Kay EllisExport Control Officerellisk@email.arizona.edu

520-626-2437

Josh EstavilloUniversity Attorneyjle1@email.arizona.edu

520-621-3175

Export Controls: Just the Basics – How to Keep Your

Faculty & Researchers Out of Trouble!

Overview

Presenters:

Kay Ellis

Josh Estavillo

Export Basics: Terms & Regs

Strategic Technologies

Identifying Red Flags

Travel Abroad

Tips on Staying Compliant

1. EXPORT REGULATIONS2. BASIC TERMS3. SENSITIVE TECHNOLOGIES

Export Alphabet Soup

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 Economic Sanctions

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).

Export 101

Regulations likely to affect your export are . . .

8U.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

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.

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 . . .

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)

. . . 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.

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.

1. COMMERCIAL APPLICATIONS2. SPACE, ROCKETS & MILITARY APPLICATIONS

Sensitive Technologies

“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 Toxins2 = Materials Processing3 = Electronics4 = Computers5 = Telecommunications and Information Security6 = Sensors and Lasers7 = Navigation and Avionics8 = Marine9 = 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

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)

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

What is a Restricted or Prohibited Party?

Vendor Payments

Payments to entities/persons on the denied lists could result in fines Includes payments to entities in the

U.S. or abroadPayment to foreign entity should raise

a red flag!

IDENTIFYING RED FLAGS IN YOUR PROPOSALS, SOLICITATIONS,

AGREEMENTS

Staying inside the “Safehaven”

Certain restrictions will take you out of FRE:

• Don’t accept publication or access restrictions in Non-disclosure agreements, contracts, agreements, etc.:

Review the Topic, Statement of WorkIs it a Military component for research?Is it a Space-related component for

research? Foreign national participation

Sponsor is a foreign entity or governmentRestrictions on foreign national participationInternational Travel or work being done abroad

Outside FRE: Red Flags

Got Publication or Foreign Person Access Restrictions in your agreement?

Export control language (not all result in restriction)

“Sponsor Approval” vs “Sponsor Review”DFAR clauses and other “flow down”

provisions from a “Prime” agreementReferences to Classified information or

Security Plans

Red Flags in Non-Disclosure Agreements, RFPs, Proposals & Contracts

Determining the need for a license

(Export Controls Review)Questions to Ask:

What is the nationality of researchers INCLUDING Professors and Research Assistants (grad students/post-docs)?

Will the researcher or grad student be receiving restricted information? Is it EAR controlled? Is it ITAR controlled?

Determining the need for a license (Export Controls Review)

Questions to Ask:Is the project strictly defense-related?If it’s ITAR, will the foreign national grad

student need to discuss the data with the sponsor?

Destination: Is the research technology or goods going overseas to a foreign company, government or individual? Does the PI want to take the

technology/equipment/data with him or her?

Determining the need for a license

Steps to Take:

Determine if license is needed for the technology/end user/end use

Determine if license exemption or exception is available

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Do I need to be concerned about export controls in this research?

1. 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

2. Fundamental Research

(note definitions and caveats associated with this exemption)

1. Equipment or encrypted software is involved, or

2. Technology is not in the public domain, and

3. 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

4. The contract has terms e.g. a publication restriction that effect the Fundamental Research Exemption

NO

1. Equipment, software, chemical, bio-agent, or technology is on the US Munitions List (ITAR), or

2. 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

3. Chemicals, bio-agents or toxins on the Commerce Control List are involved, or

4. The contract contains a restriction on export or access by foreign nationals

YES

License Will Be Required

Probably(further review is required)

License May Be Required

When to Consider Obtaining an Export License:

Managing export controlled research

Assuming you can’t negotiate out the restrictive clauses - how do you manage the export controlled project?

Determining the need for a license

If no exceptions or exemptions, determine what kind of license is needed -

•EAR•ITAR•OFAC

What next?!

Next steps:Get a license and/orSet up a Technology Control PlanTrain the project personnelAudit the PlanKeep records

License or Technology Control Plan?

In some situations it is possible to put a TCP in place instead of applying for a license

A TCP is simply a plan that outlines the procedures to secure controlled technology (e.g., technical information, data, materials, software, or hardware) from use and observation by unlicensed non-U.S. citizens If this is not possible, then a license or technical

assistance agreement would be needed

When do you need a TCP?

In conjunction with a Technical Assistance Agreement (TAA) – Dept. of State

In conjunction with a Deemed Export license – Dept. of Commerce

In conjunction with an agreement that does not allow foreign nationals

In conjunction with an agreement that involves controlled technology – includes NDAs

Or in conjunction with any project that involves controlled technology!

How to keep your faculty out of trouble!

Travel Abroad

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, smart phones, PDAs Encryption products on your laptop Data/technology Blueprints, drawings, schematics

Information/data presented at meetings or conferences

Equipment, data, presentations should be vetted for export control issues prior to travel

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, Lebanon, Libya, 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 technical assistance agreement would be required if you were providing a “defense service” to a foreign person

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, Adobe, etc. okay to most countries – no license required

In most cases, if you are taking or need to work with export controlled info or equipment abroad, a “License Exception” is available!

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 Iran, Syria, Libya, Cuba, North Korea, or Sudan

Another exception, “BAG” can be used for Syria, Cuba, N. Korea

Can’t take University property to these countries without a license

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 travelRecords must be kept for five yearsPI/employee should keep a copyCopy for Export Control Officer’s fileCopy for PI’s award file (if applicable)

FINAL THOUGHTS

Tips on Staying Compliant

Develop an Export Compliance Management Plan within your unit

Risk AssessmentStop the Bleeding in Potentially High Risk Areas

Shipping Procurement Sponsored Research projects

Develop “best practices” Technology Control Plans Checklists to review for export issues

Recordkeeping Required to keep records for five years

Tips on How to keep your Faculty Out of Trouble

Before adding a foreign national to a project, did you check to see if there are export control issues? A license could be required and must be in place

prior to work on the projectAcceptance of Export Controlled

information – Know your responsibility: Is the controlled research protected? TCP and/or

license must be in place before work begins Understand the conditions and restrictions of

agreements Did you just agree to export an instrument to China that

requires a license? Did you allocate enough $$ for the duties and fees?

More Tips….

Travel Abroad faculty briefings advisable Exports of export controlled hardware,

technology or software require export compliance review (includes presentations) PRIOR to travel

No Side-deals Make sure all agreed upon terms are included in

the agreement

Export Recordkeeping Requirements – keep for at least 5 years from date of export or

expiration of the license whichever occurs last

Where to get more information

http://www.vpr.arizona.edu/export-control - UA Vice President for Research Export Controls Webpage

http://www.bis.doc.gov/ - Commerce - Bureau of Industry & Security - EAR

http://pmddtc.state.gov/ - State - Directorate of Defense Trade Controls - ITAR

http://www.ustreas.gov/offices/enforcement/ofac/ - Office of Foreign Assets Controls

http://www.cbp.gov/ - Customs and Border Protection