnamese party exports a single master copy of a 
Vietnamese motion picture to a U.S. party and licenses the U.S. party to 
duplicate, distribute, show and exploit in the United States the 
Vietnamese film in any medium, including home video distribution, for 
five years, with the Vietnamese party receiving 40% of the net income. 
All transactions relating to the activities described in this example 
are authorized under this section or Sec. 500.550.
    Example #3: A U.S. recording company proposes to contract with a 
Vietnamese musician to create certain musical compositions, and to 
advance royalties of $10,000 to the musician. The music written in 
Vietnam is to be recorded in a studio that the recording company owns in 
the Bahamas. These are all prohibited transactions. The U.S. party is 
prohibited under Sec. 500.201 from contracting for the Vietnamese 
musician's services, from transferring $10,000 to Vietnam to pay for 
those services, and from providing the Vietnamese with production 
services through the use of its studio in the Bahamas. No informational 
materials are in being at the time of these proposed transactions. 
However, the U.S. recording company may contract to purchase and import 
preexisting recordings by the Vietnamese musician, or to copy the 
recordings in the United States and pay negotiated royalties to Vietnam 
under this section or Sec. 500.550.
    Example #4: A Vietnamese party enters into a subpublication 
agreement licensing a U.S. party to print and publish copies of a 
musical composition and to sub-license rights of public performance, 
adaptation, and arrangement of the musical composition, with payment to 
be a percentage of income received. All transactions related to the 
activities described in this example are authorized under this section 
and Sec. 500.550, except for adaption and arrangement, which constitute 
artistic enhancement of the Vietnamese composition. Payment to the 
Vietnamese party may not reflect income received as a result of these 
enhancements.

[54 FR 5231, Feb. 2, 1989, as amended at 60 FR 8934, Feb. 16, 1995]