Transcript PMA Training - Research and development

Export Controls: Just the Basics –
How to Keep Your Faculty &
Researchers Out of Trouble!
NCURA REGION VI & VII 2011 SPRING
MEETING
APRIL 2011
Export Basics: Terms & Regs
Overview
Presenters:
Strategic Technologies
Adilia Koch
Kay Ellis
What is your responsibility?
How to keep your Faculty out
of Trouble!
Basic Elements of a University
Export Compliance Plan
Export Alphabet Soup
EXPORT REGULATIONS
2. BASIC TERMS
3. SENSITIVE TECHNOLOGIES
1.
ADILIA KOCH
Why do Universities need to comply with the
Export Regulations?
 It’s the law.
 Security around the world changed after 9/11.
 Consequences of non-compliance can result
 negative
publicity, civil or criminal violations
 Violations can range from $250,000 to $1
million per violation or
 Imprisonment
 The export regulations apply to Universities too!
Why does the government control exports?
 The government controls certain technologies that it
considers to be strategically important for:
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National Security Reasons
Nuclear Non-Proliferation Reasons
Missile Technology Controls
Anti-Terrorism
Chemical & Biological Controls
Regional Stability
Crime Control Measures
Anti-boycott Reasons
Universities in the Media
 University of Tennessee Professor Found Guilty on 18
Counts of Export Violations
Satterfield, Jamie. 2008. “Retired UT Prof guilty; case gained national attention.” www.knoxnews.com (accessed on March 22, 2010).
What went wrong?
Project was not awarded as Fundamental Research
•_
Contract contained publication and foreign person restrictions
Statement of Work required use of University:
• Plasma Lab
• Graduate students – unauthorized foreign persons  license or government authority required
Dr. Roth told Air Force he would not have any “Foreign Nationals” work on the
project.
Fundamental Research does not apply when publication or access restrictions
pertain to your research or research results.
Export 101
Terms you
should know
• Export
• Foreign Person
• Technical
Assistance
• Technical Data
Fundamental
Research
Exclusion
• Limits
• Jeopardizing
FRE
Export
Regulations
Sensitive
Technologies
• ITAR
• EAR
• OFAC
• Civil Use
• Military or
Space
Applications
Regulations likely to affect your export are . . .
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The regulations most likely to affect the campus import/export activities are:
 U.S. Department of State
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International Traffic in Arms Regulations (ITAR)

Controls Defense Articles & Defense Services (technical data and know-how) found in the
U.S. Munitions List (USML).
 For example: Category XV - spacecraft systems, science instruments on spacecraft &
associated equipment and software
 U.S. Department of Commerce
 Export Administration Regulations (EAR)

Controls items on the Commerce Control List (CCL) having a commercial or dual-use
(military/strategic and commercial) application
 For example: high performance computers and encryption software
 U.S. Department of Energy & Nuclear Regulatory Commission
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Nuclear related controls
 Treasury Department
 Office of Foreign Assets Control (OFAC)
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Trade Sanctions, Embargoes, Restrictions on Transfers to Certain End-Users, Terrorism,
Anti-Narcotics
Export . . . When does it occur?
 An export is the transfer of export controlled information,
commodities or software either inside the U.S. (deemed
export) or outside the U.S. States.
 Exports can occur in many ways:
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Email
Mail
Agent or broker acting on your behalf – i.e., a Freight Forwarder
Face-to-Face
Website
Visual inspection that reveals technical data
Conference
Hand-carried items – laptop, memory devices
Foreign Person is defined as . . .
Foreign Person
Foreign Entity
• Any person not a U.S.
citizen or legal permanent
resident (green card
holder)
• Any partnership or group
not incorporated or
organized to do business
in the U.S.
• Any person not granted
political asylum
• Any foreign government
• Any U.S. Person employed
or representing a foreign
entity
Technical Assistance . . . “Know-how” . . .
Defense Service . . Training
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 Technical Assistance (defense service) means the
furnishing of assistance (including training) to
Foreign Persons . . . in the United States (deemed export) . . . or
abroad (technology transfer)
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. . . about the design, development, engineering, manufacture,
production, assembly, testing, repair, maintenance, modification,
operation, demilitarization, destruction, processing, or use of an
export controlled item -- whether EAR or ITAR controlled.
Technical Data . . . Technology Transfer
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 Technical Data or Technology is information required for
the design, development, production, manufacture,
assembly, operation, repair, testing, maintenance or
modification of an export controlled item.
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The information can be in the form of
blueprints, drawings, models, photographs, plans, instructions
and documentation; tech data
 includes software related to an export controlled item.
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Sensitive Technologies
1. COMMERCIAL APPLICATIONS
2. SPACE, ROCKETS & MILITARY
APPLICATIONS
“The EAR” (Export Administration Regulations):
Commercial & Military Use (Dual-Use)
Commerce Control List Categories
0 = Nuclear materials, facilities and equipment (and
miscellaneous items)
1 = Materials, Chemicals, Microorganisms and Toxins
2 = Materials Processing
3 = Electronics
4 = Computers
5 = Telecommunications and Information Security
6 = Sensors and Lasers
7 = Navigation and Avionics
8 = Marine
9 = Propulsion Systems, Space Vehicles, and Related
Equipment
“The ITAR” (Int’l Traffic In Arms Regulations):
Military, Rockets or Space Applications
USML Categories (The ITAR)
 I
Firearms, Close Assault Weapons and Combat Shotguns
 II
Guns and Armament
 III
Ammunition/Ordnance
 IV
Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines
 V
Explosives and Energetic Materials, Propellants, Incendiary Agents and Their Constituents
 VI
Vessels of War and Special Naval Equipment
 VII
Tanks and Military Vehicles
 VIII
Aircraft and Associated Equipment
 IX
Military Training Equipment and Training
 X
Protective Personnel Equipment and Shelters
 XI
Military Electronics
 XII
Fire Control, Range Finder, Optical and Guidance and Control Equipment
 XIII
Auxiliary Military Equipment
 XIV
Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated
Equipment
 XV
Spacecraft Systems and Associated Equipment
 XVI
Nuclear Weapons, Design and Testing Related Items
 XVII
Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated
 XVIII Directed Energy Weapons
 XX
Submersible Vessels, Oceanographic and Assoc. Equipment
 XXI
Miscellaneous Articles (Software, components, etc.)
Long Reach of the ITAR
 ITAR includes
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Includes commodities and technologies that have
predominant military use or space application;
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Items that started out as having civil application but were later
adapted or modified for military application;
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Dual-Use items that contain or use ITAR controlled
articles/technology, i.e., “see through rule”
What’s not export controlled?
 Information in the public domain.
 Information excluded under the Fundamental
Research Exclusion (FRE)
 Basic marketing and general system descriptions
Fundamental Research Exclusion in the
Regs & Nat’l Policy (NSDD-189)
Fundamental Research Exclusion (FRE) in the
regs and Nat’l Policy directive: NSDD-189 creates
a safehaven…
“Accredited Universities of higher
learning conducting basic and
applied research the results of which
are intended to be published…and are
not subject to access or
publication restrictions.”
National Policy re Fundamental Research --NSDD-189
“Fundamental Research means basic and
applied research in science and engineering, the
results of which ordinarily are published and
shared broadly within the scientific community, as
distinguished from proprietary research . . . the
results of which ordinarily are restricted for
proprietary or national security reasons.”
Limits to Fundamental Research Exclusion –
Subject to Export Controls or Other Prohibitions
Fundamental
Research does NOT
cover --
Exports of
Hardware, Software,
Technology
Financial Dealings
with Prohibited
Parties or Entities
Export Controlled
activities –
“technical assistance”
Other
Transactions
Involving Embargoed
or Sanctioned
Parties/Countries
What is a Restricted or Prohibited Party?
U.S. Government [OFAC, BIS, State Dept.]
lists of individuals & entities both in the
U.S. and abroad that have committed
export violations or other offenses.
• Financial dealings or export transactions with
Restricted or Prohibited parties is prohibited.
• Violations are subject to severe penalties and fines.
Restricted Party Screenings (RPS)
recommended depending on transaction
Drug
Traffickers
Debarred
Parties
Specially
Designated
Nationals
When to Consider Obtaining an Export License:
Exporting controlled h/w,
s/w or technology?
•  Yes
No Exemption or Exclusion
applies?
•  Yes
“See through rule” applies?
(ITAR)
•  Yes
Foreign Collaboration?
Outside FRE?
•  Yes
Denied Party or Sanctioned
Country involved?
•  Yes
STOP!
• License May be Required!
What to do if . . . ?
 Not sure if item should be ITAR or EAR controlled?
 Submit a Commodity Jurisdiction Request (CJ) to State Dept.,
Directorate of Defense Trade Control
 Not sure which ECCN to use?
 Submit a Commodity Classification Automated Tracking
System (CCAT) to BIS via SNAP-R
 You’ve hit a grey area?
 Obtain an Advisory Opinion from BIS (748.3)
 Not sure what to do?
 Get help from your campus lawyer or hire one!
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Don’t go at it alone!
Contract Language:
Staying inside the “Safehaven”
IDENTIFYING RED FLAGS IN YOUR
AGREEMENTS
Outside FRE: Red Flags
Certain restrictions will take you out of FRE:
• Don’t accept publication or access restrictions
in Non-disclosure agreements, contracts,
agreements, etc.:
 Review the Statement of Work
 Is it a Military component for research?
 Is it a Space-related component for research?
Foreign national participation
 Sponsor is a foreign entity or government
 Restrictions on foreign national participation
 International Travel or work being done abroad
Red Flags in Non-Disclosure Agreements, RFPs,
Proposals & Contracts
Got Publication or Foreign Person Access
Restrictions in your agreement?
 Export control language not all result in restriction
 Restrictions on publication or public disclosure of
research results (Preapproval of content), such as
“Sponsor Approval”
 DFAR clauses and other “flow down” provisions from
a “Prime” agreement
 References to Classified information or Security
Plans
Argument for not accepting clauses
Loss of Fundamental Research Exclusion (FRE)
Fundamental Research means “basic and applied research in
science and engineering the results of which are published and
shared with the scientific community as distinguished from
proprietary research from industrial development, design and
production, the results of which are restricted for proprietary or
national security reasons”
 Refer to NSDD189, C. Rice letter and Young memo
 NSDD 189 (September 1985) - States the products of
fundamental research remain unrestricted
 Confirmed in November 1, 2001 Memo by Condoleezza
Rice
 Re-confirmed in June 26, 2008 Memo by J. Young
Travel Abroad and Tips
How to keep your faculty out of trouble!
How do the export regulations affect travel abroad
for university employees?
Commerce and State have regulations that affect:
 Physically taking items with you on a trip such as
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Laptops
Encryption products on your laptop
Data/technology
Blueprints, drawings, schematics
How do the export regulations affect travel abroad
for university employees?
The Office of Foreign Assets Control (OFAC) has
regulations that affect:
 Money transactions and the exchange of goods and
services in certain countries – providing “value”
 Travel to sanctioned countries:
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Balkans, Belarus, Burma, Cote d’Ivoire, Cuba, Democratic
Republic of the Congo, Iran, Iraq, Former Liberian Regime of
Charles Taylor, North Korea, Sudan, Syria, and Zimbabwe
 Doing business with certain people or entities
 Commerce, State, and OFAC have “lists”
What does this mean?
The bad news….
 A license could be required depending on what you
are taking and the country you are traveling to
 A license or technical assistance agreement would be
required if you were providing a “defense service” to
a foreign person
A defense service means the furnishing of assistance
(including training) to a foreign person relative to a
defense article. It also includes furnishing any
technical data relative to a defense article.
 There are consequences if you violate the
regulations!
What does this mean?
The good news…
 Travel to most countries does not usually constitute
an export control problem!
 Taking a laptop with only Microsoft Office Suite,
Internet Explorer, etc. okay to most countries – no
license required
The good news….
License exceptions/exemptions available
 In most cases, if you are taking or need to work
with export controlled info abroad, a license
exception or exemption is available!
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An exception/exemption is not needed if you are taking a
“clean” laptop to countries other than Cuba, Syria, Iran,
North Korea, or Sudan
There are some items you can take that are controlled but
don’t require a license to most countries; i.e., you don’t need
to use the exception
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Items, software should be evaluated before travel
Department of Commerce Exception (TMP) What does it cover?
 Temporary “export” of items such as:
 Laptops with controlled technology and/or data
 Digital storage devices with controlled technology
and/or data
 Most Software
 Designs, drawings that are export controlled
 Other “tools of the trade”
Department of Commerce Exception (TMP) What is not covered?
 The exception does not apply to:
 Satellite or space-related equipment, components, or software
 Exports related to nuclear activities except for a limited
number of countries
 Technology associated with high-level encryption
 Travel to Iran, Syria, Cuba, North Korea, or Sudan
 Anything regulated by the Department of State’s International
Traffic in Arms Regulations (ITAR)
Recordkeeping Requirements
 State and Commerce require documentation of
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exceptions and exemptions
Paperwork must be in place before you travel
Records must be kept for five years
PI/employee should keep a copy
Copy for Export Control Officer’s file
Copy for PI’s award file (if applicable)
Tips on How to keep your Faculty Out of Trouble.
 Acceptance of Export Controlled information – Know your
responsibility:
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Safeguard data in locked cabinet
Cannot publish without export authority or removal
Understand the conditions and restrictions of export licenses, agreements
 Travel Abroad faculty briefings advisable
 Exports of export controlled hardware, technology or software require
export compliance review
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Some exports may require an export license.
 No Side-deals
 Make sure all agreed upon terms are included in the agreement.
 Understand the terms of the agreement:
 Did you just agree to export an instrument to China that requires a
license? Did you allocate enough $$ for the duties and fees?
 Export Recordkeeping Requirements – keep for at least 5 years from
date of export or expiration of the license whichever occurs last.
Dispelling the Myths
#1. The Fundamental Research Exclusion means my
university is not subject to the Export Regulations.
#2: My Faculty can publish anything including
export controlled information received from a 3rd
party.
#3 My freight forwarder or Custom Broker is
responsible for the accuracy of the information
contained in my shipping documents.
#4 I’m not selling anything so my shipment has a
zero $ value.
Export Compliance:
“Preventing violations”
KEEPING YOUR CAMPUS COMPLIANT
Develop an Export Compliance
Management Plan
 Risk Assessment
 Stop the Bleeding in Potentially High Risk Areas
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Shipping
Procurement
Sponsored Research
 Develop “best practices”
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Technology Control Plans
Technology Transfer Control Plans
File for licenses
 Recordkeeping
 Hire experts to help you navigate the export control terrain --
It’s the cost of doing business in the international arena.
RESOURCES
 Glossary
 Useful Links
 The Law and Regulations
 Lists to Check
Glossary
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Commodity: Material, equipment, and services (e.g., instruments, computers, information, tools,
assistance).
Dual-Use: EAR-controlled items that can be used both in USML and commercial applications.
End-User: The Foreign Person that receives and ultimately uses the exported commodity.
End-Use: A detailed description of how the Foreign Person intends to use the commodities being exported.
Export: Transfer of a commodity, technology, or software to any person or entity, by physical, electronic, oral,
or visual means with the knowledge or intent that the item will be shipped, transferred, or transmitted to a
Foreign Person.
License: A legal authority to export (permanent or temporary), re-export, or temporarily import an article
controlled by the ITAR or EAR.
Public Domain: Information, which is published and generally accessible or available to the public.
Release: Technology is “released” for export to Foreign Persons through visual inspection of U.S. origin
equipment and facilities, or through oral exchanges of information with Foreign Persons, either in the U.S. or
abroad.
U.S. Munitions List (USML): Articles, services, and related technical data designated as defense articles
and defense services under ITAR. Note: Originally, spacecraft related technology was under EAR. In 1999, by
act of Congress it was moved under ITAR and put on the USML.
Prohibited/Restricted Party Lists
http://www.bis.doc.gov/complianceandenforcement/liststocheck.htm
Lists to Check: The following lists may be relevant to your export or re-export
transaction.
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Denied Persons List
A list of individuals and entities that have been denied export privileges. Any dealings with a party on this list that
would violate the terms of its denial order is prohibited.
Unverified List
A list of parties where BIS has been unable to verify the end use in prior transactions. The presence of a party on this
list in a transaction is a “red flag” that should be resolved before proceeding with the transaction.
Entity List
A list of parties whose presence in a transaction can trigger a license requirement under the Export Administration
Regulations.
Specially Designated Nationals List
A list compiled by the Treasury Department, Office of Foreign Assets Control (OFAC). OFAC’s regulations may
prohibit a transaction if a party on this list is involved. In addition, the Export Administration Regulations require a
license for exports or re-exports to any party in any entry on this list that contains any of the suffixes "SDGT". "SDT",
"FTO" or "IRAQ2".
Debarred List
A list compiled by the State Department of parties who are barred by §127.7 of the International Traffic in Arms
Regulations (ITAR) (22 CFR §127.7) from participating directly or indirectly in the export of defense articles,
including technical data or in the furnishing of defense services for which a license or approval is required by the
ITAR.
Nonproliferation Sanctions
Several lists compiled by the State Department of parties that have been sanctioned under various statutes. The
Federal Register notice imposing sanctions on a party states the sanctions that apply to that party. Some of these
sanctioned parties are subject to BIS’s license application denial policy described in §744.19 of the EAR (15 CFR
§744.19).
General Order 3 to Part 736 (page 9)
This general order imposes a license requirement for exports and re-exports of all items subject to the EAR where the
transaction involves a party named in the order. This order also prohibits the use of License Exceptions to export or
re-export to these parties. These parties are currently located in: Dubai, United Arab Emirates; Germany; Syria;
Lebanon; Malaysia; Iran; and Hong Kong.
The Export Laws & Regulations
 U.S. Department of State: International Traffic in Arms
Regulations (ITAR) http://www.treas.gov/offices/enforcement/ofac/
 U.S. Department of Commerce, Bureau of Industry &
Security (BIS): Export Administration Regulations (EAR)
http://www.access.gpo.gov/bis/ear/ear_data.html
 U.S. Department of the Treasury, Office of Financial and
Asset Controls (OFAC)
http://www.treas.gov/offices/enforcement/ofac/
 U.S. Customs Regulations
Imports -- Harmonized Tariff Code (HTS #)
http://www.usitc.gov/tata/hts/bychapter/index.htm
Schedule B (US Census) http://www.census.gov/
Embargoed/Sanctioned Countries & Policies
 State Department
http://pmddtc.state.gov/country.htm
 Office of Foreign Assets Control
http://www.treas.gov/offices/enforcement/ofac/
Useful Links
 The ITAR Regulations
http://pmddtc.state.gov/consolidated_itar.htm
 Department of Commerce http://www.bis.doc.gov/
 Commerce Control List (CCL) (EAR)
http://www.access.gpo.gov/bis/ear/ear_data.html#ccl
 US Customs & Border Protection
http://www.customs.ustreas.gov/
 Other US Government Links
http://www.bis.doc.gov/about/reslinks.htm
Travel
 US State Department Travel Warnings
http://travel.state.gov/travel/cis_pa_tw/tw/tw_1764.html
 CIA Factbook
https://www.cia.gov/library/publications/theworld-factbook/
November 1, 2001
Dr. Harold Brown
Co-Chairman
Center for Strategic & International Studies
1800 K Street, N.W.
Washington, D.C. 20006
NSDD-189
Dear Dr. Brown:
Thank you for conveying the concerns of the Council on the Future of Technology and Public Policy
regarding export controls and fundamental research. On behalf of the President, I would like to respond
to your comments on this matter.
The key to maintaining U.S. technological preeminence is to encourage open and collaborative basic
research. The linkage between the free exchange of ideas and scientific innovation, prosperity, and U.S.
national security is undeniable. This linkage is especially true as our armed forces depend less and less on
internal research and development for the innovations they need to maintain the military superiority of
the United States. In the context of broad-based review of our technology transfer controls that will begin
this year, this Administration will review and update as appropriate the export control policies that affect
basic research in the United States. In the interim, the policy on the transfer of scientific, technical, and
engineering information set forth in NSDD-l89 shall remain in effect, and we will ensure that this policy
is followed.
Again, thank you for your views on this important matter. I hope that we will be able to draw upon the
Council's expertise as we review this issue in the coming months.
Sincerely,
Condoleezza Rice, Assistant to the President for National Security Affairs
Discussion Time
 Questions & Answers
Contact Information
Adilia Koch
Kay Ellis
Director of Export Compliance
California Institute of Technology
Export Control Officer
University of Arizona
[email protected]
626-395-4469
[email protected]
520-626-2437