2 Why Is Compliance Important? Potential civil and criminal penalties, for the individual and the institutionLoss of export privilegesRisk to reputation; bad publicityLimiting participation of foreign nationals in University research is not realistic and contrary to policy
3 Three U.S. Export Licensing Programs U.S. Department of State (Office of Defense Trade Controls) controls defense articles, defense services, and related technical data, including most space-related articles.U.S. Department of Commerce (Bureau of Industry and Security) controls “dual-use” items – goods and technology with both civilian and military/strategic uses.U.S. Department of the Treasury oversees U.S. trade embargoes (Office of Foreign Assets Control) and enforces all three programs at U.S. borders through U.S. Customs Service.Cuba
4 Commerce Department State Department Treasury Department Law and RegulationsCommerce DepartmentState DepartmentTreasury DepartmentExport Administration ActArms Export Control ActTrading with the Enemy Act, Int’l Emergency Economic Powers Act, & OthersExport Administration Regulations (“EAR”)15 C.F.R. PartsInternational Traffic in Arms Regulations (“ITAR”)22 C.F.R. PartsIraq Sanctions Regulations, Terrorism Sanctions Regulations, & Others31 C.F.R. PartsCommerce Control ListU.S. Munitions ListList of Specially Designated Nationals & Blocked Persons
5 What Is an Export? ITAR 120.17, EAR 734.2(b) An actual shipment or transmission of items subject to the EAR or ITAR (commodity, technical data, or software) out of the United States.Releasing (including oral or visual disclosure) “technical data” or software “source code” to a “foreign person,” in the United States (“deemed export”).Performing technical assistance, training, or other “defense services” for, or on behalf of, a “foreign person,” (including foreign corporations) whether in the United States (“deemed export”) or abroadRe-exporting from foreign countries U.S.-origin goods or technical data, goods incorporating U.S. components, or goods manufactured from U.S. technology or re-exporting U.S.-origin “technical data” or software
6 Examples of Exports SHIPPING OUT of US Physical shipments or hand carried itemsRelease of technical data or software in a foreign countryRELEASING INFO in USRelease of source code to a foreign national in the USRelease of technical data to a foreign national in the USInspections of U.S. equipment and facilities by a foreign national
7 U.S. and Foreign Persons ITAR 120.15 & 16, EAR 772.1 “U.S. Person” means:a “Lawful Permanent Resident (8 USC 1101 (a)(20))U.S. Citizen or nationalLegal immigrant with a “green card”a “Protected Individual” under the INA (8 USC 1324(b)(3))designated an asylee or refugeea temporary resident under amnesty provisionsbut does not include Protected Individuals who:fail to apply for citizenship within 6 months of becoming eligiblehave not been naturalized within 2 years after applyingany entity incorporated to do business in the United States
8 U.S. and Foreign Persons ITAR 120.15 & 16, EAR 772.1 “Foreign Person” means everyone elseincludes foreign businesses not incorporated in the U.S.EAR does not use the term “Foreign Person,” instead refers to “foreign national,” exempting Protected Individuals (See EAR 734.2(b)(ii))
9 U.S. Munitions List (USML) I - FirearmsII - Artillery ProjectorsIII - Ammunition*IV - Launch Vehicles, etc...*V - Explosives, Propellants, Incendiary Agents and Their ConstituentsVI - Vessels of War and Special Naval EquipmentVII - Tanks and Military VehiclesVIII - Aircraft and Associated EquipmentIX - Military Training EquipmentX - Protective Personnel EquipmentXI - Military ElectronicsXII - Fire Control, Range Finder, Optical and Guidance and Control EquipmentXIII - Auxiliary Military EquipmentXIV - Toxicological Agents and Equipment and Radiological Equipment*XV - Spacecraft Systems and Associated EquipmentXVI - Nuclear Weapons Design and Related EquipmentXVII - Classified Articles, Technical Data and Defense Services Not Otherwise EnumeratedXVIII - ReservedXIX - ReservedXX - Submersible Vessels, Oceanographic and Associated EquipmentXXI - Miscellaneous Articles1313131313
10 Commerce Control List (CCL) Category 0 - Nuclear Materials, Facilities and Equipment and Misc.Category 1 - Materials, Chemicals, Microorganisms and ToxinsCategory 2 - Materials ProcessingCategory 3 - ElectronicsCategory 4 - ComputersCategory 5 - Telecommunications and Information SecurityCategory 6 - Lasers and SensorsCategory 7 - Navigation and AvionicsCategory 8 - MarineCategory 9 - Propulsion Systems, Space Vehicles and Related Equipment3823302323
11 Examples of Items Covered by Category 3 - Electronics Systems, Equip& ComponentsMass Spectrometers & Pulse AmplifiersTest, Inspection, & Prod. Equip.Equipment for the manufacturing of production semiconductor devices or materialMaterialsHetero-epitaxial materials consisting of a “substrate” having stacked epitaxially grown multiple layers of: silicon, germanium, or compounds of gallium or indiumSoftwareComputer-aided design software designed for semiconductor devices or integrated circuits having any of the following: design rules or circuit verification rules, simulation of the physically laid out circuits, or lithographic processing simulators for designTechnologyTechnical data for the development of production of any of the above items
12 Example: Shipment of Polygraph (Basic Steps) Step 1 - Classification of item. Start by looking in the Commerce Control List under the category of electronics (Category 3) and product group which covers equipment (Product Group A). Then read through the list to find whether your item is included in the list. The ECCN for polygraphs is 3A981.Step 2 – License requirements. These list the reason that the item is controlled. Polygraphs are controlled for “CC”, or crime control.
13 Example: Shipment of Polygraph (Basic Steps) Step 3 – Destination Country. Check whether a license is required for the country.
14 Example: Shipment of Polygraph (Basic Steps) Step 4 – Screening. Certain individuals and organizations are prohibited from receiving U.S. exports.Entity List – BIS list of organizations identified as engaging in activities related to the proliferation of WMD.Specially Designated Nationals and Blocked Persons List – OFAC list of individuals and organizations representing restricted countries or known to be involved in terrorism or narcotics trafficking.Unverified List – BIS list of firms for which it was unable to complete an end-use check.
15 Examples of Items Covered by Category 1 Materials, Chem, Microorganisms, & Toxins Systems, Equip& ComponentsChemical Agents, including tear gas containing 1% or less of CS or CN, except containers net wt <20gmTest, Inspection, & Prod. Equip.Electrolytic cells for fluorine production with a production capacity >250 g of fluorine per hourMaterialsChemical precursors for toxic chemical agents (1C350) (Examples: benzilic acid; sodium bifluoride); human pathogens, zoonoses, and “toxins” (1C351) (Examples: Rickettsia rickettsii, Chlamydia psittaci); animal pathogens (1C352) (Example: goat pox virus); plant pathogens (1C354) (Example: Puccinia graminis)Software“Software” for process control that is specifically configured to control or initiate “production” of chemicals controlled by 1C350TechnologyTechnical data for the development of production of any of the above items
16 Technical Data & Technology ITAR 120.10, EAR 772.1 ITAR defines “technical data” asInformation required for the design, development production, manufacture, assembly, operation, repair, testing, maintenance, or modification of defense articles.Invention covered by an invention secrecy orderSoftware directly related to defense articles
17 Technical Data & Technology ITAR 120.10, EAR 772.1 EAR defines “technology” asSpecific information necessary for the “development,” “production,” or “use” of a product. The information takes the form of “technical data” or “technical assistance.”Technical assistance may take forms such as instruction, skills training, working knowledge, and consulting services and may involve transfer of “technical data.”“Technical data” may take forms such as blueprints, plans, diagrams, models, formulae, tables, engineering designs and specifications, manuals and instructions written or recorded on other media or devices such as disk, tape, read-only memories.
18 What is Not Controlled ? (The “Safe Harbor”) Technical Data & Software (ITAR 120.10, EAR 772.1) What is not defined as export controlled “technical data” or “software”?Publicly available technical data and softwarePublished for sale, in libraries open to the public, or through patents available at any patent officeGeneral scientific, mathematical, or engineering principles commonly taught in colleges and universitiesAvailable through unlimited distribution at a conference, meeting, seminar, trade show, or exhibition (provided no previous government or industry restrictions on distribution applied)Arises during or results from fundamental research, where no restrictions on publication or access acceptedNon-technical contract or business documents
19 National Security Decision Directive NSDD-189 In September 1985, the Reagan Administration issued NSDD-189 in which it established the following policies:To the maximum extent possible, the products of fundamental research should remain unrestricted.Where the national security requires control, the mechanism for control of information generated during Federally-funded fundamental research in science, technology, and engineering at colleges, universities, and laboratories is classification.No restriction may be placed upon the conduct or reporting of Federally-funded fundamental research that has not received national security classification, except as provided in applicable U.S. statutes.President Bush’s National Security Advisor, Condoleezza Rice, reaffirmed NSDD-189 in November 2001.
20 National Security Decision Directive NSDD-189 NSDD-189 defined “fundamental research” asBasic and applied research in science and engineering, the results of which ordinarily are published and shared broadly within the scientific community.It is distinguished from research which results in information which is restricted for proprietary reasons or pursuant to specific U.S. Government access and dissemination controls.
21 National Security Decision Directive NSDD-189 NSDD-189’s definition of “fundamental research” is reflected throughout the ITAR and EAR in terms of what research is subject to export controls.Avoiding restrictions on access and dissemination of research findings in contracts with the U.S. Government and industry is a key strategy for minimizing export control issues in university and research laboratory settings.
22 What is Not Fundamental Research? Given this definition of fundamental research, university research will not qualify as fundamental research ifThe university or research institution accepts any restrictions on the publication of the information resulting from the research, other than limited prepublication reviews by research sponsors to prevent inadvertent divulging of proprietary information provided to the research by the sponsor or to ensure that publication will not compromise patent rights of the sponsor; orThe research is Federally-funded and specific access and dissemination controls regarding the resulting information have been accepted by the university or researcher.
23 Key EAR Exceptions EAR 734.3(b) – “What is not subject to the EAR?” Publicly available technology and software, except software controlled for EI (encryption) under ECCN 5D002 thatAre already published or will be published – EAR 734.7Arise during, or result from, fundamental research – EAR 734.8Are educational – EAR 734.9Are included in certain patent applications – EARSee Supplement No. 1 to Part 734 for extensive explanatory questions and answer regarding what is not subject to the EAR in the context of university and research laboratory activities.
24 Key EAR ExceptionsEAR – “What is government research covered by contract controls?If research is funded by the U.S. Government, and specific national security controls are agreed on to protect information resulting from the research, EAR 734.3(b)(3) will not apply.
25 Key EAR ExceptionsExamples of “specific national security controls” include:Requirements for prepublication review by the Government, with right to withhold permission for publicationRestrictions on prepublication dissemination of information to non-U.S. citizens or other categories of personsRestrictions on participation of non-U.S. citizens or other categories of persons in the research.BUT: A general reference to one or more export control laws or regulations or a general reminder that the Government retains the right to classify is not a “specific national security control.” (EAR )
26 Key ITAR Exemptions (used in Space Science Research) ITAR 125.4(b)(10) – Exempts from licensing requirements disclosures of unclassified technical data in the U.S. by U.S. institutions of higher learning to foreign persons who are their bona fide and full time regular employees.Employee’s permanent abode throughout the period of employment must be in the U.S.Employee must not be a national of a country to which exports are prohibited pursuant to ITAR (e.g., Belarus, Cuba, Iran, Libya, North Korea, Syria, Vietnam, Burma, China, Haiti, Liberia, Somalia, and Sudan—list as of 7/2003)The institution informs the individual in writing that the technical data may not be transferred to other foreign persons without the prior written approval of the Office of Defense Trade Controls
27 Key Exception: Publicly Available Software Software (and technical data) is published when it is available for general distribution either for free or at a price that does not exceed the cost of reproduction and distribution.Such reproduction and distribution costs may include variable and fixed allocations of overhead and normal profit for the reproduction and distribution functions either in your company or in a third party distribution system. Such costs may not include recovery for development, design, or acquisition because the provider of the software does not receive a fee for the inherent value of the software.
28 What is Publicly Available Software? If the source code of a software program is publicly available, then the machine readable code compiled from the source code is software that is publicly available.Note that encryption software controlled under ECCN 5D002 for “EI” (Encryption Items) reasons on the Commerce Control List and mass market encryption software with symmetric key length exceeding 64-bits controlled under ECCN 5D992 remain subject to the EAR.
29 Key Exception: EncryptionSoftware Technology & Software Unrestricted Encryption source code controlled under ECCN5D002 that would be considered publicly available, and corresponding object code resulting from compiling such source code, may be exported under Exception TSU (but not knowingly to Cuba, Iran, Iraq, Libya, N.Korea, Sudan or Syria)Provide written notification to Commerce (BIS) of the Internet location of the source code or a copy of the source code by the time of export (see )Posting of source code or object code on the Internet (e.g. FTP or World Wide Web site) where it may be downloaded by anyone would not establish ‘knowledge’ of a prohibited export or reexport.
30 What can you take with you overseas? Exception TMP: “Tools of Trade” Usual and reasonable kinds and quantities of tools of trade (commodities and software) for use by the exporter or employees of the exporter in a lawful enterpriseThe tools of trade must remain under the effective control of the exporter or the exporter’s employee (retain physical possession of the item, locked in hotel safe, or guarded)Encryption commodities and software may be pre-loaded on a laptop, handheld device or other computer or equipmentAll tools of trade may accompany the individual departing from the US or may be shipped unaccompanied within one month before the individual’s departure from the US, or at any time after departure
31 License Exception TMP Temporary: “Tools of Trade” All commodities and software, if not consumed or destroyed in the normal course of authorized temporary use abroad, be returned as soon as practicable but no later than one year after the date of exportNo tools of the trade may be taken to Cuba or SudanReference 15 CFR Part 740.9(a)(2)(i) for TMP “Tools of Trade” License Exception
33 Do’s and Don’ts: General Do NOT Ship Any Item Outside the U.S. without first checking the ITAR and EAR Lists to determine if the item is controlled (This includes Outgoing MTA’s, Software Licenses, and any Agreement Deliverables)Secure License Approval (through campus contact or UCOP for ITAR) or verify license exception PRIOR to Shipment for all controlled itemsDo NOT Accept Publication or Access Controls in research agreements (regardless of whether federal, state, or private)Do NOT create special training or access programs limited to select foreign companies or foreign nationals without first securing a government-approved Technical Assistance Agreement
34 Do’s and Don’ts: Contract Clauses Screen all proposed research contracts from government and industry for access and dissemination restrictions that might jeopardize the project’s qualification as “fundamental research.”Do NOT Accept clauses, such as:DOD Clause , Disclosure of InformationFAR Clause , Rights in Data, Special WorksAirforce Clause , Export Controlled Data RestrictionsArmy Clause , Foreign Nationals Performing Under Contract (Feb 2002)Questionnaire for Public Trust Positions (SF89P) or National Agency Check/Name Check RequestDD2345, Militarily Critical Technical Data AgreementWatch out for flow down language!
35 Do’s and Don’ts: Confidentiality Clauses Review any Confidentiality/Non-Disclosure Agreements to insure that UC is not assuming the burden of restricting dissemination based on citizenship status or securing licenseAllow Commercial Contractor to Transfer Export Controlled Data (as long as it isn’t proprietary), or Proprietary Data that isn’t Export Controlled (See EAR 734.8(b)(4) and EAR Supplement 1, Section D, Question 2)In limited cases, can agree that the individual to receive export controlled proprietary data will not disclose it to anyone (including other UC personnel) in most cases, proprietary data from a commercial entity that is also export controlled cannot be accepted or used in University research.Can agree that UC will comply with Export Regulations; can not agree that data generated by UC in the course of the research is export controlled
36 Do’s and Don’ts: Citizenship Info Do NOT provide citizenship, nationality, or VISA status information for project staff to others or include such information in proposals. It is a violation of the INS regulations, of the Federal Privacy Act, and of the California Information Practices Act to do so. It is also contrary to University policy to discriminate on this basis or to select research project staff on any basis other than merit. See C&G Memo for guidance:Do NOT agree to background checks or other arrangements where the external sponsor screens, clears, or otherwise approves project staff. University policy allows for background screening conducted by the University when appropriate to the position.
37 Do’s and Don’ts: Software Whenever possible, make University created software, databases, and other technical data “publicly available”Publication in periodicals, books, print, electronic, or other media available to a community of persons interested in the subject matter either free or at a price that does not exceed the cost of reproduction and distribution (See EAR Supplement 1, Questions A(1) - A(6)If the source code of a software program is publicly available, then the machine readable code compiled from the source code is software that is publicly available and, therefore, not subject to the EARThe cost of reproduction and distribution may include variable and fixed allocations of overhead and normal profit for the reproduction and distribution functions but may not include recovery for development, design, or acquisition, such that the provider does not receive a fee for the inherent value of the software.
38 Do’s and Don’ts: Software License Do not agree to software license restrictions onaccess to or use of the software by nationals of certain countries, particularly those from Country Group Drestrictions on dissemination of the ‘direct product’ of the softwareask the software provider to identify the ECNN number that controls the software, and research the applicability of control, given the possibility that the software provider is being overly cautious and the software is not, in fact, controlled
39 Do’s & Don’ts: EncryptionSoftware Technology & Software Unrestricted Encryption source code controlled under ECCN5D002 that would be considered publicly available, and corresponding object code resulting from compiling such source code, may be exported under Exception TSU (but not knowingly to Cuba, Iran, Iraq, Libya, N.Korea, Sudan or Syria)Provide written notification to Commerce (BIS) of the Internet location of the source code or a copy of the source code by the time of export (see )Posting of source code or object code on the Internet (e.g. FTP or World Wide Web site) where it may be downloaded by anyone would not establish ‘knowledge’ of a prohibited export or reexport.
40 Do’s and Don’ts: Embargoes Do NOT travel to the Balkans, Burma, Cuba, Iran, Iraq, Liberia, Libya, North Korea, Sudan,or Syria, for research or educational activities without first contacting the campus VC-Research to secure a license from the Office of Foreign Assets Control. These are embargoed countries. A general license for Cuba may cover you; all other countries require a specific license.Review scope of work and collaborators to identify any projects that may require travel to embargoed countries. UC has secured OFAC licenses for research in embargoed countries. It simply takes a bit of time.
41 UC Policy ReferencesC&G Memo 04-02: Provision of Information on Citizenship, Visa Status, Nationality or Country of Origin: Federal and State Law and RegulationC&G Memo 00-05: Unacceptable Controls Based on U.S. Citizenship StatusC&G Memo 90-03: Acceptance of Funds Restricted to U.S. CitizensUCOP Website on Export Regulations
42 Is the Item “Export Controlled?” EAR List at:ITAR List at:For EAR Items: 1)Check the “reason for control”; 2)Check country chart; 3)Determine if license required in the column for the country where item to be shippedFor EAR Item, if no “check” in control column for country, then ship under NLR (no license required); If item being shipped is not on Commodity Control List, then ship EAR99 (exempt)For ITAR Item, if on list, contact UCOP; license will be required because there is no EAR equivalent “country chart”