Certificate in Grants and Contracts Administration Program Session 4:

Introduction to Export Controls

Wednesday, January 23, 2013John Jacobs

Office of Compliance Export Controls

Wednesday, January 23, 2013John Jacobs

2

Introduction to Export Controls

Is Export Control New to The United States of America?

Early Tariffs Civil War

WWI September 11th 2001

Introduction to Export Controls

What/Why is the Issue/Concern with Export Control at UNCC!

HSBC foreign bank: Violating DoT/OFAC regulations concerning money laundering in relation to Iran, Libya, Sudan, Burma, Cuba, and Drug Cartels

Roth: U.S. citizen, Dr. Roth professor University of Tennessee violated EAR and ITAR a number incidents

4

Introduction to Export Controls

What is an Export?

EAR: The shipment/transfer of items/technology/technical data out of the United States that is subject to EAR or the same action to a foreign person/national in the United States.

ITAR: (a) Sending or taking a defense article out of the United States in any manner (b)Transferring registration, control or ownership to a foreign person of any aircraft, vessel or satellite covered by the U.S. Munitions List, whether in the United States or abroad (c) Disclosing (including oral orvisual disclosure) or transferring in the United States any defense article to an embassy, any agency or subdivision of a foreign government(e.g., diplomatic missions) (d) Disclosing (including oral or visual disclosure) or transferring technical data to a foreign person, whether in the United States or abroad (e) Performing a defense service on behalf of, or for the benefit of, a foreign person whether in the U.S. or abroad

Introduction to Export Controls

The U.S. export control system is based on several different laws. These laws are implemented

through a series of executive orders, regulations, and interagency agreements

Principal Laws:

• Export Administration Act of 1979 (EAA)• International Emergency Economic Powers Act• Arms Export Control Act• Atomic Energy Act• Trading with the Enemy Act• United Nations Participation Act

6

Introduction to Export Controls

Scope of Controls of the EAR and ITAR Regulations

• Equipment• Chemicals/toxins• Biological• Software code• Computers• Associated technology

7

Export Control Regulations

EAR: Export Administration Regulations - US Department of Commerce – Bureau of Industry

and Security Authorizes President to impose controls on dual use goods for the

following purposes:– protect national security– promote foreign policy interests– implement international obligations– prevent shortages of goods domestically

8

Basic Control Principles of EAR:Dual-Use Items

• Controls goods, technology, or software subject to U.S. jurisdiction– U.S. goods wherever they are located– Foreign goods in the U.S.– Foreign made products containing U.S. parts & components– Technology

• Export from the U.S.• Re-export from one foreign country to another• Persons subject to U.S. jurisdiction

9

Export Control Regulations

EAR: Export Administration Regulations - US Department of Commerce – Bureau of Industry and Security Continued

• Controls are imposed and maintained by the Department of Commerce in cooperation with the Departments of State and Defense, and other agencies

Export Control Regulation

ITAR: International Traffic in Arms Regulations - US Department of State – Office of Defense

Trade ControlsControls all aspects of Ideas/Materials that are used within

Research/Development/Manufacturing any items on the Munitions List of the United States this includes subcomponents

of major end items

11

Export Control Regulations

OFAC: US Department of Treasury - Office of Foreign Assets Control

• OFAC prohibits:– Payments or providing anything of value to sanctioned

countries– Travel to and other activities with embargoed countries

• In general, OFAC ‘trumps” export controls

12

Introduction to Export Controls: Embargo, Boycott, and Trade

Sanctions• Controls are Country, Entity and Person Specific

• Terrorist Supporting Countries (T6)Cuba Iran LibyaNorth Korea Syria Sudan

• Denied Parties List/ Restrictive Parties Screening

13

UNCC PERSPECTIVE• Universities know how to do compliance• Export control regulations are no more

complicated than animal care regulations• We didn’t learn animal care overnight• We don’t have to learn export control

overnight• So we don’t have to be afraid of this• But we needed a plan

14

UNCC Export Management System

• Designation of an institutional official• Training & professional development• Awareness programs• Record-keeping• Internal assessments• Legal counsel

UniversitiesFundamental Research

As defined in NSDD 189: “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 and from industrial development, design, production, and product utilization, the results of which ordinarily are restricted for proprietary or

national security reasons.”

16

Universities Exclusions

• Fundamental Research Exclusion• Educational Information Exclusion• Public Information Exclusion

These are Exclusions, not Exemptions

17

BIG Concern for Universities: Deemed Exports

• The transfer of technology or technical data to a foreign person/national in the U.S. is

“deemed” to be an export to that individual’s home country

• Deemed exports is the primary challenge that Universities face

18

Operational Considerations• Proposal review at all stages• Controls on visiting scientists & post doctorate• Student tracking• Travel, accounts payable, purchasing• Handling of proprietary information, software & encryption• Material transfer agreements• Taking or shipping items to a foreign country• Performing defense services; 6.3 funding• Controlling technology on campus• http://research.uncc.edu/compliance-ethics/export-control

19

Export ControlsPenalties

EAR. Administrative penalties for violations of the EAR may include: (a) denial of export privileges, (b) exclusion from practice, (c) imposition of a fine up to $250,000 per violation, or twice the value of the transaction, whichever is greater, or (d) any combination of the above. Criminal penalties for a company involve a fine up to the greater of $1,000,000 or 5 times the value of the exports per violation.

ITAR. Civil penalties for ITAR violations include a fine of up to $500,000 per violation. Criminal penalties may include a fine of up to $1,000,000 per violation, imprisonment for up to 10 years per violation, or both. Additional penalties may include seizure and forfeiture of the merchandise, interim suspension of export privileges, and debarment - a prohibition from exporting defense articles. Finally, DDTC regularly requires the supervised imposition of compliance programs.

Export ControlsPenalties

OFAC. Maximum civil penalties for most violations of OFAC statutes and regulations are $250,000 for each violation or twice the value of the transaction (whichever is greater); maximum criminal penalties are fines of up to $1,000,000 or, for an individual, up to 20 years' imprisonment.

CBP. Penalties for violation of CBP statutes and regulations allow for seizureand forfeiture of the merchandise, as well as the following penalties: (a) for fraud, penalty is equivalent to the domestic value of the imported merchandise; (b) for gross negligence, penalty is the lesser of the domestic value of the merchandise or fourtimes the loss of revenue to the U.S., or (c) for negligence, the lesser of the domestic value of the merchandise or two times the loss of revenue to the U.S. 19 U.S.C. § 1 592.

Concerns You Need to Watch •Restrictions on Publication•Foreign Nationals on Campus•Travel Outside the U.S.•Carrying/Shipping Equipment/Samples Outside the U.S.•Financial Payments to Foreign Nationals/Companies/Countries•Collaborating with Foreign Colleagues in Foreign Countries or in the U.S.•Providing Services or New Information Materials to or from a Boycotted Country•Joint Authorship/Editing of Articles with Foreign Nationals from Embargoed Countries•Accepting Export Controlled Technology/Technical Data/Information•Side Deals

Office of Compliance Export Controls

Introduction to Export Controls

Questions?John Jacobs/ jljacob2@uncc.edu/704.687.1877Cameron Applied Research Center Room 319

Assessment Questions

1) What regulations cover export control?2) List 4 concerns that you should watch for?3) Name the Empowered Official?4) Who do you call with a concern?5) In what category does UNCC try to keep all the research?