Export Control: The Basics and Developing a Management Plan

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Export Control The Basics and Developing a
Management Plan
SRA International Southern Section Meeting
April 20, 2005

• James E. Peterson, Ph.D.
• Associate Vice Chancellor for Research
• Office of Sponsored Research
• University of North Carolina at Chapel Hill

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What We Will Cover

• Basics
• What are export controls
• Increased focus
• Agencies
• Definitions
• Exclusions
• Penalties

3
What We Will Cover

• Management Plan
• Why one is needed
• Developing a good plan
• Resources
• Universities
• Other sites

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What are Export Controls?

• A comprehensive series of regulations enforced by
  the Federal Government that regulate the
  distribution of certain exports to foreign
  nationals and foreign countries because

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Why Export Controls

• Restrict exports of goods and technologies that
  could contribute to military potential of other
  countries
  
• Prevent proliferation of weapons of mass
  destruction
  
• Prevent terrorism and other illicit activities
• Nature or type of technology raises some sore of
  trade / economic protection issue
  
• Concerns about the country, organization,
  individual or end user of the technology

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What are Export Controls?

• Have been in existence in one form or another
  since the 1940s
  
• Export control laws apply to all activities not
  just sponsored research projects
  
• Control involves obtaining a license from the
  federal government prior to exporting

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Why the increased focus on Export Controls?

• After 9/11 seen as anti-terrorism tool with
  increased focus on universities and enforcement
  
• Life sciences biologicals
• Wider range than select agents
• Visits to campuses in 2003 and 2004
• Inspector General reports
• Sessions at national meetings
• Friday morning session at February 2005 COGR
  meeting
  
• Federal Register request for comments on March
  28, 2005

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U.S. Agencies

• STATE
• International Traffic in Arms Regulations (ITAR)
• for inherently military technologies
• COMMERCE
• Export Administration Regulations (EAR)
• for Dual Use technologies
• TREASURY
• Office of Foreign Assets Control (OFAC)
• prohibits transactions with countries subject to
  embargo, boycott or trade sanctions

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ITAR (STATE)

• Reference Library
• http//www.pmdtc.org/reference.htmITAR
• U.S. Munitions List
• http//www.pmdtc.org/usml.htm
• Defense articles, defense services and related
  technical data
  
• Divided into 21 categories
• Country Control Chart
• http//www.pmdtc.org/country.htm

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EAR (COMMERCE)

• EAR Database
• http//www.access.gpo.gov/bis/ear/ear_data.html
• Commodity Control List
• Part 738 http//www.access.gpo.gov/bis/ear/pdf/738
  .pdf
  
• Dual Use technologies with primary commercial
  application, but also possible military use

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Commodity Control List

• Categories
• O Nuclear Materials, Facilities and Equipment
• 1 Materials, Chemicals, Microorganisms and
  Toxins
  
• 2 Materials Processing
• 3 Electronics
• 4 Computers

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Commodity Control List

• Categories (continued)
• 5 Telecommunications and Information Security
• 6 Lasers and Sensors
• 7 Navigation and Avionics
• 8 Marine
• 9 Propulsion Systems, Space Vehicles and Related
  Equipment

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Country List

• Part 738 SPIR
• http//www.access.gpo.gov/bis/ear/pdf/738spir.pdf
  
• 15 pages
• country vs reason for control

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OFAC (TREASURY)

• Impose trade sanctions and trade and travel
  embargoes aimed at controlling terrorism, drug
  trafficking and other illicit activities
  
• Embargoed Countries
• http//www.treas.gov/offices/enforcement/
  ofac/sanctions/

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OFAC (TREASURY) continued

• Country list can change but today includes
  Burma (Myanmar), Cuba, Iran, Iraq, Libya,
  Liberia, North Korea, Sudan, Syria, Zimbabwe
  
• Difficult to do anything with these countries
• Payments / providing value
• Travel and other activities even when exclusions
  apply
  
• SDN and Blocked Persons
• http//www.treas.gov/offices/enforcement/
  ofac/sdn/

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What is an export?

• Transfer to a foreign person in the U.S. or
  abroad of
  
• Controlled technology
• Information
• Equipment
• Software
• Services

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What is a transfer?

• Transfer can be by
• Actual shipment outside the U.S.
• Electronic or digital transmission
• Visual inspection in or outside the U.S.
• Written or oral disclosure
• Actual use or application on behalf of or for the
  benefit of foreign person or entity

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What is a deemed export?

• Transmitting the technology, information, etc.
  to a foreign person within the United States.

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Methods of disclosure to a deemed export

• FAX
• Telephone conversations
• E-mail communications
• Face-to-face discussions
• Tours of labs
• Training sessions
• Computer data

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Who is a foreign person?

• Any person who is not a lawful permanent resident
  of the U.S.
  
• Any foreign corporation or other entity or group
  that is not incorporated or organized to do
  business in the U.S.
  
• Any foreign government

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Exclusions

• Fundamental Research (ITAR, EAR)
• Publicly Available (EAR) / Public Domain (ITAR)
• Employment (ITAR only)
• Education (ITAR, EAR)
• Government Sponsored Research Covered by Contract
  Controls (EAR)

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Fundamental Research Exclusion

• No license is required to disclose to foreign
  persons information (not items or materials) that
  is published and generally available or
  accessible to the public. Basic or applied
  research in science or engineering at
  universities (located in the U.S.) where the
  resulting information is ordinarily published
  (IGs would prefer actual publication) and shared
  broadly in the scientific community.

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Publicly Available / Public Domain Exclusion

• Information already published
• Libraries open to the public
• Unrestricted subscriptions
• Published patents
• Conferences, meetings, etc. held anywhere which
  are generally accessible to the public
  
• Websites accessible to the public for free
• Broadest exclusion can apply to information
  transfers in U.S. and abroad

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Fundamental Research / Public Domain Can Apply
Unless

• The university accepts any clause that
• forbids the participation of foreign persons
• gives the sponsor a right to approve publications
  (short 30-90 day pre-publication review is
  allowed)
  
• restricts participation in research and/or access
  to and disclosure of research results
  
• There are side deals between PI and sponsor
  regarding publishing

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Employment Exclusion

• No license is required to share controlled
  technical information with a foreign person who
  
• is a full-time regular university employee
• has permanent address in the U.S. while employed
  provided that the person is
  
• not a national of a country to which exports are
  prohibited
  
• advised in writing not to share controlled
  information with other foreign persons
  
• does not apply to graduate students

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Education Exclusion

• No license is required to share with foreign
  persons if the information is
  
• Concerning general scientific, mathematical or
  engineering principles commonly taught in
  universities or information in the public
  domain
• Conveyed in courses listed in course catalogues
  and in associated teaching labs

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Government Sponsored Research Covered by Contract
Controls

• Information resulting from research that includes
  security controls in the agreement
  
• Does not qualify for fundamental research
  exclusion but no license required if follow
  controls in agreement
  
• If dont follow all the controls then need
  license
  
• If no license then violation

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Licensing

• Most research and teaching on campus in U.S. and
  some information transfers on campus and abroad
  can qualify for exclusions and therefore we dont
  need a license
• When exclusions dont apply and a license is
  required it must be obtained
  
• Before export abroad to anyone of items,
  materials, technical data
  
• Before deem export to foreign nationals in U.S.
  (even on campus)

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Licensing (continued)

• If license is required and denied the export or
  deemed export is prohibited
  
• Violations subject to both civil and criminal
  penalties against individuals and institutions
  
• Violations will affect the reputations of both
  individuals and institutions

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Penalties for ITAR

• Criminal
• Up to 1 million for a university or company
• Up to 1 million per violation for individuals
  and/or up to 10 years in prison
  
• Civil violations
• Up to 500,000 / violation for individuals, a
  university or company
  
• Seizure of articles
• Revocation of exporting privileges

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Penalties for EAR

• Criminal
• Up to 1 million for a university or company
• Up to 250,000 / violation for individuals and/or
  up to 10 years in prison
  
• Civil
• Loss of export privileges
• Up to 12,000 / violation for individuals, a
  university or company

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Penalties for OFAC

• Criminal
• Maximum fine of 100,000 for individuals and/or
  10 years imprisonment
  
• Maximum fine of 1 million for a university or
  company
  
• Civil
• Maximum fine of 55,000 / violation
• Violations of specific sanctions may add
  additional penalties

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So.

• I dont have to worry! Everything we do on this
  campus is fundamental research and is ordinarily
  published.
  
• Could leave the door open for an export control
  violation
  
• What should I do?

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Why I need an Export Control Management Plan

• Required for many corporations (ITAR)
• Visits by Commerce, State and DOD to
  universities will continue
  
• Shows due-diligence on our part
• Will help protect academic freedom and exclusions

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Developing an Export Control Management Plan

• Put the program and policy in writing
• Centralize oversight
• Good legal counsel
• Good educational programs
• Good record keep
• Ask the right questions
• Not just sponsored research

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Management Plan

• In Writing
• Clear and consistent written policy complying
  with export regulations
  
• Background material on website
• Summary of regulations covered, technologies and
  sanctioned countries
  
• Management Plan in writing

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Management Plan

• Centralized Oversight
• Designate an empowered official for export
  controls who will
  
• Have a good general knowledge of ITAR, EAR, OFAC
• Interact with faculty to answer questions
• Ensure application of a uniform policy
• Apply for licenses and interact with State and
  Commerce
  
• Interact with legal experts

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Management Plan

• Good Legal Counsel
• Need ally in internal office or outside counsel
• Knowledgeable in export control regulations in a
  university setting

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Management Plan

• Good Educational Programs
• Emphasize what faculty and staff can know
  without being export experts
  
• How to qualify for exclusions
• When to get advice from the central office
• Know the risks of non-compliance
• Tailored presentations to departments

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Management Plan

• Good Record Keeping
• Record requirements in both EAR and ITAR
• Records of the compliance program
• Implementation efforts
• Steps taken to find and correct inadequacies

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Management Plan

• Ask the Right Questions
• Ask pertinent questions on internal approval
  form for research

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Questions from the UNC-CH Internal Processing
Form
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Reasons for the 4 Questions

• Educate PIs and staff on export control
  regulations
  
• Screen proposals to determine if there may be a
  problem
  
• Basis for compliance if proposal is funded

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Management Plan

• Ask the Right Questions (continued)
• Look at statement of work to determine if the
  contemplated research involves
  
• Design or development of controlled technology
• Controlled equipment
• Look at budget/narrative
• Are foreign nationals involved

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Management Plan

• Not Just Sponsored Research
• Other departments and areas of the university
  involved
  
• Student service organizations
• Legal counsel
• International programs/services
• Outreach programs
• Procurement / purchasing
• Technology development / licensing

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Management Plan

• Not Just Sponsored Research (continued)
• Information technology
• Financial support services
• Travel
• Environmental health
• Property office
• Shipping / receiving
• Deans, chairs and directors

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Implications of Export Control Laws

• No effect on most university research because we
  qualify for one of the exclusions
  
• Potential impact on
• Ability of foreign students or researchers to
  participate in research involving a controlled
  technology
  
• Ability to provide services (including training)
  to foreign persons
  
• Ability to send controlled equipment to foreign
  countries

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Things to Watch For

• Restrictions on publications
• Foreign Nationals in the U.S.
• Travel outside the U.S.
• Carrying equipment/samples outside the U.S.
• Shipping equipment/samples overseas
• Payments to certain countries

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Things to Watch For

• Collaborating with foreign colleagues in foreign
  countries
  
• Providing services or new information materials
  to or from a boycotted country
  
• Joint authorship / editing of articles with
  national of embargoed countries
  
• Accepting export controlled information
• Side Deals

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Resources

• Some good university websites
• MIT
• http//web.mit.edu/osp/www/resources_export.htm
• University of Maryland
• http//www.umresearch.umd.edu/ORAA/ecg/
• Oklahoma State University
• http//www.osu-ours.okstate.edu/Pages/ear-itar.htm
  l
  
• UNC-CH
• http//research.unc.edu/osr/policies/
• export_control.php

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Resources

• Other Sites
• COGR
• http//www.cogr.edu
• Commerce
• http//www.bxa.doc.gov/licensing/exportingbasics.h
  tm
  

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Reading an Export Control Classification Number

• Sample ECCN 2B991 (Machine Tool)
• 1 Digit identifies CCL Category
• 2 Letter identifies Group
• 3 Digit identifies the Reason for
  Controls
  
• 4 Digit differentiates between unilateral or
  multilateral category
  
• 5 - Digit used for sequential numbering within
  the category
  
• Items subject to the EAR that are not elsewhere
  controlled by the CCL Category or in any other
  category in the CCL are designated by the number
  EAR 99.

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Commerce Control List Categories

• O Nuclear Materials, Facilities and Equipment
• 1 Materials, Chemicals, Microorganisms and
  Toxins
  
• 2 Materials Processing
• 3 Electronics
• 4 Computers
• 5 Telecommunications and Information Security
• 6 Lasers and Sensors
• 7 Navigation and Avionics
• 8 Marine
• 9 Propulsion Systems, Space Vehicles and
• Related Equipment

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Groups

• A Equipment
• B Test, Inspection and Production Equipment
• C - Materials
• D - Software
• E Technology

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Reasons for Control Indicated in the ECCN

• 0 National Security reasons (including Dual
  Use and International Munitions List) and Items
  on the NSG Dual Use Annex and Trigger List
  
• 1 Missile technology reasons
• 2 Nuclear Nonproliferation reasons
• 3 Chemical and biological weapons reasons
• 9 Anti-terrorism, Crime Control, Regional
  Stability, Short Supply,UN Sanctions, etc.
  
• Note See expanded list of reasons and
  abbreviations in Part 738.2(d)(2)(1)(A). The
  higher on the list, the more restrictive.

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Example ECCN

• 2 B 9 9 1
• 2 Materials Processing
• B Test, Inspection and Production Equipment
• 9 Anti-terrorism, Crime Control, Regional
  Stability, Short Supply, UN Sanctions
  
• 9 - Controlled for unilateral purposes
• 1 Sequential purpose only