Export Controls Just the Basics How to

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 1. EXPORT REGULATIONS 2. BASIC TERMS 3. SENSITIVE TECHNOLOGIES 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: 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? Contract contained publication and foreign person Project was not awarded as Fundamental Research restrictions • _ • • Plasma Lab Graduate students – unauthorized foreign persons license or government authority required Statement of Work required use of University: 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. . . 9 The regulations most likely to affect the campus import/export activities are: U. S. Department of State 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 Nuclear related controls Treasury Department Office of Foreign Assets Control (OFAC) 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: 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 • Any person not a U. S. citizen or legal permanent resident (green card holder) • Any person not granted political asylum • Any U. S. Person employed or representing a foreign entity Foreign Entity • Any partnership or group not incorporated or organized to do business in the U. S. • Any foreign government

Technical Assistance. . . “Know-how”. . . Defense Service. . Training 12 Technical Assistance (defense service) means the furnishing of assistance (including training) to Foreign Persons. . . in the United States (deemed export). . . or abroad (technology transfer) . . . 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 13 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. 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.

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 IIGuns 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 includes Includes commodities and technologies that have predominant military use or space application; Items that started out as having civil application but were later adapted or modified for military application; 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! 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 ØLoss 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” Ø Refer to NSDD 189, 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 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: 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! 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 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 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: 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 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 3 rd 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 Shipping Procurement Sponsored Research Develop “best practices” 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 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. 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 "IRAQ 2". 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_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_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/the-world -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-l 89 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 adilia. koch@caltech. edu 626 -395 -4469 email. arizona. edu 520 -626 -2437