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UMass Amherst
Export Control Seminar
Liz RodriguezAssociate Counsel
University of MassachusettsNovember 18th, 2009
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Purposes of E/C Law Advance Foreign Policy Goals Restrict Exports of Goods and Technology that could
Lend a Military Advantage to our Adversaries
Prevent Proliferation of Weapons of Mass Destruction
Prevent Terrorism
Fulfill International Trade Obligations
Balance These Objectives Against Impact on U.S. Economy including on R&D
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Export
Send or Take a Controlled Item Outside of the United States
Release of Controlled Item to a Foreign National WITHIN the United States
Unlawful to Export a Controlled Item Without a License or under Exemption or Exception
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Deemed Export
Release Within U.S. Technology, information and data or software source
code, or providing technology training or services (including about a machine or equipment)
Subject to EAR or ITAR Deemed to Country of Citizenship or Residency Foreign Nationals – excludes U.S. Permanent Resident
(green card holder) and persons with refugee, asylum or other protected status
Where No License Exemption or Exception Applies
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High Risk Disciplines
Government Contract/Subcontract with U.S. Military Agencies
Corporate Sponsors Include Defense Contractors
Foreign Corporate and Government Sponsors
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Key Regulations - ITAR
Military Items (and Space)
Regulated by the State Department International Traffic in Arms Regulations U.S. Munitions List (USML) National Security Not only Sensitive or Classified Items
MILITARY
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Key Regulations - EAR
Dual-Use Items
Regulated by the Commerce Department Export Administration Regulations (EAR) Commerce Control List (CCL) ECCNs, including EAR99 Commercial Items with possible Dual Uses Balance foreign availability, commercial and research
objectives with national security Lists to Check
http://www.bis.doc.gov/complianceandenforcement/liststocheck.htm
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ITAR/EAR DIVIDE
Encryption items. The phrase encryption itemsincludes all encryption commodities, software,and technology that contain encryption featuresand are subject to the EAR. This does not includeencryption items specifically designed, developed,configured, adapted or modified for militaryapplications ( including command, control andintelligence applications) which are controlled bythe Department of State on the U.S. MunitionsList.
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Key Regulations - OFAC
Embargoed Countries and Sanctioned Persons
Regulated by the Treasury Department Office of Foreign Assets Control (OFAC) Embargoed Countries SDN List of Sanctioned Persons Prohibits Payments Includes terrorists, terrorist organizations, drug
traffickers
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Embargoed/Sanctioned Countries
as of November 2009
Cuba, Iran, North Korea, Sudan, Syria
Others: http://www.access.gpo.gov/bis/ear/pdf/746.pdf
Embargoed for Defense Articles and Services: http://www.pmddtc.state.gov/embargoed_countries/index.html Examples: Afghanistan, Burma, Belarus, Lebanon, North KoreaArms Embargo to China - Includes Space
MUST SECURE A LICENSE FIRST!
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Severe Penalties against Institutions and Individuals
Penalties for ITAR Violations (each, per violation):Criminal (Entities): Up to $1MCriminal (Individuals): Up to $1M / 10 years prisonCivil Fines: Up to $500K and Forfeitures
Penalties for EAR Violations (each, per violation): Criminal (Entities): Up to $1MCriminal (Individuals): Up to $1M / 20 years prisonCivil Fines: $250K
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Severe Penalties against Institutions and Individuals (cont’d)
Penalties for OFAC violations (per violation): Criminal (Entities): Up to $1MCriminal (Individuals): Up to $1M / 20 years prisonCivil Fines: $250K
Institution also subject to administrative penalties:Termination of export privileges (EAR and ITAR); Suspension and/or debarment from government
contracting (EAR and ITAR)
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Behind Bars
A federal jury found University of Tennessee professor emeritus J. Reece Roth guilty of 18 charges involving the Arms Export Control Act.
Roth repeatedly allowed two foreign national graduate students access to information on a military project and he took data about it to China in May 2006.
On July 1, 2009, a federal judge ordered Professor Roth to serve four years behind bars for his handling of restricted air force technology.
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Controlled Item?
Four Step Process1. Determine ECCN Using CCL Part 774 & Check for License
Exceptions
2. Check Country Chart
3. Check General Prohibitions for End-Uses, including for EAR99 Items
4. Check EAR & OFAC Lists for End-Users, including for EAR99 Items
Items Not Specified by an ECCN are “EAR99”
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Using the CCL Commerce Control List Part 774 10 Categories of Items Each Category Organized into 5 Groups
(A) Systems, Equipment, and Components (B) Test, Inspection and Production Equipment (C) Materials(D) Software(E) Technology - information (aka technical data and technical
assistance) about “development”, “production”, or “use” of a product
Each Item Designated by an ECCN e.g., 3A981 End-User Certificate for Foreign Sponsors
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Red Flags Know Your Customer and End-Uses – such as research
collaborators in foreign countries
Sponsor Letters – “vet” who you are sponsoring before you assist them in securing any visa
Sponsors with unusual requests, such as large batches of highly regulated and potentially hazardous materials
Requests from persons in U.S. to ship abroad, or with phone numbers or addresses outside of the US
Requests from Sponsors for materials outside their general business area
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License Exemptions Public Domain EAR/ITAR/OFAC
Information that IS published AND generally accessible to the public, including:
Items Available through newsstands, bookstores, Internet, subscriptions, mail order
Libraries Published Patent Applications and Patents Conferences, Meetings, Seminars in the U.S. Generally
Accessible to the Public Fundamental Research
PUBLIC DOMAIN = NOT SUBJECT TO EAR / ITAR
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License Exemptions Education Exclusion EAR/ITAR
EAR does not apply to instruction in catalog courses and associated teaching laboratories of universities DOES NOT EXCLUDE CERTAIN ENCRYPTION SW 15 cfr 734.9
ITAR does not apply to technical data (information) that only describes general scientific, mathematical or engineering principles commonly taught in universities
DOES NOT EXCLUDE TEACHING ABOUT SPECIFIC TECHNICAL DATA OR ANY MANIPULATION OF DEFENSE ARTICLE
NOTE: ITEMS IN PUBLIC DOMAIN ARE NOT SUBJECT TO ITAR
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Fundamental Research ExclusionNSDD-189 (1985)
Fundamental research means BASIC and APPLIED RESEARCH in science and engineering at Universities, the results of which ORDINARILY ARE PUBLISHED AND SHARED BROADLY within the scientific community, as distinguished from proprietary research and from industrial development, design, production, and product utilization, the results of which ordinarily are restricted for proprietary or national security reason.
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Fundamental Research Exclusion (FRE)
..no restrictions on publication of research results
..no access or dissemination controls on the results of the research (normally seen as restrictions/ approvals of foreign nationals working on project)
..does not apply to advanced encryption
..does not apply to defense article itself
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Laboratory Service Contracts
Purchase Orders From Recharge Centers Right to Publish? Are you receive Materials from Sponsor? Using Modified Equipment with Unpublished
User Manuals? Using Proprietary Technology? Unpublished
Protocol? Process not covered by Patent? No Protection Under FRE Supplier Classification of Materials
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Fundamental Research ExclusionEAR Guidance
For dual-use items, the EAR provides guidance and greater flexibility than ITAR for FRE
Permits prepublication delay by sponsor to prevent inadvertent release of sponsor proprietary information and to file for patent protection
FRE applies to work under U.S. government grant involving EAR controlled information even if there are access and dissemination controls provided that university follows the national security controls
See Dept. of Commerce FAQs: Suppl 1 Part 734
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Proprietary Information - EAR
BIS policy is that information an organization or individual withholds from publication is subject to the EAR. Trade secrets fall within the scope of EAR and may require license before release to a foreign national.
If preexisting technology, subject to the EAR, is the basis of a research endeavor, it may be necessary to receive a license before involving foreign nationals in that research.
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Proprietary Machines
There are few exclusions that cover foreign national access to defense articles or company proprietary machines with unpublished use manuals.
Open Source Software
Software development for research purposes or intended to be open-sourced results in publicly available software, assuming encryption restrictions do not apply.
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Nondisclosure / ConfidentialityAgreements
If you enter into a confidentiality or nondisclosure agreement which restricts your ability to publish research results, the project may cease to qualify for the fundamental research exclusion
Exchange of controlled items under a confidentiality or nondisclosure agreement, for example during the proposal stage, does not qualify for fundamental research exclusion.
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Strategies
Avoid Signing Confidentiality Agreements Avoid Accepting Company Proprietary Items or
Information Buy commercially available materials rather than
Company provided materials Refuse Publication Restrictions Ask Sponsors to Omit Controlled Items from
UMass Portion of Subcontract - DARPA Notify OGCA of any Red Flags – Knowledge of
Violation is about to occur?
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Shipping Materials or Technology Abroad
Use 4 Step Process to Classify the Item under EAR Is it Specifically Designed, Configured, Modified or
Adapted for a Military or Space Application?If so, ITAR may apply
Any Red Flags – Do you suspect any Proliferation Activities such as activities relating to proliferation of nuclear, chemical or biological weapons, missiles or weapons of mass destruction?
Need to make an AES filing
DOUBLE CHECK--HAVE YOU CHECKED THE LISTS!!
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Automated Export System (AES)
AES electronic filing (formerly, the Shipper’s Export Declaration paper filing) is required for shipments such as:
transactions authorized under an export license, such as a shipment to an OFAC embargoed country
All commodities shipped under NLR or a license exception if the value is greater than $2,500
Online Training EAR Training - Module 6
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Travel Abroad
Exemptions may apply to cover export of controlled items (commodities, software, materials, information) abroad, but planning is required to identify the exemptions
Temporary licenses (TMP) may apply for items that will be carried with you and returned to U.S.
Guidelines for Securing a License are Available for Travel to Certain Countries, such as Cuba
There may be Approved Travel Companies that can assist to secure a license
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Running a Tight Ship (ITAR)
Practices to Ensure Compliance
What U.S. Origin Defense Articles (items or technical data) are developed or received by your laboratory and how do you track it?
What U.S. Origin technical data related to defense articles are developed or received by your laboratory and how do you track it?
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Bona Fide EmployeeExclusion (ITAR)
The exclusion under ITAR 125.4(b)(10) allows a bona fide University Full Time Foreign National Employee to have access to unclassified technical data, but the employee must:
Must live in U.S. Cannot be a national from a proscribed country
under ITAR 126.1 and Must be notified in writing not to transfer data to
other foreign nationals
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Resources
Commerce Department (EAR) Online Training
http://www.bis.doc.gov/seminarsandtraining/seminar-training.htm
Determining ECCN http://www.bis.doc.gov/licensing/exportingbasics.htm
EAR Definitions http://www.access.gpo.gov/bis/ear/pdf/772.pdf
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State Department – International Traffic in Arms Regulations (ITAR) Applies to Defense Articles and Defense Services ITAR Regulations http://www.pmddtc.state.gov/regulations_laws/itar_consolidated.html Items listed on United States Munitions List (USML)
http://www.pmddtc.state.gov/regulations_laws/documents/consolidated_itar/2009/Part_121.doc
Includes Space-related Technology Due to Nexus to Missile Applications
Commerce Department – Export Administration Regulations (EAR) Bureau of Industry and Security (BIS) http://www.bis.doc.gov/ Commercial Items Determined to Have Potential for “Dual-Use” Items listed on the Commerce Control List (CCL) and EAR99 “catch-all”
Treasury Department - Office of Foreign Assets Control (OFAC) Trade sanctions, embargoes, restrictions on certain end-users Sanctions on terrorists, terrorist organizations, narcotics king pins
Others: Nuclear Regulatory Commission; Department of Energy, Department of Homeland Security; Customs; Immigration and Naturalization Service
Federal Agencies & Statutes
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Commerce Control ListEAR Categories
0-Nuclear Materials, Facilities & Equipment (and Miscellaneous Items)
1-Materials, Chemicals, Microorganisms, and Toxins 2-Materials Processing 3-Electronics Design, Development and Production 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
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U.S. Munitions ListITAR Categories
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 X- Protective Personnel Equipment
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U.S. Munitions List(cont’d)
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 XIX- Reserved XX- Submersible Vessels, Oceanographic and Associated
Equipment XXI- Miscellaneous Articles