Export Control: Institutional Obligations for Internationalization Efforts

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Export ControlInstitutional Obligations for
Internationalization Efforts

• Jilda Diehl Garton
• Associate Vice Provost for Research
• Georgia Institute of Technology
• February 25, 2009

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University International Programs
Dual Degree Joint Degree
Satellite Campus Educational Programs
Satellite Campus Research Programs
Hosting International Students Scholars
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The Laws and Regulations
Foreign Corrupt Practices Act
OFAC Sanctions
Export Control Laws
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What are the Applicable Laws and Regulations?

• Department of State International Traffic in
  Arms Regulations (ITAR)covering inherently
  military technologies
• Department of Commerce Export Administration
  Regulations (EAR)covering dual-use
  technologies
• Department of the Treasury, Office of Foreign
  Assets Control (OFAC)prohibits transactions with
  countries subject to boycotts, trade sanctions,
  embargoes

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Export in International Programs

• If any controlled information, technology,
  software, or equipment will be transferred to
  another party overseas a license must be obtained
  prior to the transfer unless a valid licensing
  exception or exclusion applies.
• At Conferences
• During Research Collaborations
• During Teaching
• Other Disclosures

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What is an export?

• Shipment of controlled item or good
• Transmission (electronic or digital) of
  controlled item or information related to
  controlled item
• Release or disclosure (including verbal or
  visual) of any controlled technology, software or
  technical data, either in U.S. or abroad
• Use or application of controlled technology on
  behalf of, or for the benefit of, any foreign
  person or entity, either in U.S. or abroad
• An export of technology or source code when
  released to a foreign national within the U.S. is
  deemed to be an export to that persons country.

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What is an export?

• Deemed exports are transfers of controlled
  technology to foreign persons, usually in the
  U.S., where the transfer is regulated because the
  transfer is deemed to be to the country where
  the person is a resident or a citizen.

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ITAR and EAR cover items that are

• On the U.S. Munitions List
• (ITAR, 22 CFR 121.1)
• Anything with a military application even if it
  is not on the USML,
• On the Commerce Control List
• (EAR 15 CFR 774)
• Defense Services (ITAR)
• e.g., training on how to use defense articles
• Technologies/Technical Data (EAR and ITAR)
• Information beyond basic and general marketing
  materials on use, development or production of
  controlled items or materials
• (15 CFR 772, 774, Supp. 1 and 2 22 CFR 120.10)

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• Depending on the item or technology to be
  exported, the destination, or the end-user or
  end-use, a license may be required if
• Items or technologies controlled under Commerce
  Control List (CCL) or US Munitions List (USML)
• Unless a license exception or other exemption
  applies
• Countries of concern (e.g., China, T6, former
  Soviet Union, etc)
• General prohibitions (EAR)
• e.g., Restricted PartiesDenied Parties List,
  Unverified List, Entity List, Specially
  Designated Nationals List (OFAC) Debarred
  Parties List (ITAR)

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Most activities on U.S. campuses are subject to
one or more exclusions from export controls but
there are rules for the exclusions.
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• The most common exclusions from
  controls/exemption for academic research
  institutions
• Fundamental Research Information Exclusion
  (ITAR/EAR)
• Public Domain/Publicly Available Information
  Exclusion (ITAR/EAR)
• Educational Information Exclusion (ITAR/EAR)
• Full-Time Bona Fide U.S. Higher Education
  Employee Information Exemption (ITAR)
• These exemptions do NOT apply to encryption
  software or to mass market encryption software
  with symmetric key length exceeding 64-bits

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Educational Information Exclusion

• ITAR
• Educational Information Exclusion focuses on
  what is taught. For example,
• general science, math and engineering commonly
  taught at U.S. schools and universities are
  excluded from ITAR controls.
• EAR
• Educational Information Exclusion focuses on
  where its taught. For example,
• information conveyed in courses listed in course
  catalogues is excluded from EAR controls.
• there is no exclusion for encryption technology

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Research Fundamental Research Exclusion

• Fundamental Research Exclusion applies to
  information when the research is
• Basic or applied
• At an institution of higher learning
• In the U.S. and
• No publication or access controls exist for the
  activity
• There are no contractual restrictions on access
  by (or employment of) foreign nationals

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Fundamental Research Exlusion

• Even when the FRE applies
• The intent to publish is key
• It applies to the results of the research
• If there is a Non-Disclosure Agreement in place
  for access to technology or information used in
  the research, the exclusion may not apply to the
  proprietary information.
• OFAC Sanctions Apply
• For ITAR controlled technologies, the exclusion
  only applies to activities conducted in the
  United States
• Consult counsel for applicability of EAR to
  research conducted outside the U.S.

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Research Agreements

• In rare circumstances, research conducted on
  campus is not subject to the FRE and controlled
  technology is involved in the research.
• Research may need to be structured to avoid
  deemed export
• A Technology Control Plan will be required
• An export license may be required

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OFAC Services Payments

• Office of Foreign Assets Control (OFAC)
• Regulates the transfer of items/services of value
  to sanctioned nations
• Imposes Trade Sanctions, and Trade and Travel
  Embargoes Aimed at Controlling Terrorism, Drug
  Trafficking and Other Illicit Activities
• Prohibit Payments/Providing Value to Nationals of
  Sanctioned Countries and Some Specified
  Entities/Individuals
• May Prohibit Travel and Other Activities with
  Sanctioned Countries and Individuals Even When
  Exclusions to EAR/ITAR Apply
• Non-employee Payments

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Screening Software

• Visual Compliance
• Vanderbilt Software

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Foreign Corrupt Practices Act

• The FCPA makes it unlawful to bribe foreign
  government officials to obtain or retain
  business. The FCPA prohibits
• paying, offering, promising to pay money or
  anything of value to a foreign official, a
  foreign political party or party official, or any
  candidate for foreign political office.
• payments made in order to assist the firm in
  obtaining or retaining business for or with, or
  directing business to, any person.
• corrupt payments through intermediaries.

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Foreign Educational Collaborations
30 of Tech undergraduates have international
experience
95 of the faculty participates in international
activities
23 faculty-led summer programs to Asia,
Australia/New Zealand, Europe, Latin America
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Case Studies

• Questions and Issues
• Are denied parties or entities involved?
• Will there be an export?
• Is the technology, equipment, material,
  information controlled?
• Is it subject to an exclusions?
• Is it controlled to the country where the
  activity will take place?
• Could there be a re-export?
• Will a license be required?

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Thinking about the InfrastructureInternational
Programs

• Here
• Visas
• Taxes
• Deemed Exports
• Exports in Research for Non-US Sponsors

• There
• Intellectual Property
• Taxes
• Entity Formation
• Understanding Laws Regulations
• Exports

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Case Studies
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1. International Conferences

• Presenters are responsible for understanding
  export laws and how they apply to their
  disciplines.
• In general, if a conference will be open to
  anyone, and
• If any technology is ITAR controlled, present or
  discuss only information or technology that has
  already been published.
• If any technology is EAR controlled, present or
  discuss only information that will be published.

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Case Studies
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2. Research Collaborations

• Screening for sanctioned countries and denied
  parties and entities is the first step in ANY
  relationship!
• Will the effort be undertaken with the intent to
  publish?
• Will the technical area be subject to ITAR?
• A Technical Assistance Agreement (a form of
  license) maybe needed prior to engaging in a
  proposal or research effort.
• Will confidential or proprietary information be
  transferred to a non-U.S. person or entity?
• Travel arrangements, entertainment, and gifts may
  be considered things of value under FCPA.

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Hosting Visitors

• Screening for denied parties and those that
  represent denied entities is the first step.
• What access will they have?
• Deemed export is a concern.
• Educational exemption may not apply to those not
  enrolled as students.
• Other issues (not specific to foreign nationals)
  IP, non-disclosure, liability

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Case Studies
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3. Dual Degree

• Screening for denied parties and entities is the
  first step.
• Screening students?
• What about Iran and Cuba?
• Educational programs and catalog courses
• Do they go beyond published content?
• Certification of public domain information.

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Case Studies
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4. Joint Degree

• Screening for denied parties and entities
• Research collaboration and mentoring graduate
  students almost always means the exchange of
  unpublished information.
• When sharing
• information and
• technology
• licenses could
• be required!

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4. Joint Degree

• Transferring equipment and materials between
  countries
• Customs declarations
• Who can ship?
• Record keeping is mandatory.
• Export licenses could be required
• Does the FRE apply?
• Develop a formal Technology Control Plan.

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REQUIRED ELEMENTS OF A TECHNOLOGY CONTROL PLAN

• 1) Commitment
• This element of the TCP shows university
  commitment to export controls. It should
  demonstrate the export compliance reporting
  structure. Some examples include the supervisors
  responsible for implementing the TCP.
• 2) Physical Security
• Equipment and data must be shielded from
  unauthorized persons. Relevant security systems
  such as badging, escorts, visitor logs and other
  types of building access restrictions should be
  included.
• 3) Information Security
• Measures must be taken to ensure information
  access controls. The data discard policy and
  relevant IT policies and procedures should be
  included, as well as other plans for controlling
  access to controlled information.
• 4) Personnel Screening
• All personnel with access to the controlled
  technology and their nationality should be
  listed. The type of background check and any
  additional reviews should be specified as well.
• 5) Training and Awareness
• This element should highlight the ongoing
  training provided in the area of export controls.
  The Office of Legal Affairs provides periodic
  training sessions to members of the Georgia Tech
  community. Contact OLA for recent schedules.
• 6) Self-Evaluation
• Self-evaluation is an internal audit process
  whereby records are reviewed and any findings
  reported to senior administrators.

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Case Studies
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5. Overseas Campus

• What kind of entity will it be?
• Incorporated there?
• An affiliate of the U.S. university?
• What will its purpose be?
• Research?
• Education?
• Both?
• Issues include
• IP
• Taxation
• Export controls

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Entity Formation, Taxation and IP

• Taxation
• The collaborative activity will be governed by
  the host countrys tax laws and by U.S. tax
  treaties
• Question to answer
• What scope of the activities or revenues is
  subject to taxation?
• The collaborators can allocate liability by
  contract, but cant eliminate legal liability
• Personal tax issues for U.S. based and
  foreign-based faculty and employees

• Intellectual Property
• Ownership
• In which jurisdiction are inventors legally
  required to file patent applications
• Enforceability of patents varies
• Management agreements
• Earning IP royalties or other revenues in a
  foreign country may trigger taxation by that
  country

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Ex Patriot and Indigenous Faculty and Staff
U.S. University Employees
Overseas Campus Employees

• Intellectual Property
• Non-disclosure agreements
• Joint project agreements
• Export
• What can be shared?
• When is a license required?
• Funding and Effort Allocation