Export Controls: Just the Basics – How to Keep Your Faculty & Researchers Out of Trouble!

1. Export Controls: Just the Basics – How to Keep Your Faculty & Researchers Out of Trouble! Kay Ellis Export Control Officer ellisk@email.arizona.edu 520-626-2437 Josh Estavillo University Attorney jle1@email.arizona.edu 520-621-3175

2. Export Basics: Terms & Regs Overview Strategic Technologies Presenters: Kay Ellis Josh Estavillo Identifying Red Flags Travel Abroad Tips on Staying Compliant

3. Export Alphabet Soup Export regulations Basic Terms Sensitive technologies

4. 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!

5. 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

6. 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).

7. Export 101

8. Regulations likely to affect your export are . . . • U.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

9. 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

10. Foreign Person is defined as . . .

11. Technical Assistance . . . “Know-how” . . . Defense Service . . Training • 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.

12. Technical Data . . . Technology Transfer • 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.

13. Sensitive Technologies COMMERCIAL APPLICATIONS SPACE, ROCKETs & MILITARY APPLICATIONS

14. “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

15. “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.)

16. 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”

17. What’s not export controlled? • Information in the public domain. • Information excluded under the Fundamental Research Exclusion (FRE) • Basic marketing and general system descriptions

18. Fundamental Research Exclusion in the Regs & Nat’l Policy (NSDD-189)

19. National Policy re Fundamental Research --NSDD-189 “Fundamental Researchmeans 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.”

20. Limits to Fundamental Research Exclusion – Subject to Export Controls or Other Prohibitions

21. What is a Restricted or Prohibited Party?

22. Vendor Payments • Payments to entities/persons on the denied lists could result in fines • Includes payments to entities in the U.S. or abroad • Payment to foreign entity should raise a red flag!

23. Staying inside the “Safehaven” IDENTIFYING RED FLAGS IN YOUR Proposals, Solicitations, AGREEMENTS

24. Outside FRE: Red Flags • 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 Work • Is it a Military component for research? • Is it a Space-related component for research? • Foreign national participation • Sponsor is a foreign entity or government • Restrictions on foreign national participation • International Travel or work being done abroad

25. Red Flags in Non-Disclosure Agreements, RFPs, Proposals & Contracts 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” agreement • References to Classified information or Security Plans

26. 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?

27. 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?

28. 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

29. Do I need to be concerned about export controls in this research? • Public domain, and • No equipment, encrypted software, listed-controlled chemicals, bio-agents or toxins, or other restricted technologies are involved, and • Information/software is already published, and • There is no contractual restriction on export, or • Fundamental Research • (note definitions and caveats associated with this exemption) • 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 • The equipment, software or technology is on the Commerce Control List, or • Information or instruction is provided about software, technology, or equipment on the CCL, or • 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 • 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 Probably (further review is required) License May Be Required YES License Will Be Required NO 29

30. When to Consider Obtaining an Export License:

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

32. Determining the need for a license If no exceptions or exemptions, determine what kind of license is needed - • EAR • ITAR • OFAC

33. What next?! Next steps: • Get a license and/or • Set up a Technology Control Plan • Train the project personnel • Audit the Plan • Keep records

34. 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

35. 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!

36. Travel Abroad How to keep your faculty out of trouble!

37. 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

38. 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”

39. 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!

40. 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 mostcountries – 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!

41. 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”

42. 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)

43. Recordkeeping Requirements State and Commerce require documentation of exceptions and exemptions Paperwork must be in place before you travel Records must be kept for five years PI/employee should keep a copy Copy for Export Control Officer’s file Copy for PI’s award file (if applicable)

44. Tips on Staying Compliant Final Thoughts

45. Develop an Export Compliance Management Plan within your unit • Risk Assessment • Stop 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

46. 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 project • Acceptance 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?

47. 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

48. 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