EXPORT CONTROL AWARENESS

1
EXPORT CONTROL AWARENESS

• UNIVERSITY OF IOWA
• Lisa Leff
• Assistant Director
• Division of Sponsored Programs
• Spring 2005

2
What are Export Controls

• US laws that regulate the distribution of
  strategically important products, services, and
  information to foreign nationals and foreign
  countries. These things may be important for
  foreign policy reasons, as well as national
  security

3
Export Controls at the University of Iowa

• I would like to take this opportunity to
  encourage everyone to read the following
• Message from the Vice President for Research
• Export Controls Who Should Care and Why
• Which provide an overview of the issue of Export
  Controls and can be found, along with other
  useful information, at
• http//research.uiowa.edu/dsp/main/?getexport-co
  ntrols

4
Applicability Depends On

• Nature of the goods, technology, or data (actual
  or potential issues for economic protections or
  military applications)
• Destination (country, organization, individual)
• Intended user or suspected end use or end user

5
US Export Controls and Responsible Agencies

• State Department Controls inherently military
  technologies International Traffic in Arms
  Regulations (ITAR)
• Commerce Department Controls Dual-Use
  technologies (primary civil use, but with
  military application) Export Administration
  Regulations (EAR)
• Treasury Department, Office of Foreign Assets
  Control (OFAC) Prohibits transactions with
  countries subject to boycotts, trade sanctions
  and embargoes

6
Implications of Export Laws

• No effect on 90 of university research
• BUT potential impact on
• Ability of foreign nationals (students, faculty,
  visiting scholars etc.) to participate in
  research involving a controlled technology
  (primarily ITAR)
• Ability to provide services (including training
  in the use of controlled equipment) to foreign
  nationals and foreign countries (ITAR, EAR, and
  OFAC)
• Ability to send controlled equipment to foreign
  nationals or countries (ITAR, EAR, and OFAC)

7
EAR

• Goods and related technology listed on the
  Commerce Control List (CCL, 15 CFR 774, Supp. 1)
• Lists 10 categories for which a license is
  required
• Materials (chemicals, microorganisms, toxins),
  Materials Processing, Electronics, Computers,
  Telecommunications, Lasers and Sensors,
  Navigation and Avionics, Marine, Propulsion
  Systems, Space Vehicles and Related Equipment

8
EAR 99

• This is an additional catch-all category
• It covers goods/technology subject to the EAR
  as defined in 15 CFR 734.3(a) but not
  specifically identified on the CCL
• These items may or may not require a license,
  depending on the destination (country and
  individual)

9
ITAR

• Regulates Defense articles, defense services,
  related technical data on the US Munitions List
  (USML) at 22 CFR 121
• Also regulates items and technology that are
  inherently military in nature designed to
  kill/defend against death in a military situation
• The USML lists 21 categories which require a
  license
• The List includes weapons, chemical and
  biological agents, vehicles, missiles, equipment
  and all satellites

10
SINCE 9/11

• The higher education community has increased its
  efforts to remove university research from the
  scope of export control regulations
• There is an increasing applicability of these
  regulations to university research
• The government has recently audited several
  university research programs, checking for
  compliance

11
Issues for University Research

• The definition of export is expansive and
  includes
• Transfer/disclosure outside the US to any person
  (including a US citizen abroad)
• Transfer/disclosure in any form (verbal, written,
  electronic, visual) within the US to anyone not a
  US citizen or permanent resident (green card
  holder) DEEMED EXPORT RULE
• ITAR also includes defense services

12
Deemed Export Rule

• If export controls apply and license is required
• - and no exemption is available
• - Must obtain a license before
  export- controlled item/information can be shared
  abroad or with a foreign national participating
  in the research on a US campus
• - When certain countries are involved, no
  license is available at all

13
More Issues

• The expansion of ITAR jurisdiction to include
  research satellites and related technology (ITAR
  2002 amendment)
• Increasing application of ITAR to the life
  sciences
• MTAs and their issues with the application of
  the fundamental research exemption)

14
2002 ITAR Amendment

• Provides an exemption to US universities for
  certain spacecraft systems fabricated solely for
  research purposes, IF
• Exports are restricted to universities/research
  institutions in NATO or other US-allied
  countries, AND
• All the information is in the public domain
  (defined in 22 CFR 120.11)

15
Effect of the 2002 Amendment

• Does not expand the scope of existing fundamental
  research exemption under ITAR, since public
  domain information is already outside of ITAR
  scope
• Appears to require a license for information in
  the public domain (outside ITAR scope) for
  exports to countries outside NATO or US allies
• Effectively, no reliable authority for proceeding
  without a license in the area of satellite
  research

16
Dissemination of Information

• The regulations prohibit the disclosure of
  controlled technical information by any method to
  a foreign national in the U.S. or abroad without
  a license from Commerce or State
• Methods of disclosure include
• Fax
• Telephone discussions
• E-mail communications
• Computer data disclosure
• Face-to-face conversations
• Training sessions
• Tours which involve visual inspections

17
Other Examples of Restrictions

• Conferences where previously unpublished research
  will be presented (web-based, abroad or in the
  US)
• Meetings where unpublished research will be
  discussed (web-based, abroad, or in the US)
• Teaching foreign collaborators how to use items
  in research (defense service)
• Transfers of research equipment abroad

18
No License Requirements for Dissemination of
Information IF

• An exemption/exclusion applies
• Public domain (ITAR)/ Publicly available (EAR)
• Educational Exemption (ITAR, EAR)
• Fundamental Research Exemption (ITAR, EAR)
• Bona fide/full time Employment Exclusion (ITAR
  only)

19
Public Domain/Publicly Available

• ITAR definition of public domain information
  which is published and generally accessible to
  the public through (among other things)
  fundamental research
• EAR publicly available technology and software
  is outside the scope of the controls

20
Exclusion Inapplicable

• To equipment or encrypted software
• If there is a reason to believe the information
  will be used for Weapons of Mass Destruction
  (WMD)
• Where the US government has imposed access and
  dissemination controls as a condition of funding
  (ITAR)

21
Educational Instruction Exemption

• Generally, a license is not needed for
  classroom/lab teaching to foreign nationals in US
  Universities
• When sharing information concerning general
  scientific, mathematical, or engineering
  principles commonly taught in universities or
  information in the public domain with foreign
  nationals (EAR)
• ITAR specifically removes information concerning
  general scientific, mathematical, or engineering
  principles commonly taught in schools, colleges
  and universities or information in the public
  domain from its definition of technical data
• Students in degree programs, using controlled
  equipment to conduct research need to be
  registered for a research credit class

22
Fundamental Research Exemption

• EAR 15 CFR 734.8
• Basic and applied research in science and
  engineering, where the resulting information is
  ordinarily published and shared broadly within
  the scientific community
• Distinguished from proprietary research and
  industrial development, the results of which are
  ordinarily restricted for proprietary reasons or
  national security reasons

23
Fundamental Research Exemption

• ITAR 22 CFR 120.11
• Public domain information which is published
  and which is generally accessible to the public
• Through fundamental research basic and applied
  research in science and engineering at accredited
  institutions of higher education in the US where
  the resulting information is ordinarily published
  and shared broadly within the scientific community

24
Common Elements of FRE ITAR/EAR

• Exclude from export controls the disclosure of
  information resulting from fundamental research
  to foreign nationals
• Exclusion is lost when university accepts
  restrictions on the publication of results
  restrictions on foreign national participation in
  research
• Exclusion is not applicable to a sponsors
  existing proprietary information
• Applies only to the transfer/disclosure of
  information (not to physical objects or defense
  services)
• Applies only to disclosures in the US at
  accredited institutions of higher learning

25
The Fundamental Research Exemption is Destroyed
(EAR ITAR) When

• The University accepts ANY contract clause that
• Forbids the participation of foreign nationals
• Gives the sponsor the right to disallow
  publications resulting from the research or
• Otherwise functions to restrict participation in
  research and/or access to and disclosure of
  research results

26
FRE EAR and ITAR Compared

• ITAR applies to information which is
  published and generally accessible/available to
  the public
• EAR applies to information which is publicly
  available

27
FRE EAR and ITAR Compared

• EAR Exclusion is not lost where university
  accepts temporary publication delay for
  prepublication review for proprietary/patent
  purposes
• ITAR does not contain this language, so there
  is ambiguity about whether the safe haven is
  available

28
FRE EAR and ITAR Compared

• EAR exclusion is not lost in a federally-funded
  project where university accepts specific
  national security controls, so long as controls
  are not violated in exporting the information
• ITAR exclusion is lost in federally funded
  projects where such restrictions are accepted

29
Fundamental Research Exemption Violation

• Side deals between a PI and Sponsor effectively
  destroy the Fundamental Research Exemption and
  also violate University policy. See University
  Operations Manual, II-27.2, Principles Governing
  Restricted-Access Research

30
University Strategy

• Protect the fundamental research exemption by
  eliminating contractual clauses that destroy our
  ability to claim the exemption in the first place.

31
Employment Exemption

• A license is not required when sharing controlled
  technical data with a foreign national who
• Is not a national of an embargoed country
• Is a full-time bona fide U of Iowa employee
• Has a permanent address in the U.S. while
  employed at the U of Iowa and
• Is advised IN WRITING not to share covered
  technical data with any other foreign nationals
  without government approval.

32
ITAR Employee Exemption Problems

• Visa restrictions may require holder to maintain
  a foreign residence
• Researcher may not have full-time employee status
  (ie students and some post-docs)

33
Providing Services to Foreign Nationals

• ITAR and EAR prohibit assisting and training
  foreign nationals anywhere with designing,
  developing, using, testing, etc. controlled
  equipment without a license from Commerce or
  State
• Example Fermenters that have a capacity of at
  least 20 liters

34
Export Controlled Equipment NO Exclusions

• While there are no clear exclusions or safe
  harbors from the requirement to obtain a license
  for foreign nationals to use controlled
  equipment,
• The University believes the Education Exemption
  applies if the foreign national student uses the
  equipment as part of a program of instruction

35
Providing Services Under OFAC

• OFAC prohibits providing services to countries
  subject to U.S. sanction programs, boycotts,
  etc., without a license
• Providing Services includes
• Conducting surveys and interviews in boycotted
  countries
• Providing marketing, business, editing services
  to persons in boycotted countries

36
Providing Services Continued

• Creating new information materials at the request
  of persons in a boycotted country
• Engaging the services of persons in a boycotted
  country to develop new information materials
• Working directly or indirectly with persons in a
  boycotted country to import into or export from
  the US publication services, INCLUDING editing
  services
• Web-based conferences and presentations

37
Countries under Boycotts

• Recent Examples The Balkans, Cuba, Iran, Iraq,
  Libya, Liberia, Sudan, Syria, North Korea
• For a full, up to date listing, visit the OFAC
  website
• http//www.treas.gov/offices/eotffc/ofac/sanction
  s/index.html

38
License Required to Ship Controlled Equipment out
of the US - ITAR

• A license is required to ship ITAR controlled
  equipment to ANY foreign country
• There are very few exclusions or exceptions
• It can take months to obtain a license from State
• Please notify DSP as early as possible

39
Shipping Equipment Continued - EAR

• A license may be required to ship equipment out
  of the US under the EAR depending on whether the
  equipment is controlled, where it is being sent,
  and whether an exception applies.
• NOTE A license may be required to ship software
  out of the US!
• The process to classify equipment under the EAR
  is tedious, detailed and very time consuming.
  Contact DSP early!

40
Shipping Equipment Continued

• There is a presumption under OFAC laws that any
  and all equipment shipments and service
  provisions to countries subject to US
  sanctions/boycotts or persons in those countries
  is ILLEGAL
• Examples of currently embargoed countries
  Balkans, Burma, Cuba, Iran, Iraq, Libya, Liberia,
  Sudan, Syria, Zimbabwe

41
Laptop Exception

• Faculty who want to take their laptops out of the
  country to use in a university project that
  qualifies as fundamental research may be able to
  do so under the license exception for temporary
  export (TMP) IF the laptop meets the requirement
  for tools of trade and is under the control of
  the UIowa faculty member (15 CFR Part 740.9)
• This exception does NOT apply to embargoed
  countries

42
Administrative Penalties for EAR and ITAR
Noncompliance

• Termination of export privileges under EAR and
  ITAR
• Suspension and/or debarment from government
  contracting (EAR and ITAR)
• Voluntary disclosures of violations serve as a
  mitigating factor in determining penalties

43
Penalties for EAR Violations

• Criminal for Willful Violations
• Up to 1 Million for the University or company
• Up to 250K per violation for individuals and/or
  up to 10 years in prison
• Civil
• Up to 12k per violation for individuals and the
  University or company

44
Penalties for ITAR Violations

• Criminal Willful Violations
• Up to 1 Million for the University or Company
• Up to 1 Million per violation for individuals
  and/or up to 10 years in prison
• Civil Violations
• Up to 500k per violation for individuals and the
  University or company

45
Penalties for OFAC Violations

• Criminal Willful Violations
• Fine of no more than 1 M for companies
• Fine of no more than 100k for individuals
  (including corporate officers) and/or 10 years in
  prison
• Civil Penalties
• Fine of up to 55k for each violation by any
  person

46
Proposal Stage Red Flags

• Does the Project involve
• Shipping equipment to a foreign country?
• Collaborating with foreign colleagues in foreign
  countries?
• Training foreign nationals to use equipment?
• Working with a country subject to a US boycott?
• Is the RFP marked Export Controlled?
• Is the Sponsor demanding pre-approval rights over
  publications or the participation of foreign
  national students?

47
IF YES

• The U of Iowa must make a determination as to
  possible license requirements Contact Lisa
  Leff/DSP
• Note 1 If a license is needed, the application
  takes a great deal of time and effort from both
  the faculty member and DSP and can be in process
  for months
• Note 2 These regulations apply to ALL
  activities, not just sponsored projects

48
REMEMBER

• KEEP IT EXEMPT!
• -NO restricted publication clauses
• -NO side deals
• -NO restrictions on foreign national
  participation
• CONSIDER THE IMPACT IF YOUR RESEARCH INVOLVES
• AN EMBARGOED COUNTRY
• CONTACT DSP AS SOON AS AN EQUIPMENT ISSUE ARISES
• Questions?
• Lisa Leff at 5-2120
• Additional U of Iowa Export Control Information
  can be found at
• http//research.uiowa.edu/dsp/main/?getexport-con
  trols
• These slides were developed with the assistance
  of Grainne Martin, General Counsels office and
  previously prepared material from MIT and NCURA
  presentations