Export Controls: An Introduction

1
Export Controls An Introduction

• Gene Stein
• Director, Sponsored Research Development

2
What Are ITAR and EAR?

• ITAR International Traffic in Arms Regulations
• EAR Export Administration Regulations

These regulations apply to all of SDSUs
activities, not just sponsored projects.
3
Why Do They Exist?

• The U.S. government wants to make sure that
  strategically important technology, services, and
  information dont get into the hands of foreign
  nationals and foreign countries. Some of the
  regulations have been around for decades, but
  there is more concern since Sept. 11, 2001.

4
Three Government Agencies Involved

• Department of State Controls defense articles
  and services technical data most space-related
  articles (ITAR)
• Department of Commerce (Bureau of Industry and
  Security) Controls dual-use itemsgoods and
  technology with both civilian and military uses
  (EAR)
• Department of the Treasury Controls trade
  embargoes and the Customs Service

5
What if SDSU Doesnt Do Sensitive Defense Work?

• Were not building tanks or missiles. Why worry?
• Some research that faculty members do can be
  defense-related or have a dual use
  (toxins/micro-organisms, lasers, computer design)
• If were going to engage in this work we may need
  to get a license, which can take months and

6
Why Must We Comply?

• Possible fines and imprisonment for violators
• Possible civil and criminal penalties for
  individuals, SDSU, and SDSURF
• Loss of export privileges
• Loss of research grants and contracts
• Bad publicity

7
How Is Export Defined?

• An actual shipment of items (equipment, data,
  software, information) subject to ITAR or EAR out
  of the U.S.
• Performing technical assistance for, or on behalf
  of, a foreign person or company, whether in the
  U.S. or abroad
• Re-exporting or shipping U.S.-origin goods or
  technology from one foreign country to another
  foreign country.

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Defining Export (contd)

• Releasing (including oral or visual disclosure)
  technical data or technology to a foreign person,
  whether in the U.S. (deemed export) or abroad.
  

Important If a foreign student sees or
discusses sensitive data in a faculty members
lab, it is considered a deemed export and is the
same as sending the data or technology to that
students home country.
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What Is A Deemed Export?

• In the absence of an exclusion, a license must be
  obtained from the U.S. Dept of State or Commerce
  to disclose controlled technical information to a
  foreign person in the U.S. or abroad.
• Methods of disclosure include Fax telephone
  conversations e-mail communications computer
  data disclosure face-to-face discussion
  training sessions tours with visual inspection.

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Who Is A Foreign Person?

• A foreign person is everyone other than a
• U.S. citizen
• permanent resident alien
• legal immigrant with a green card or
• protected individual (refugee/someone with
  asylum)
• A business that is not incorporated in the U.S.
  is a considered a foreign person.

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Foreign Person Problem/Solution
Problem How can a university check the
nationality of every student who goes into a lab?
Its not realistic, impairs education, and
restricts the free flow of information. Solution?
Say that the visas and scrutiny students got
before coming to the U.S. are sufficient.
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Categories of Items under ITAR

• ITAR covers military items (listed IXXI) such
  as
• Firearms, assault weapons, shotguns
• Guns and armament
• Ammunition/ordnance
• Guided missiles, bombs, torpedoes
• (It goes down to Item XXI.)
• Item XIV is Toxicological, Biological, Chemicals
• Aside from Item XIV, this wont affect SDSU.

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EAR (Military Civilian Use)

• 0. Nuclear materials, facilities, equipment
• 1. Chemicals, microorganisms, toxins
• 2. Materials processing
• 3. Electronics design, development, production
• 4. Computers
• 5. Telecomm. and information security
• 6. Sensors and lasers
• 7. Navigation and avionics
• 8. Marine
• 9. Propulsion systems, space vehicles
• We MAY need a license on these

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Implications of Export Laws

• There will be no effect on most university
  research, at SDSU and elsewhere. But there will
  be a potential impact on

• Ability of foreign researchers or students to
  participate in research involving controlled
  technology
• SDSUs ability to provide some training (mainly
  in controlled equip.) to foreign persons
• Ability to send controlled equipment to foreign
  countries

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Exemptions (Some Good News)

• A license is not required to disseminate
  information if one of three exemptions applies
• Fundamental Research Exemption (ITAR, EAR)
• Employment Exemption (ITAR only)
• Education Exemption (ITAR, EAR)

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Fundamental Research Exemption

• This is important
• No license is required to disclose to
  foreign persons information that is in the public
  domain, meaning it is published and is generally
  accessible or available to the public through
  books, news, libraries open to the public,
  unrestricted subscriptions, conferences, etc.

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FRE (contd.)

• Even more importantly for Universities
• No license is required when the work is
  fundamental research.
• Fundamental Research is basic and applied
  research in science and engineering at
  universities where the resulting information is
  ordinarily published and shared broadly in the
  scientific community.

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FRE (contd.)

• Rough translation for implementation
• If a faculty member is allowed to publish his/her
  research findings in the open literature, the
  Fundamental Research Exemption applies and a
  license is not needed.
• If publishing restrictions are accepted, and/or
  foreigners are not allowed to participate or see
  the research, it is not fundamental research.
  These restrictions destroy the exemption.

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National Security Decision Directive-189

• Reagan Administration issued in 1985
• It establishes the following policies
• To the maximum extent possible, the products of
  fundamental research should remain unrestricted
• Where national security requires control of
  federally-funded fundamental research in science
  and engineering at universities and labs, control
  should be through security classification

20
NSDD-189 (contd.)

• No restrictions may be placed upon the conduct
  or reporting of federally-funded fundamental
  research that has not received security
  classification, except as provided in applicable
  statutes.
• In 2001, former National Security Advisor
  Condoleeza Rice reaffirmed NSDD-189.

Problem Many federal contract officials dont
know about NSDD-189.
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More on FRE
The FRE is destroyed if SDSU accepts any contract
clause that

• Forbids participation by foreign persons
• Gives the sponsor the right to approve
  publications resulting from the research or
• Restricts participation in research and/or access
  to, and disclosure of, research results.

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FRE (contd.)

• A side deal between the PI and sponsor (not to
  publish) can destroy the FRE and may also violate
  university policies.
• NOTE Sponsors are allowed to request temporary
  delays in publication (30-90 days) to allow time
  to review for patentable or confidential
  information without destroying the FRE.

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FRE (contd)

• If the sponsor requires the PI to delete certain
  information, or if the PI is required to get the
  sponsors consent before publishing, the FRE is
  destroyed.
• NOTE Accepting a restriction on one project
  does not destroy the FRE on others. Even a
  restriction on one part of a project doesnt
  destroy the FRE on the total project.

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Strategies

• Protect the FRE by negotiating the elimination of
  all contract clauses or language that restrict
  university control over publications, or limit
  access to, or participation by, foreigners in
  research.
• Do not accept any research projects that restrict
  the ability to publish or share information with
  everyone.

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Strategies (contd.)
On federal projects or on subcontracts from
industry, do not accept these clauses

• DoD Clause 252.204-7000 (Disclosure of
  Information)
• FAR Clause 52.227-17 (Rights in Data, Special
  Works)
• Army Clause 52.005-4401 (Release of Information)
  Also, AR 530-1 and AR 360-1
• DFARS Air Force Clause 5352.227-9000 (Export
  Controlled Data Restrictions)
• Army Corps of Engineers, 52.000-0-4017

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Strategies (contd.)

• With industry, it may be necessary to see the
  companys prime contract to make sure about
  flow-down clauses
• With industry, we may only be able to accept a
  portion of the workscope, so that the
  export-controlled part is done by the company,
  with SDSUs part being fully publishable

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Strategies (contd.)

• If SDSURF and SDSU decide to accept an award that
  requires the PI to receive export-controlled
  information, we must consider whether the
  information is

• Central to the project (probably making the whole
  project export-controlled) or
• Tangential, in that the PI needs the information
  but others on the project dont.

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Strategies (contd.)

• If we decide the information is tangential
• Execute a nondisclosure agreement
• Require that the information be clearly marked
  export controlled
• Work with the PI to make sure he/she safeguards
  the information
• Ask PI sign a statement accepting responsibility
  for protecting the information
• Why?

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Penalties

• Liability is personal as well as institutional
• Penalties are severe
• Fines up to 1 million
• Significant prison time

OPINION Except in rare and unusual cases, SDSU
should not accept awards where export-controlled
information is central to the project.
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II. Employment Exemption

• No license is required to share technical
  information with a foreign person who
• Is a full-time, bona fide SDSU employee
• Has a permanent US address while employed,
  provided that he/she is
• (a) not a national of certain countries
• (b) is advised in writing not to share controlled
  information with other foreign persons

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Employment Exemption (contd.)

• The employment exemption does not apply to
  students. They are not employees.
• This means that certain foreign students cannot
  have access to, or participate in, research
  involving controlled information or technology.
• How can a PI know what country every student is
  from? PIs wont check visas of their students
• This is another reason not to accept awards with
  export-controlled material, information, or data

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III. Education Exemption

• Another exemption.
• If the controlled information concerns general
  scientific, mathematical, or engineering
  principles commonly taught at universities, or is
  information in the public domain, no license is
  required to share it with foreign persons
• Foreign students using controlled equipment to
  conduct research should be registered for a
  credit-bearing research class.

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Equipment Exemption?

• ITAR and EAR prohibit training foreign persons in
  the design, development, use, or testing of
  controlled equipment without a license. BUT
• Most universities rely on
• the FRE because equipment is part of doing
  research or
• the education exemption when instruction requires
  use of equipment
• and faculty wont check students visas.

34
Laptop Exemption

• Excluding countries under sanction (Iran, Iraq,
  Myanmar, Cuba, Libya, Liberia, Syria, North
  Korea), faculty can take a laptop out of the U.S.
  to use on a project that qualifies as fundamental
  research. Theres a license exemption for
  temporary export (TMP) if the laptop can be
  considered a tool of the trade and the PI
  retains control of it at all times. Microsofts
  Web site tells which of their software is
  controlled and needs a license.

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It Gets Confusing Example I

• SDSU faculty wants to take GPS systems to France
  to train colleagues.
• GPS is covered under EAR, category 7 (Navigation
  and Avionics). Maybe also under ITAR.
• Is a license needed? From which agency? PI and
  SDSU need to figure it out.
• A license may be needed. Some colleagues may not
  be French. Are some on list of denied people?

36
Example II

• Physics Dept. wants to hire a foreign national as
  a tech assistant. Is an export license required?
• Maybe yes. If a foreign national is hired in a
  technical, non-clerical position, his/her hire is
  considered a deemed export. Transferring
  technology or data to the person is the same as
  transferring the technology to the persons home
  country.
• If an export license is not required because of
  the persons nationality, he/she should sign a
  document agreeing to comply with US export
  regulations.
• Licenses can take up to a year to obtain.

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What Can Hurt Us?

• Research sponsored by corporations
• Is the corporation in violation?
• Is our research subcontract part of a larger
  agreement that contains export controls?
• Also.
• Increasing federal scrutiny of university
  research and deemed exports
• Troublesome FAR clauses restricting publication
• Material transfer agreements
• Interpreting national security vs. openness

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What Do We Have to Do?

• Educate SDSURF and key SDSU administrators
  (including deans and chairs) about export control
  issues and penalties
• Create an export control awareness program for
  faculty and other researchers
• Designate someone in Graduate Division and/or
  SDSURF to be point-person for information on
  export control issues
• Be sure questions on routing form concerning
  export control are answered by PI

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What Do We Have to Do? (contd)

• Train SDSURF staff to look for export control
  issues in the contract review process. Does an
  exemption apply? Are there hidden publishing
  restrictions, etc?
• Select a person (VP for Research?) who has
  authority to decide whether SDSU will accept
  projects that require a license.
• Option Decide that research projects without one
  of the exemptions (esp. FRE) will not be accepted.