Export_Controls

Report
Export Control
Presented
by
Charles F. Carletta, J.D.
Secretary of the Institute & General
Counsel
Rensselaer Polytechnic Institute
Michael E. Ginsberg. J.D.
Paul E. Fredette, Ph.D.
Pattison, Sampson, Ginsberg & Griffin, PC
22 First Street, Troy, NY 12181
518-266-1026
[email protected]
1
Export Control - Basics
What
Why
Where
2
Criminal Enforcement Against
University Professors

Dr. Thomas Butler
•




Chief of Infectious
Disease Division at
Texas Tech’s
Department of Internal
Medicine
Select Agent violations,
accounting fraud
One count for transfer of
plague sample to
Tanzania
Penalty: 2 years in
prison; fine; denial of
export privileges
Fired from Texas Tech
3
Dr. J. Reece Roth





Professor Emeritus of U. of
Tennessee, Knoxville
72 years old
18-count indictment for technology
transfer to foreign nationals
(Chinese FN grad. stud.)
Convicted of releasing ITARcontrolled technology to a Chinese
graduate student. The release
occurred in connection with an Air
Force contract with his off-campus,
for-profit business.
4 years jail, upon release additional
2 years supervised release
4
What are Export Controls?
U.S. federal government laws and regulations that
require federal agency approval before the export of
controlled items, commodities, technology, software or
information to restricted foreign countries, persons,
and entities (including universities)
Remember:
– Exporting is a privilege—not a right
– Activity cannot take place until an export
license is obtained or it is determined that
a license is not necessary
– Every situation is unique
– Ignorance is not a defense
5
What Is An Export?

Physical shipment of goods or items, e.g.,
biological and chemical samples, diagnostic and
analytical instruments and tools, etc.

Electronic/digital/oral transmission/disclosure
of goods, technical data or items, e.g., email,
phone, fax, internet, CD, discussions, etc.;

Release of specific technical data to any foreign
national, e.g., reports, drawings, specs, etc.;

Providing access to a foreign national, e.g.,
visiting scientist, faculty, student, post doc, etc., to
any controlled product, technology.
6
Important Terms

Item
–

Export
–

A shipment or transmission of items out of the US.
Re-export
–

Commodities, software and technology.
A shipment or transmissions of items subject to the EAR from one
foreign country to another foreign country.
Deemed export/re-export
–
Release of technology or source code to a foreign national in the
US is deemed to be an export; and, the release by a foreign
national to a foreign national of another foreign country is deemed
to be a re-export .

CCL -

ECCN -
Commerce Control List (15 CFR 738.2; 15 CFR 774,
Supplement 1)
Export Control Classification Number (15 CFR 738.2)
7
Who is a Foreign National/Person?

A person who is not




Granted permanent U.S. residence, as demonstrated by
the issuance of a permanent residence card, i.e., a “Green
Card”
Granted U.S. citizenship
Granted status as a “protected person” under 8 U.S.C.
1324b(a)(3), e.g., political refugees, political asylum
holders, etc.
This includes all persons in the U.S. as students,
business people, scholars, researchers, technical
experts, etc.
Foreign National is the term used by the Department of Commerce
Foreign Person is the term used by the Department of State
8
THE BIG PICTURE
Export Control Compliance Questions:

WHAT? What is the Item involved, e.g., technology
parameters, functions, characteristics? What is the
end use? Is it “military” or “dual use”?

WHERE? What are the “destination countries”?

WHO? Who are the proposed export recipients?

HOW? How will the export occur, i.e., physical or
“deemed” export?
9
Primary U.S. Laws/Regulations
Legal Landscape
U.S.
Export Control Laws
Export Administration Regulations
International
U.S.
(“EAR”)
Traffic in Arms Regulations (“ITAR”)
Sanctions and Economic Embargoes
10
Primary U.S. Laws/Regulations
Agencies & Jurisdictions
International Traffic in Arms Regulations (ITAR)
Department of State
- Directorate of Defense Trade Controls (DDTC)
•
22 CFR Parts 120 - 130
Licenses Defense
Articles and Services
Export Administration Regulations (EAR)
Department of Commerce
Primary Licensing
Agency for Dual-Use
Exports
Office of Foreign Assets Control (OFAC)
U.S. Depart of the Treasury
Administers Economic
Sanctions (Embargoes)
- Bureau of Industry and Security (BIS)
•
15 CFR Parts 730 - 774
•
31 CFR 500
11
Export Administration Regulations (EAR)
(Dual Use Items and Technology)
 The Commerce Department's Bureau of Industry and
Security (“BIS”) regulates exports of U.S. products,
materials, technology, and software that have
commercial and military applications (“dual use”).
Examples: computers, electronics, chemicals.
 An item is “subject to the EAR” if it has been produced
in the United States or is being exported from the United
States. In addition, certain foreign-made products may
be deemed “subject to the EAR” on the basis of U.S.origin content or technology.
12
International Traffic In Arms Regulations
(ITAR)

Administered by the Department of State’s Directorate of
Defense Trade Controls ("DDTC")

Covered Items/Activities:





Export, reexport, and manufacture of defense
articles;
Export and reexport—including deemed export
and reexport--of technical data;
Performance of defense services for foreign
persons;
Brokering activities; and
Temporary Imports of defense articles.
13
U.S. Economic Sanctions & Trade Embargoes
(OFAC)
 Regulations administered by Treasury Department's
Office of Foreign Assets Control ("OFAC").
 Near-total embargoes, covering most business
dealings, against Cuba, Iran, Sudan, North Korea,
and Syria.
 Partial embargo against Burma, limited to
investment and provision of financial services.
 Exception for "information and informational
materials," but not if the information is subject to
export controls and not for "services."
14
OFAC Restrictions

OFAC prohibits the transfer of anything of value
and the provision of services to countries subject to
U.S. sanction programs, boycotts, etc. without a
license.

Sanctions are complicated and vary across
countries.

Examples: conducting surveys and interviews in
boycotted countries; providing marketing and
business services to persons in boycotted
countries.
15
Differences Between ITAR & EAR

ITAR:

Covers military items (munitions/defense articles);

Includes most space related technologies due to
application to missile technology;

Includes technical data related to defense articles
and services (furnishing technical assistance
including design, engineering and use of defense
articles);

Very strict, not much latitude, few exemptions.
16
Differences Between ITAR & EAR (cont.)

EAR:

Regulates “dual use” items = 10 CCL categories of
different technologies (equipment [including test
equipment], tests, materials, software and
technology);

Regulates items designated for commercial purposes
but that can have military applications (computers,
pathogens, civilian aircraft, etc.);

Covers goods, test equipment, materials and the
technology (technical data and technical assistance)
and software:

Covers “re-export” of foreign commodities
incorporating U.S. origin controlled items outside the
U.S.;

DOC easier to work with – more exemptions available.
17
Analysis & Implications
for Academic Institutions
Challenges
International Travel
Deemed Export
18
EAR and ITAR apply
Typically:
• Physical transfer of sensitive or controlled technologies
and related technical information, including software, to
persons and entities outside the U.S.
• Disclosure of technical data or information on sensitive or
controlled technologies to foreign persons while in the
U.S. These so-called “deemed exports” may include
formal presentations, informal conversations, or even
observations during site tours.
• Training and offering services involving sensitive or
controlled technologies to foreign persons.
19
EAR - APPLICABILITY TO UNIVERSITIES

EAR applies to and involves everybody
INCLUDING U.S. faculty members, foreign
nationals, visiting scientists, permanent residents,
staff, and students.

“Deemed exports/re-exports” may include:



Visual inspection by foreign nationals of U.S.-origin
equipment and facilities;
Oral exchanges of information in the U.S. or abroad;
Application to situations abroad of personal
knowledge or technical experience gained in U.S.
20
Export Control issues challenging universities

Currently, the use of controlled equipment is not a deemed
export. Deemed exports occur only if controlled technology is
transferred.

The regulatory definition of “use” is technology for operation,
installation (including on-site installation), maintenance
(checking), repair, overhaul and refurbishing.”*

A deemed export license may be required when the use of
equipment would require access to the manufacturer’s
proprietary manual, allowing the foreign person access to
technology relating to operation, installation, maintenance,
repair, overhaul and refurbishing.
* All elements above are required for there to be controlled “use”.
21
Why “And” in use of Controlled Equipment

REASON: “The totality of these (listed)
activities would provide the foreign national
with enough knowledge to replicate or improve
the performance of the controlled item. As
such all of the activities listed in the definition of
“use” are required to trigger a license
requirement.
22
Deemed Exports and Defense Services

The EAR defines a deemed export as the release of technology or
source code subject to the EAR to a foreign national (no green
card) in the U.S.
 Applies to a foreign or visiting faculty, research assistants, and
students
• Can affect tours of laboratories
•
phone calls, emails, visual inspections

Transferring ITAR technical data to or performing a defense
service (includes training) on behalf of a foreign person in the U.S.
or abroad.

Does not apply to U.S. Citizens, permanent residents and those
with U.S. asylum protection .
23
Remedies
Exclusions:
Fundamental Research
Education
Public
Flags
Licensing
Technology Control Plan
24
Fundamental Research Exclusion (FRE)
You may not need a license if…





Information (note: not items or materials) resulting
from or arising during basic and applied research in
science and engineering, and
Conducted at an accredited institution of “higher
education” (EAR) or “higher learning” (ITAR) and
Located in the U.S. (doesn’t apply abroad), and
Where the resulting information is ordinarily
published (EAR – will be published) (ITAR – already
published) and shared broadly in the scientific
community, and
Is not subject to proprietary or U.S. government
publication or access dissemination controls
• e.g., a restriction on foreign national participation.
25
Fundamental Research Exclusion
ITAR & EAR (cont.)
The FRE is lost if the proposed contract or grant:
 Forbids the participation of foreign nationals.
 Gives the sponsor a right to approve publications
resulting from the research.
 Otherwise operates to forbid participation in
research and/or access to and disclosure of
research results.
 “side deals” that may be made outside the terms
of the award.
26
Fundamental Research Exclusion (FRE)
EAR versus ITAR
 Applies only to information NOT items; “ordinarily
published” and “shared” as distinct from “publicly
available” and “public domain” information.

FRE regulations for:
•
•
EAR 15 CFR 734.8(b)
ITAR 22 CFR 120.11(a)(8)
27
Educational Information Exclusion

Educational information is exempt from
licensing requirements where the information is
generally taught at U.S. universities.

The regulations differ slightly in how they define
Educational Information:
 ITAR general science, math and engineering
 EAR information listed in course catalogues

Students using controlled equipment to conduct
research should be registered for a research
credit class.
28
Public Domain1 & Publicly Available2 Exclusions
You may not need a license if…


Information is already published ,
through specific means found in:
 libraries open to the public
 unrestricted subscriptions, newsstands,
bookstores
 published patent information
 conferences, meetings, seminars and trade
shows open to the public
 websites accessible to the public for free and
without the host’s knowledge or control of who
visits.
1.
2.
ITAR
EAR
29
Export Control “Red Flags” – Reviewing
Proposals and Proposed agreements
Does the project involve:
Shipping equipment to a foreign country?
Collaborating with foreign colleagues in foreign countries?
Training foreign nationals to use equipment?
Working with a country subject to a US boycott?
Export control designations?
Sponsor demanding pre-approval rights over publications or
the participation of foreign nationals?
Foreign sponsor?
Anything involving India and China (economic & dual use)?
NDAs & MTAs regarding disclosure of proprietary
information?
30
Do I need to be concerned about export controls in this research?
1.
2.
Public domain, and
a) No equipment, encrypted
software, listed-controlled
chemicals, bio-agents or
toxins, or other restricted
technologies are involved,
and
b) Information/software is
already published, and
c) There is no contractual
restriction on export, or
Fundamental Research
1.
2.
3.
(note definitions and caveats
associated with this
exemption)
4.
NO
Equipment or encrypted software
is involved, or
Technology is not in the public
domain, and
Technology may be exposed to
foreign nations (even on campus)
or foreign travel is involved, and
a) The equipment, software or
technology is on the
Commerce Control List, or
b) Information or instruction
is provided about software,
technology, or equipment
on the CCL, or
c) The foreign nationals are
from or the travel is to an
embargoed country
The contract has terms e.g. a
publication restriction that effect
the Fundamental Research
Exemption
Probably
(further review is required)
License May Be Required
1.
2.
3.
4.
Equipment, software, chemical,
bio-agent, or technology is on the
US Munitions List (ITAR), or
Equipment, software, chemical,
bio-agent or technology is
designed or modified for military
use, use in outer space, or there is
reason to know it will be used for
or in weapons of mass
destruction, or
Chemicals, bio-agents or toxins
on the Commerce Control List
are involved, or
The contract contains a
restriction on export or access by
foreign nationals
YES
License Will Be
Required
31
EAR: Commerce Control List (CCL)
 CCL (15CFR 774, Supplement 1)
 Dual use items & technology subject to
EAR.
 Before exporting them – must have a
license,
 Unless an EAR exception applies.
 EAR 99: Other items/technology subject to EAR
restrictions, e.g., exports to embargoed countries;
restricted end uses.
32
License Requirements
An export license is required when exporting technologies regulated by the EAR,
ITAR or when engaged in activities regulated by OFAC. The following
examples deserve special attention:





EAR and ITAR export licenses are not required when there are no
publication, foreign national, or access and dissemination
restrictions.
Shipment of covered hardware and software outside the U.S.
requires a license (EAR, ITAR, and OFAC). Note: appropriate time
must be allowed to obtain license prior to shipment.
Technical assistance agreements (TAAs) where U.S. citizens or
permanent residents are providing training of foreign nationals
where a covered technology is involved requires a license.
Acceptance of export controlled data for use by foreign national
researchers in a University laboratory requires a license.
When a research agreement would carry restrictions on
publications/foreign nationals, a license is required.
33
Licensing Requirements (cont…)
You need a license if…

Controlled research equipment, biological samples, or computers
with research data or encrypted or proprietary software are handcarried or shipped abroad.

There is reason to believe the recipient/end-user is violating export
laws.

You intend to share sponsor’s controlled proprietary information with
a foreign national or anyone abroad.*

Defense, military, weapons, space or other dual-use technologies.

Attending conference with limited registration.

Exclusions don’t apply.

Providing anything of value to a sanctioned country/entity/individual
*This information may be the subject of a NDA or an MTA or non-disclosure
language included in a sponsored research agreement
34
Federal Licensing Protocol
When exceptions don’t apply … or dealing with
sanctioned country/entity…

a license must be obtained BEFORE any deemed
export, export or re-export, and

PRIOR TO undertaking the activity, including

BEFORE transfer of information sufficient to
develop research proposals.
35
Compliance Plan
36
Export Control Compliance Program

A university program starts with risk
assessment:







Identify those areas of technical exposure
Know who is on campus
Know researcher’s travel plans
Know who is coming to campus
Policy & Procedures to manage and comply with
EAR, ITAR, OFAC, etc.
Audit schedule & detail records kept for 5 years
Training
37
Export Compliance Methodology


Internal processing
Contact Empowered Officer (22CFR 120.25) for
more information and to help determine





Whether export regulations apply
Jurisdiction (EAR, ITAR, OFAC)
ECCN or commodity classification
License application completed, if necessary
Technology Control Plan developed, if applicable
38
Methodology cont…



Check for license requirements and license exceptions
Check Country Chart, Reasons for Control, and
Country Group
Check all lists








Denied Persons
Unverified
Entity
Specially Designated Nationals (SDNL)
Debarred List
Non-proliferation Sanctions
General Order 3 to Part 736
Determine whether you need a license
39
Technology Control Plans
TCPs are developed to comply with Export Control Laws and are
designed to restrict the use and observation of export controlled
technical information, data, materials, software, or hardware by
unauthorized foreign nationals.







Developed by the Office of General Counsel
Describes safeguards for protecting controlled technology
 IT access, data access & handling and discard
 Building access
Commitment in the form of compliance program.
Physical security plan – badging, access, visitor logs
Personnel screening – review of lists, background checks
Training and awareness
Corrective actions
40
Export Controls govern

Export control laws apply to all university
activities:










Sponsored research
Traveling
Technology Transfer - IP protection & IP licensing
Purchasing
Shipping
Visitors, students, employees
Human Resources
International Affairs – VISA letter of Invitation
Encrypted software and commodities with encrypted
software
Security
41
Voluntary Disclosures (22 CFR 127.12)

If you realize you have violated the regulations,
notify State, Commerce, or OFAC:
 Procedures are spelled out in ITAR and EAR.

Honest errors are acceptable but gross
negligence is punishable.

It is better to self-disclose than not say
anything.

Violations are civil and criminal---Fines and jail
time!!!
42
Summary
Do’s & Don’ts
43
Do’s & Don’ts – Shipping

Do NOT ship any item outside the U.S. without first
checking the ITAR and EAR lists to determine if the
item is controlled.

Secure license approval or verify license exception
PRIOR to shipment for all controlled items.
44
Do’s & Don’ts – Restricted Information

Do NOT enter into secrecy agreements or
otherwise agree to withhold results in project
conducted at the University or that involve
University facilities, students or staff.

Do NOT accept proprietary information from
another that is marked “Export
Controlled”. Review any Confidentiality/NonDisclosure Agreements to insure that University
and you are not assuming the burden of
restricting dissemination based on citizenship
status or securing licenses.
45
Do’s & Don’ts – Citizenship Restrictions

Do NOT provide citizenship, nationality, or visa
status information for project staff to others or
include such information in proposals.

Do NOT agree to background checks or other
arrangements where the external sponsor screens,
clears, or otherwise approves project staff.

Do NOT attend meetings where foreign nationals
are prohibited from attending. Do not sign the
DD2345, Militarily Critical Technical Data
Agreement, as a condition of attending a conference
or receiving materials from the government.
46
Do’s & Don’ts - Travel

Do NOT travel to Cuba, Iran, North Korea,
Sudan, or Syria for research or
educational activities without first
contacting the campus Export Control
Officer to secure a license from the Office
of Foreign Assets Control.

Do review equipment that you will be
taking with you against export controls. A
license may be required.
47
Do’s & Don’ts - International Travel
Departments of Commerce and State have
regulations that affect:

Physically taking items on a trip such as:







Laptop
Encryption products on your laptop
Blackberry (cell phone)
Data/technology
Blueprints, drawings, schematics
Other “tools of the trade”
Giving controlled technology/data to a foreign
person outside the U.S.
48
Special Rules for Laptops
Laptop Exclusion:

Excluding embargoed countries, faculty who wish to take
their laptops out of the country to use in a university project
that qualifies as fundamental research may be able to do so
under the license exception for temporary export (TMP) if
the laptop meets the requirement for “tools of trade” (15
CFR 740.9(a)(2)(ii)) and is under the “effective control” (15
CFR 772.1) of the faculty member.

BUT a review must be done to ensure that the software on
the laptop is not controlled,

AND the laptop is retained in ones physical possession or
secure in an environment as a hotel safe, bonded
warehouse or locked or guarded exhibition facility. Leaving
the laptop in a hotel room while going out to dinner is not
“effective control’.
49
Take Away
Export Control Compliance requires complying with
all Laws and Regulations!
Complying with one agency does not mean complying
with the other Agencies’ Laws and Regulations.
Each Agency stands alone!
Evading the Laws and Regulations can be personally
very expensive!
50
Special thanks is extended to the following for their assistance,
discussions and permission to use their information: Jeffrey
Armstrong, Rensselaer Polytechnic Institute, Stanford University,
Massachusetts Institute of Technology, University of Texas at
Austin, University of Tennessee, University of North Carolina
Wilmington, University of Maryland, Georgia Technological
Institute, University of Florida, University of New Hampshire,
Michigan State University, Fischer & Associates, University of
California, Virginia Polytechnic Institute.
Additional Sources as internet posting and educational
information: BIS, DDTC, Dept. of Treasury, COGR, AAU,
NCURA, Rensselaer Polytechnic Institute, Northrop Grumman,
EAR ITAR Boot Camp, Dorsey & Whitney LLP.
51
Websites







Bureau of Industry and Security (BIS)
http://www.bis.doc.gov/about/index.htm
http://www.bis.doc.gov/complianceandenforcem
ent/emcp_guidelines.pdf
Directorate Defense Trade Controls (DDTC)
http://www.pmddtc.state.gov/index.html
Office of Foreign Assets Control (OFAC)
http://www.treas.gov/offices/enforcement/ofac/
52
Q&A
53

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