Carol Tracy Carr University Consulting Services

2. The basic export control framework -- ITAR, EAR and OFAC Why export controls have become an important concern for research universities How export controls apply to academic research Compliance, enforcement and penalties Specific issues for researchers Overview

3. U.S. Export Controls and Trade Sanctions U.S. export controls have multiple goals Advance Foreign Policy Goals Restrict Exports of Goods and Technology That Could Contribute to the Military Potential of Adversaries Prevent Proliferation of Weapons of Mass Destruction (nuclear, biological, chemical) Prevent Terrorism Fulfill International Obligations

4. U.S. Export controls Cover any item in U.S. trade (goods, technology, information) Extend to U.S.-origin items wherever located, including U.S.(Jurisdiction follows the item or technology worldwide) Under U.S. law, exporting is a privilege and not a right Export Controls and Trade Sanctions Basics

5. Controls have broad coverage and limited exclusions Exports of most high-technology and military items, and associated technology, are subject to U.S. export controls (require either a license or an applicable exemption) -- an increasing amount of university research is covered Export Controls and Trade Sanctions Basics

6. State Department: �Munitions� (the International Traffic in Arms Regulations or �ITAR�) Licensing: Directorate of Defense Trade Controls (�DDTC�) Arms Export Control Act (22 U.S.C. 2778) 22 CFR �� 120-130 Commerce Department: �Dual-Use� Items (the Export Administration Regulations or �EAR�) Licensing: Bureau of Industry and Security (�BIS�) Export Administration Act of 1979 15 CFR ��730-774 Treasury Department, Office of Foreign Assets Control (OFAC): Trade Sanctions, Embargoes, Restrictions on Transfers to Certain End-Users, Terrorism, Anti-Narcotics 31 CFR ��500-599 Federal Agencies Involved

7. International Traffic in Arms Regulations (ITAR) Covers military items (munitions or defense articles) Regulates goods and technology designed to kill people or defend against death in a military setting (e.g., tank, fighter aircraft, nerve agent defensive equipment) Differences Between ITAR and EAR

8. Munitions List Category I-Firearms Category II-Artillery Projectors Category III-Ammunition Category IV-Launch Vehicles, Guided & Ballistic Missiles, Rockets, Torpedoes, Bombs, Mines Category V-Explosives, Propellants, Incendiary Agents, and Their Constituents Category VI-Vessels of War and Special Naval Equipment Category VII-Tanks and Military Vehicles Category VIII-Aircraft, [Spacecraft] and Associated Equipment Category IX-Military Training Equipment Category X-Protective Personnel Equipment Category XI-Military [and Space] Electronics Category XII-Fire Control, Range Finder, Optical and Guidance and Control Equipment Category XIII-Auxiliary Military Equipment Category XIV-Toxicological Agents and Equipment and Radiological Equipment Category XV-Spacecraft Systems and Associated Equipment Category XVI-Nuclear Weapons Design and Test Equipment Category XVII-Classified Articles, Technical Data and Defense Services Category XVIII-Directed Energy Weapons Category XX-Submersible Vessels, Oceanographic and Associated Equipment Category XXI-Miscellaneous Articles

9. Creates �defense articles� (includes tech data which encompasses software unlike EAR) and �defense services� (certain information to be exported may be controlled as a �defense service� even if in the public domain) Includes technical data related to defense articles and defense services (furnishing assistance including design, engineering, and use of defense articles) Differences Between ITAR and EAR

10. International Traffic in Arms Regulations (ITAR) Includes space-related technology and research; increasing applicability to other university research areas such as nanotechnology/new materials and sensors and life sciences Differences Between ITAR and EAR

11. Export Administration Regulations (EAR) Covers dual-use items: 10 CCL categories of different technologies covering equipment, tests, materials, software and technology Regulates items designed for commercial purpose but that can have military or security applications (e.g., computers, pathogens, civilian aircraft) Differences Between ITAR and EAR (cont.)

12. Export Administration Regulations (EAR) Covers goods, test equipment, materials, technology (tech data and technical assistance) and software Also covers �re-export� of �U.S.-origin� items outside the United States Differences Between ITAR and EAR (cont.)

13. Commerce Control List Category 0 - Nuclear Materials, Facilities & Equipment (and Miscellaneous Items) Category 1 - Materials, Chemicals, Microorganisms, and Toxins Category 2 - Materials Processing Category 3 - Electronics Design, Development and Production Category 4 - Computers Category 5 (Part 1) - Telecommunications Category 5 (Part 2) - Information Security Category 6 - Sensors and Lasers Category 7 - Navigation and Avionics Category 8 - Marine Category 9 - Propulsion Systems, Space Vehicles and Related Equipment

14. U.S. economic sanctions focus on the end-user or country rather than the technology Embargoes administered by Office of Foreign Assets Control, U.S. Department of Treasury (�OFAC�) Prohibitions on trade with countries such as Iran, Cuba Limitations on activities in certain areas of countries or with certain non-state actors U.S. Trade Sanctions

15. OFAC prohibits payments or providing �value� to nationals of sanctioned countries and to specified entities even if the country is not subject to sanctions (ex. Baathists in Iraq) Separate prohibitions under the ITAR and EAR ITAR proscribed list/sanctions (e.g., Syria or requirement for presidential waiver for China) EAR restricts exchanges with some entities and universities in India, Israel, Russia, etc. because of proliferation concerns U.S. Trade Sanctions

16. U.S. Export Controls -- Why the growing concern with universities?  9/11 changed everything top research universities became a focal point for U.S. government export control compliance the growing intersection of cutting-edge science, technology and engineering research with national security, foreign policy and homeland security the evolving role of the research university (global in scope, multidisciplinary, changing innovation role)

17. 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 and from industrial development, design, production, and product utilization, the results of which ordinarily are restricted for proprietary or national security reasons. It is the policy of this Administration that, to the maximum extent possible, the products of fundamental research remain unrestricted. It is also the policy of this Administration that, where the national security requires control, the mechanism for control of information generated during federally-funded fundamental research in science, technology and engineering at colleges, universities and laboratories is classification.

18. U.S. Export Controls -- The Post 9/11 Regulatory Framework Increasing intersection of export controls with post-9/11 regulatory framework ( and growing disconnects) Life sciences as a major security concern -- biological agents, toxins and chemical precursors Increasing focus on material transfers and use of a wide range of select agents, chemicals and reagents Select agents: growing export control issues beyond compliance with the Patriot Act and the Biopreparedness Act regulations Increasing interest not only in the material but also in controlling the underlying technology, information and data �Sensitive but unclassified� information

19. 11/1/2001 Rice Letter 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-l89 shall remain in effect, and we will ensure that this policy is followed. Condoleeza Rice

20. U.S. Export Controls -- A Growing Focus on Research Universities Growing government perception that universities �are not serious� about export control compliance and are misusing the fundamental research exemption Corporate complaints that universities �aren�t playing by the same rules� with competitive implications GAO Report (2002) severely criticizing Commerce�s oversight of �deemed exports�, especially with foreign nationals from India, Pakistan, China, Russia and Israel

21. U.S. Export Controls -- A Growing Focus on Research Universities II Fall 2003 -- Federal interagency export control investigation/audit of 9 major research universities; OIG Report and likely Congressional hearings in 2004 �Enhanced� export control enforcement focus on universities and their researchers Summer 2006 � GAO �Interviews� of about two dozen research institutions GAO Report � issued December, 2006 Deemed Export Advisory Committee - 2007

23. �Deemed� Export Public Domain Exemption Fundamental Research Exemption Educational Instruction Exemption Government-sponsored research covered by national security contract controls ITAR -- �defense articles� and �defense services�, especially in space research and, increasingly, in life sciences and nanotechnology research The application of OFAC sanctions to university-sponsored or related activities Key Issues for University and Non-Profit Research

24. U.S. export controls cover transfers of technology and software within the U.S. (the transfer outside the U.S. is deemed to apply when a foreign national receives the information in the U.S.) Applies to technology transfers under the EAR and the provision of ITAR technical data and defense services Unless the fundamental research exemption applies, a university�s transfer of controlled technology to a non-permanent resident foreign national who is not a full-time university employee in the U.S. may be controlled and/or prohibited Deemed Exports

25. What are Deemed Exports?

26. Public Domain Public Domain/Publicly Available Broadest exclusion under EAR and ITAR -- it allows deemed export or export without controls Preconditions no equipment or encrypted software involved no reason to believe information will be used for WMD U.S. government has not imposed any access and dissemination controls as a funding condition No side deals

27. Public Domain II Applies to published information through one or more of the following: libraries open to the public unrestricted subscriptions for a cost not exceeding reproduction/distribution (including reasonable profit) published patents conferences, seminars in the United States accessible to public for a reasonable fee and where notes can be taken (ITAR) --or also abroad only if EAR Generally accessible free websites w/o knowledge General science/math principles taught at universities

28. Fundamental research exemption recognized, but purposely limited, given jurisdiction over goods and technologies designed to kill people Covers information �which is published and which is generally accessible or available to the public� through a number of mechanisms including: Unrestricted publications; Fundamental research in science and engineering at accredited institutions of higher learning in the U.S. where the resulting information is ordinarily published and shared broadly in the scientific community Excludes information restricted for proprietary reasons or specific U.S. government access and dissemination controls Excludes research abroad by Americans

29. Exemption significantly broader than ITAR Research conducted by scientists, engineers, or students at a U.S. university normally exempt from licensing Brief prepublication review solely: (1) to ensure no inadvertent release of proprietary information; or (2) to decide whether to patent generally does not trigger licensing Prepublication review by a corporate sponsor or other restrictions on the publication of scientific and technical information generally invalidates the exemption Some technologies ineligible for fundamental research exemption (e.g., advanced encryption) Commerce (EAR) Fundamental Research

30. Educational Information Exclusion �Educational information� is not subject to the EAR if it is released by instruction in catalog courses and associated teaching laboratories of academic institutions. Whether in the U.S. or abroad, exclusions from EAR and ITAR cover teaching foreign nationals general science, math, and engineering commonly taught at schools, colleges, and universities (ITAR, see 22 C.F.R. 120.10(5)), and conveying to foreign nationals information through courses listed in course catalogues and in associated teaching laboratories of academic institutions (EAR, see 15 C.F.R. 734.3(b) (3), 734.9), even if the information concerns controlled items.

31. Employee Exemption The ITAR contains an additional exemption (ITAR 125.4(10)) for: Disclosures of unclassified technical data in the U.S. by U.S. institutions of higher learning to foreign persons who are their bona fide and full time regular employees. This exemption is available only if: (i) the employee�s permanent abode throughout the period of employment is in the United States; (ii) the employee is not a national of a country to which exports are prohibited pursuant to Section 126.1 (of the ITAR); and (iii) the institution informs the individual in writing that the technical data may not be transferred to other foreign persons without the prior written approval of the Directorate of Defense Trade Controls. For most universities, the �bona fide and full-time regular employee� element required for the exemption typically does not include students, and may not include postdoctoral researchers (depending on their funding source).

32. Export of research products Certain oceanography or marine biology equipment may be controlled by ITAR Specially designed electronic components could be controlled Temporary transfer of research equipment abroad Carrying scientific equipment to certain destinations for research may require authorization (e.g., Iran, Syria, China, etc.) Application to University Research I

33. Application to University Research II

34. Corporate grants may limit access by foreign nationals Proprietary restrictions or restrictions on publication by corporate grants may invalidate fundamental research Could trigger licensing requirements for certain foreign nationals Conferences Potential restrictions on participants Inability to co-sponsor with certain countries or groups (e.g., restrictions on co-sponsoring conference with Iranian government) Transfer of defense services Potential license requirements for work with foreign nationals to launch research satellite Application to University Research III

35. No side deals! Any unauthorized �understandings� or side deals can pose serious dangers for the university and for the individual researcher Application to University Research IV

36. State Department (ITAR) Criminal violations: up to $1,000,000 per violation, up to 10 years imprisonment Civil penalties: seizure and forfeiture of the articles and any vessel, aircraft or vehicle involved in attempted violation, revocation of exporting privileges, fines of up to $500,000 per violation Commerce Department (EAR) Criminal violations: $50,000-$1,000,000 or five times the value of the export, whichever is greater per violation (range depends on the applicable law), up to 10 years imprisonment Civil penalties: loss of export privileges, fines $12,000-$120,000 per violation Penalties for Noncompliance

37. Loss of �exporting� privileges (usually for 30-90 days) could cripple a university�s normal activities Puts federal funding at risk -- for the university and for the individual Treasury Department (OFAC) Criminal violations: up to $1,000,000 per violation, up to 10 years imprisonment Civil penalties: up to $55,000 per violation. Violation of specific sanctions laws may add additional penalties; seizure and forfeiture of goods Public relations and media attention -- Most settlements with the Commerce, State or Treasury Departments generally become public. Court cases are always public! Penalties for Noncompliance (cont�d)

38. Why this is important� Professor Is Convicted Of Sharing Technology Washington Post, Thursday, September 4, 2008; Page A04 A federal jury in Knoxville, Tenn., convicted a retired university professor on conspiracy, wire fraud and export control charges yesterday for improperly sharing sensitive technology with students from China and Iran. Plasma physicist J. Reece Roth, 70, was sentenced to four years in prison. Prosecutors say the professor emeritus at the University of Tennessee exchanged restricted military data with foreign research assistants and traveled overseas with electronic versions of sensitive materials on his laptop computer.

39. Questions?

41. The Special Role of the Researcher Researcher is important partner in the process because: Possesses technical knowledge Decides what equipment and technology will be required Decides on the participants, both within institution and outside Controls the Statement of Work Will be implementing the controls on the exports

42. What is the Minimum the ResearcherNeed to Know About Export Controls?

43. At a minimum, researchers should know� Export controls and trade sanctions exist. They apply to many common items and activities, as well as technical and military. Noncompliance with these laws carry serious penalties (both civil and criminal, as well as individual and institutional.) When to ask for assistance to determine whether export controls apply and how to comply

44. U.S. Export controls Cover any item in U.S. trade (goods, technology, information) wherever located Under U.S. law, exporting is a privilege and not a right Export Controls and Trade Sanctions Basics

45. Export Administration Regulations (EAR) --Covers �dual use items� 10 categories of different technologies covering equipment, tests, materials, software, and technology that are designed for commercial purpose but that also can have military or security applications International Traffic in Arms Regulations (ITAR) Covers military good and technology (�munitions� or �defense articles designed to kill people or defend against death in a military setting Differences Between ITAR and EAR

46. International Traffic in Arms Regulations (ITAR) Creates �defense articles� (includes tech data which encompasses software unlike EAR) and �defense services� (certain information to be exported may be controlled as a �defense service� even if in the public domain) Important Difference!

47. The researcher is in the best position to control the issues triggering an export control issue.

48. The best defense is publication.

49. Design of Statement of Work Provides information regarding: Materials or equipment to be used Third-party information or technology Treatment of results and deliverables of the research Foreign collaboration or involvement

50. Technology Evaluation Will any portion of the research be conducted off the research institution�s main campus or outside the United States? Under this research project, will the research results and/or any deliverable be sent to a foreign country or foreign citizen (other than a foreign national in the U.S. at an accredited university) prior to publication? Does this research project involve technology or devices designed or capable for use in military, security or intelligence applications?

51. Technology Evaluation Has any collaborator or the sponsor indicated that export-controlled items are necessary for the work to be performed or that they cannot be shared with non-U.S. citizens?� Are there any restrictions on publication? �Does the research project raise any of the issues surrounding deemed exports and the use of foreign nationals? �Does the research project require the development of any of the following Systems, equipment and components Test, inspection and production equipments Materials Software and technology or the use of any related laboratory equipment which are found on the export control lists, the Commerce Control List (CCL) or the Munitions List (USML)?

52. Technology Evaluation Where any of these questions are answered in the affirmative, a full technology evaluation should be performed by an export control specialist with assistance from the researcher and/or administrator.� Resolution of any questions generally turn to technical aspects of the equipment or technology.

53. Technology Evaluation Process Identifying keywords for searching in the CCL and ML Understanding the science of research proposal Understanding the technical aspects of the equipment or technology Exploring all the facets: equipment, technology, software, technical data, �how-to� Bottom line: is it a controlled item, technology, manufacturing process, material, software?

55. Laptops and GPS �Laptops and GPS, and their underlying software, are covered by the Export Administration Regulations (�EAR�) and, in some cases, the International Traffic in Arms Regulations (�ITAR�). Export regulations vary based on the country to which a researcher is traveling and purpose for which the researcher intends to use the laptop or GPS. A license exception TMP may apply to the export of the laptop or GPS in question, and if so, a researcher may be able to take that equipment abroad without violating the EAR or ITAR.

56. Off-Campus Discussions The majority of exchanges between researchers off-campus can go forward without the requirement of an export license where the sole purpose of the meeting is to present research findings that have been or are intended to be published.� However, where there is the possibility of exchange with a foreign national or foreign entity of technical information not yet published regarding a defense article found on the Munitions List, the researchers should be aware of the following:

57. Off-Campus Discussions II The U.S. Export Regulations (ITAR) only permits unlicensed export of: 1.�general systems description of defense articles 2.�basic marketing information on function or purpose 3.�information concerning general scientific, mathematic or engineering principles commonly taught in schools, college and universities, and 4.�information in the public domain

58. Off-Campus Discussions III Technical information which falls within the meaning of the first categories above and is NOT ITAR-controlled includes: Top-level drawings, top-level narrative descriptions or summaries of performance requirements, key subsystems, design capabilities or manufacturing facilities. � Top-level description of reliability analyses, top-level block diagrams, top-level description of operational modes, top-level equipment layout drawings, and top-level predictions of power usage or consumption do not require a license.

59. Off-Campus Discussions IV Technical information which IS likely to be ITAR-controlled, and thus require an export license before sharing with a foreign national or foreign entity, includes: detailed information about �how-to� design, manufacture and test; design, manufacture, test methodology or philosophy; technical trade-off methodology or detailed alternatives, detailed test data or test procedures, detailed description of integration and test plans, or detailed schematics diagrams or interface information, as well as manufacturing or assembly processes or analytical methods of procedures.

60. Also Remember� Exports of all other technical information about a defense article can take place either through exchange of documents, through oral exchanges in person or by telephone, or by electronic exchanges, including fax transmission or email.� The ITAR prohibits the furnishing of assistance, including training, related to a defense article to foreign persons.

61. No side deals! Any unauthorized �understandings� or side deals can pose serious dangers for the university and for the individual researcher License processing takes time Fast approvals in weeks; Most approvals in months; The hardest cases can take years Important Warning!

62. Questions?