[Code of Federal Regulations]

[Title 31, Volume 3]

[Revised as of July 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 31CFR500.206]



[Page 13-14]

 

                  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 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



[[Page 14]]



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]