1. Export Controls: Overview and Update
Lorraine A. McConnell
November 14, 2006

2. Outline Introduction, Overview and Update Key Issues for Universities
Determining the Need for a License
Practical Exercises
Export Control Assistance
Questions and Answers

3. Introduction
Except for certain, limited types of research university researchers and the academic community have not traditionally been impacted by export control regulations. “Fundamental research” has been used to exempt most university activities.
In the post 9/11 world, control regulations impact a wider range of researchers and research activities.

4. Overview: Key Export Control Agencies
Three U.S. Export Control and Licensing Programs:
1) U.S. Department of Commerce (Bureau of Industry and Security {BIS}) controls dual-use items (goods and technology with both civilian and military uses).
Export Administration Regulations (EAR) – Commerce Control List
2) U.S. Department of State (Office of Defense Trade Controls) controls defense articles, defense services, and related technical data (including most space related articles).
International Traffic in Arms Regulations (ITAR) – US Munitions List
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 (Customs Service)
List of specifically designated nations, nationals, and individuals

5. Overview: Purpose of Export Regulations
Prevent terrorism
Prevent proliferation of weapons of mass destruction (biological, chemical and nuclear)
Assist in Compliance with US Trade agreements and sanctions
Restrict exports of goods and technology that might aid our adversaries

6. Overview: Export Controls Cover
ANY shipment, transfer or transmission out of the United States by any means (carried on your person or in luggage):
Goods (testing kits, equipment, hardware and materials)
Technology (Technical information and data)
Software/codes (commercial or custom)
Deemed Export (Disclosure of specific information and specific types of services to foreign nationals inside the U.S.
U.S. items wherever located, even internationally

7. Overview: Export illustrations
An actual shipment (or transmission) of items subject to the EAR or ITAR out of the U.S.
Includes the following biologicals: viruses, bacteria, toxins, sub-units of toxins, plant pathogens, genetic elements, (be careful) or pathogens, select agents, genetic elements of select agents, biosafety cabinets, fermenters.
Disclosing (including oral or visual) “technical data” or “technology” (including software source code) to a “foreign person”, whether in the U.S. (deemed export) or abroad.
Performing technical assistance, training, or other “defense services” for, or on behalf of, a “foreign person” (including foreign corporations) whether in the U.S. (deemed export) or abroad.
Re-exporting from foreign countries U.S. origin goods, technical data, goods incorporating U.S. components, goods manufactured from U.S. technology, “technical data”, or software.

8. Overview: Consequences of illegal Export
EAR
Criminal: $50K to $1 million or 5 times value of export, whichever is greater, per violation, 10 years imprisonment
Civil: revocation of exporting privilege, fines $10K-$120K per violation
OFAC
Criminal: up to $1 million per violation and 10 years imprisonment
Civil: $12 K to $55 K per violation
ITAR
Criminal: Up to $1 million per violation and 10 years imprisonment
Civil: seizure and forfeiture of article, revocation of exporting privilege, up to $500,000 fine per violation
Real life example
Texas Tech University – Microbiologist receives 2 yr prison sentence and fines of $58,375

9. Overview: Basic Regulations EAR
Export Administration Regulations (EAR)
(15 CFR Parts )
-The Commerce Control List (CCL) contains commodities, technology, and software subject to the EAR; identified by an Export Classification Control Number (ECCN)
- Licensing handled by Bureau of Industry and Security (BIS), formerly BXA
- The inherent capabilities and design, not the end use, determines whether the item falls under the ITAR or the EAR

12. Overview: Basic Regulations ITAR
International Traffic in Arms Regulations (ITAR) – 22 CFR Parts 120 – 130)
U.S. Munitions List (USML) enumerates the defense articles and services (furnishing technical assistance - includes design, engineering and use of defense articles) which are controlled
Based primarily on whether an article or service is deemed to be inherently military in character
Licensing handled by the Directorate of Defense Trade Controls (DDTC)

14. Overview: Basic Regulations OFAC
Department of Treasury Office of Foreign Asset Control
(OFAC) – Economic sanctions focus on end-user or country and may limit transfer of technologies/assistance to OFAC’s list of embargoed countries
In certain cases, OFAC regulations “trump” other government agencies such as the BIS (for example, shipping items to Iran)
OFAC has a “Specially Designated Nationals and Blocked Persons List”
Prohibits payments or providing “value” to nationals of sanctioned countries and certain entities

16. Key Issues For Universities
National Security vs. Academic Freedom
Exemptions & Exclusions
Fundamental Research
Non-Fundamental Research Concerns
Employment Exemption
Employment Exclusion
Education Exclusion
Public Domain Exclusion
Troublesome Clauses
Applications to Research
University/PI Responsibilities

17. Key Issues: National Security vs. Academic Freedom
Finding the appropriate balance between national security and traditional practices that support public access to all University activities.
Researchers need to be aware that these laws may apply to research whether sponsored or not
Important to understand the extent to which the regulations do NOT affect normal university activities

18. Key Issues: Exemptions and Exclusions
Fundamental Research Exemption (ITAR, EAR)
Deemed Export
Employment Exemption (ITAR only)
Education Exclusion (ITAR, EAR)
Public Domain Exclusion

19. But what about the Fundamental Research Exemption?

20. Key Issues: Fundamental Research Exemption
Generally permits US universities to allow foreign members of their communities (e.g. students, faculty and visitors) to participate in research involving export-controlled information on campuses in the U.S. without obtaining a deemed export license.
Does NOT permit the transfer of export-controlled materials or items abroad, even to research collaborators.
University based research is not considered “fundamental research” if the university or its researchers accept restrictions on the publication of the results of the project.

21. Key Issues: Deemed Export
The EAR defines a deemed export as the release of technology or source code subject to the EAR to a foreign national (no green card) in the U.S.
Such release is “deemed” to be an export to the home country of the foreign national.
Situations that can involve release of U.S. technology or software include:
Tours of laboratories
Foreign students or professors conducting research
Hosting foreign scientists
s, visual inspection, oral exchanges
Unless the fundamental research exemption applies, a university’s transfer of controlled technology to a non-permanent resident foreign national may be controlled and/or prohibited

22. Key Issues: Employment Exemption
ITAR – Bona Fide Employee Exemption (ITAR125.4(10)
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

23. Key Issues: Employment Exemption (cont.)
Applies only if the employee’s permanent abode throughout the period of employment is in the United States
Applies only if the employee is NOT a national of a country to which exports are prohibited (section ITAR)
Applies only if 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 Directorate of Defense Trade Controls.
The Bona Fide employee portion typically applies to full time regular employees which does not include student and may not include postdoctoral researcher (depending on their funding source)

24. Key Issues: Education Exclusion
Applies to both U.S. and abroad locations:
Teaching foreign nationals general science, engineering and math commonly taught at the university
Conveying to foreign nationals information through listed courses in course catalogues and in the associated teaching laboratories
The EAR exclusion does NOT apply to controlled information shared outside the classroom or teaching lab of an academic institution

25. Key Issues: Public Domain Exclusion
Public Domain (ITAR) and publicly available (EAR)
Includes information that is published and generally available to the public:
Through sales at bookstands and stores
Through subscriptions available without restrictions
At libraries open or available to the public
Through patents
Through unlimited distribution at a conference, meeting seminar, trade show, generally accessible to the public in the U.S.
Includes technology and software that are educational and released by instruction in catalog courses and associated labs and Universities

26. Key Issues: Troublesome Areas
COGR/AAU reported to the White House Office of Science and Technology Policy (OSTP) that “troublesome clauses restricting publication and participation by foreign nationals in research awards continued to be a significant problem for universities.”

27. Key Issues: Troublesome Areas
Corporate contract may limit access by foreign nationals
Proprietary restrictions or restrictions on publication by corporate contract may invalidate fundamental research
Includes MTAs, Non-disclosure agreements
Try to remove restrictive clauses from agreements!!!!
Conferences
Potential restrictions on participants
Inability to co-sponsor with certain countries or groups (e.g., restrictions on co-sponsoring conference with Iranian government)
Transfer of defense services
Potential license requirements for work with foreign nationals

28. Key Issues: Troublesome Areas
Government grants/contracts may limit access by foreign nationals
for any foreign nationals working on the project
determining whether a restriction is a “specific access and dissemination control” under the ITAR (which would invalidate the fundamental research exemption) particularly problematic
Restrictions on certain foreign nationals - Agencies may preclude or limit access by foreign nationals to research based on the export control laws
May require prior approval
Under ITAR, no license available if a foreign national is from an embargoed country

29. Key Issues: Applications to Research
Government grants/contracts may limit access by foreign nationals
for any foreign nationals working on the project
determining whether a restriction is a “specific access and dissemination control” under the ITAR (which would invalidate the fundamental research exemption) particularly problematic
Restrictions on certain foreign nationals - Agencies may preclude or limit access by foreign nationals to research based on the export control laws
May require prior approval
Under ITAR, no license available if a foreign national is from an embargoed country

30. Key Issues: Applications to Research Shipping
Shipping equipment, technology, software, computers, etc.,outside the U.S. may require a license

31. Key Issues: Applications to Research Travel
Taking equipment, computers, etc., out of the country may require a license
The Office of Foreign Asset Controls (OFAC) has restrictions
The Departments of Commerce, State and OFAC have denied entities/persons lists

32. Key Issues: Applications to Research Equipment Use
“Use” of controlled equipment by a foreign national may require a license even if Fundamental Research Exemption is applicable.
The transfer of controlled technology or source code of a controlled item to a FN may require a license, NOT the normal operation or use of the item or piece of equipment

33. Key Issues: Applications to Research Software
Software development
Software that is provided to the public for free may not require licenses, but proprietary software of controlled technology could require licensing
Encryption technology could require licenses or could be prohibited for transfers to certain foreign nationals/countries

34. Key Issues: University/PI Responsibilities
Review your research for potential EAR/ITAR issues don’t wait until the contract arrives!
Check to see if equipment/supplies to be purchased is controlled under EAR/ITAR – find the ECCN
If you are planning to hire a foreign national, check the regulations to see if a license may be required
At the contract stage, check for restrictive clauses that would eliminate the Fundamental Research exemption
Document exemptions
Records must be kept 5 years (license valid 2 years)
Apply for a license BEFORE project begins--process can take 2-6 months or longer!
Honest errors are acceptable but gross negligence is punishable
Violations are civil and criminal---Fines and jail time!!!

35. Determining the Need for a License: The EAR Process
Does activity qualify as an Export?
Is the item subject to EAR?
Handout #1

37. Determining the Need for a License: The EAR Process
Export Control Decision Tree
Handout #2

39. Determining the Need for a License
STEP 1: PI must classify the type of technology or science being developed on the “Commerce Control List” by determining the ECCN – Export Control Classification Number

40. Determining the Need for a License: Commerce Control List
Contains lists of items subject to licensing authority of BIS
Each entry is called Export Control Classification Number (ECCN)
(Five alpha-numeric characters)
Items listed in terms of technical parameters

41. Determining the Need for a License: ECCN BREAKDOWN EXAMPLE: 3D101
3 – Category
D – Product Group
1 – Reason for Control
0 – Relates to Reasons for Control
1 – Used for Numerical Ordering

42. Determining the Need for a License: Commerce Control List (CCL) Categories:
0. Nuclear Materials, Facilities & Equipment, and Miscellaneous
Materials, Chemicals, Microorganisms & Toxins
Materials Processing (i.e., making plastics, metals)
Electronics Development
Computer (development and programs)
Telecommunications and Information Security
Sensors and Lasers
Navigation and Avionics
Marine
Propulsion Systems, Space Vehicles and Related Equipment

43. Determining the Need for a License: CCL Product Groups
A = Equipment, Assemblies & Components
B = Production, Test & Inspection Equipment
C = Materials (raw)
D = Software
E = Technology

44. Determining the Need for a License: Reasons for Control
National Security
Missile Technology
Nuclear Proliferation
Chemical & Biological
Foreign Policy
Short Supply / Crime Control
Anti-Terrorism/ United Nations

45. Determining the Need for a License: Finding the ECCN
Review general characteristics (technical parameters) of items to arrive at Category and Product Group
Match characteristics of item with ECCN and subparagraph
HINT: Check the CCL alphabetical index

46. I found the ECCN!

47. Determining the Need for a License: GENERAL PROHIBITIONS, PART 736
STEP 2: Check General Prohibitions
Prohibit certain exports, re-exports, and other conduct, without a license, license exception or determination that no license is required
General Prohibitions 1-10 apply to items having a specific ECCN
General Prohibitions 4-10 apply to items that are EAR99 (not found on the CCL)

48. Determining the Need for a License: GENERAL PROHIBITIONS, PART 736
General Prohibitions 1-3 apply only if your item is classified under an ECCN:
Export and re-export of controlled items to listed countries
Re-export and export from abroad of foreign-made items incorporating more than a de minimis amount of controlled U.S. Content
Re-export and export from abroad of the foreign produced direct product of U.S. technology and software

49. EAR 90-what???

50. Determining the Need for a License: GENERAL PROHIBITIONS, PART 736
General prohibitions 4-10 apply if your item is classified under a specific ECCN or is “EAR 99” (items not found on the CCL- usually no license required)
Engaging in actions prohibited by a denial order (check denied persons/entities lists)
Export or re-export to prohibited end-uses or end users (e.g., chemical and biological warfare)
Export or re-export to embargoed or special destinations
Support of proliferation activities

51. Determining the Need for a License: GENERAL PROHIBITIONS, PART 736
In transit shipments and items to be un-laden from vessels or aircraft
Violation of any order, terms, and conditions
Proceeding with transactions with knowledge that a violation has occurred or is about to occur
If Prohibitions don’t apply, look for Exceptions

52. Determining the Need for a License: LICENSE OR EXCEPTION UNDER EAR?
STEP 3: Try to find the exception!
Using the CCL check reasons for control: Look at the “Reason for Control” section directly under the category heading and License Requirements. -- E.g.: Reason for control: NS, MT, AT
Match specific controls to Country Chart column
Look for an “X” in Commerce Country Chart
If an “X” is present, look under the “License Exceptions” category below the “Control(s)” section
If no license exception available, license must be obtained (4-6 weeks to process)

53. Determining the Need for a License: REASON FOR CONTROL
AT= Anti-Terrorism
CB= Chemical & Biological weapons
CC= Crime Control
CW=Chemical Weapons Convention
EI = Encryption Item
FC=Firearms Control
MT=Missile Technology
NP=Nuclear Proliferation
NS=National Security
RS=Regional Stability
SI=Significant Item
SS=Short Supply
UN=United Nations
XP=Computers

54. Determining the Need for a License: COMMON LICENSE EXCEPTIONS
LVS – Limited Value Shipments
Pertains to Country Group B
Identified by “LVS: $(value)” on the CCL (e.g.: LVS: $5000)
GBS – Group B Shipments
Identified by “GBS: Yes” on the CCL
CIV – Civil End-Users
Pertains to Country Group D-1
Identified by “CIV: Yes” on the CCL
National Security controlled items only

55. Determining the Need for a License: COMMON LICENSE EXCEPTIONS
TSR – Restricted Technology and Software
Pertains to Country Group B
Identified by “TSR: Yes” on the CCL
National Security Controlled Items only
Written Assurance – Letter can be written stating software will not be released to nationals of certain country groups (e.g. D:1 and E:2)

56. Determining the Need for a License: COMMON LICENSE EXCEPTIONS
TMP -Temporary Exports and Re-exports
Tools of trade
Replacement parts
Exhibition and demo
Inspection and calibration
Assembly in Mexico
To US subsidiary, affiliate or facility in Country Group B
Beta test software
Return to US within 1 year

57. Determining the Need for a License: Deemed Export Exceptions
CIV: Civil End Use
Applies to deemed exports for 3E001/3E002 technology
Requires Foreign National Review (FNR)
TSR: Technology/Software Under Restriction
Applies to technology/software under national security only for country group “B” nationals
Requires Letter of Assurance
APP – Computers
Applies to deemed exports for 4D001/4E001 software and technology. (FNR required)

58. Determining the Need for a License: RECAP
STEPS TO TAKE:
Determine if it is an export and is subject
Classify the technology or goods involved (ITAR, EAR, OFAC, other?)
Determine if license is needed for the technology/end user/end use
Determine whether embargoes, prohibited parties, or destinations are involved

59. Determining the Need for a License
Determine if license exemption is available (public domain, fundamental research, EAR exemption from CCL, etc.)
If no exemptions, determine what kind of license is needed
Technical Assistance Agreement (ITAR)
DSP-5 (ITAR)
Deemed Export License (EAR)
DOC License (EAR)

60. Licensing the Technology
EAR – not too complicated, no fee
Foreign nationals will require a “Deemed Export License”
In certain instances can apply for a license electronically
ITAR – very complicated and expensive
Must register before applying for a license
DSP-5/TAA required for foreign nationals working with ITAR export controlled technology
Technology Control Plan required
Recommend hiring export control attorney or consultant

61. Licensing the Technology
Apply promptly, licensing can take months!!
ITAR (State) requirements available at
EAR (Commerce) requirements available at
OFAC (Treasury) requirements available

62. Confused???

63. Practical Exercises: #1 Is This an Export?
You a software program to a research collaborator in Zimbabwe?

64. Practical Exercises: #1 Is This an Export?
A: Yes
Note: Zimbabwe is on the list of sanctioned countries so this is an illegal export.

65. Practical Exercises: #2 Subject to EAR?
You export U.S. origin technical data to a manufacturer in Taiwan so they can manufacture a computer. They wil export the foreign manufactured computer, which was produced based on U.S. origin technical data, to Russia. If there are no U.S. origin material used in the manufacture of the computer.

66. Practical Exercises: #2 Subject to EAR?
A: YES

67. Practical Exercises: #3 Regulated/License Required?
A U.S. Extension Plant Pathologist travels to Syria for a research field trip. She takes a GPS device in her baggage in order to record locations of her plant finds in the field.

68. Practical Exercises: #3 Regulated/License Required?
Is this an export? YES
Subject to the EAR? YES
Does it have an ECCN #? YES
General Prohibition 4-10 apply? YES #6
General Order No. 2 to 736
General Order No. 2 of May 14, 2004;
Sections5(a)(1) and 5(a)(2)(A) of the Syria
Accountability and Lebanese Sovereignty Act of
2003 (Public Law , codified as a note to
22 USC 2151) (the SAA), require (1) a
prohibition on the export to Syria of all items on
the Commerce Control List (in 15 CFR Part 774)
(CCL) and (2) a prohibition on the export to Syria
of products of the United States, other than food
and medicine.

69. Practical Exercises: #3 Regulated/License Required?
Syria is also a sanctioned country for OFAC and ITAR
You must submit an application for license.
Note: Even though the License Exception for baggage (740.14) would apply because of the sanctions against Syria a license application is required.
If sent to Canada NS doesn’t apply (NLR)

70. Practical Exercises: #4 Do You Need a License?
You are a U.S. Researcher who collaborates with a colleague in Switzerland. You plan on sending isolates of Francisella tularensis (mutant variants that you have made) The German colleague will be testing these mutants out in her biosensor system to see if they are detected. You will not need a CDC Form 2 to ship to Switzerland.

71. Practical Exercises: #4 Do You Need a License?
A: YES

72. Practical Exercises: #5 Public Domain Exemption Apply
Practical Exercises: #5 Public Domain Exemption Apply? / Fundamental Research Exemption Apply?
A plant pathologist is working on genetic control of Puccinia striiformis. She receives funding from a corporate sponsor who exercises substantive prepublication review. This plant pathologist sends samples of Puccinia striiformis to Canada for analysis.

73. Practical Exercises: #5 Public Domain Exemption Apply
Practical Exercises: #5 Public Domain Exemption Apply? / Fundamental Research Exemption Apply?
Public Domain Exemption applies only to information not items.
Fundamental Research Exemption does not apply because of the sponsor’s pre-publication review stipulation.

74. Need help navigating the Export Control maze???

75. Export Control Assistance
Send request for Review to:
Lorraine McConnell WSU BSO
PO Box Pullman, WA
Fax:
Expected Response Time: hours. Extenuating circumstances may cause delay.

76. Information to Include in the Request
Complete description of item to be shipped, (e.g. anti-sera is not on the CCL list but immuno-toxins defined in part as antibodies designed to target cancer cells are in fact on the CCL list).
Full name of person the item is being shipped to.
Address item is being shipped to.
What the end use of the item is.
Whether the item will be shipped on to any other location or used by others.
If answer to above is yes: the address and name of these parties is required.

77. Questions?