Export Control Officer Export Controls: Just the Basics – How to Keep Your Faculty & Researchers Out of Trouble! Kay Ellis Export Control Officer ellisk@email.arizona.edu 520-626-2437 Josh Estavillo University Attorney jle1@email.arizona.edu 520-621-3175

Export Basics: Terms & Regs Overview Strategic Technologies Presenters: Kay Ellis Josh Estavillo Identifying Red Flags Travel Abroad Help me Choose Tips on Staying Compliant

Export Alphabet Soup Export regulations Basic Terms Sensitive technologies

Why do Universities need to comply with the Export Regulations? It’s the law Security around the world changed after 9/11 Consequences of non-compliance can result negative publicity, civil or criminal violations Violations can range from $250,000 to $1 million per violation or Imprisonment The export regulations apply to Universities too!

Why does the government control exports? The government controls certain technologies that it considers to be strategically important for: National Security Reasons Nuclear Non-Proliferation Reasons Missile Technology Controls Anti-Terrorism Chemical & Biological Controls Regional Stability Crime Control Measures Anti-boycott Reasons Economic Sanctions

Universities in the Media University of Tennessee Professor Found Guilty on 18 Counts of Export Violations Why should Caltech care about complying with the export regulations? Reseachers who do not have a good understand of the limits of the Fundamental Research Exclusion or when the export regulations apply can result in violations for both the individual and the institution, and can result in negative publicity for campus. The consequences of non compliance can be severe. At the University of Tennessee, Professor Roth was arrested by customs officials upon his return from China for violating the ITAR regulations. Export controlled information was found on his laptop. He was subsequently found guilty on 18 counts and was sentenced to 23 months in jail. Satterfield, Jamie. 2008. “Retired UT Prof guilty; case gained national attention.” www.knoxnews.com (accessed on March 22, 2010).

Export 101 Terms you should know Export Foreign Person Technical Assistance Technical Data Fundamental Research Exclusion Limits Jeopardizing FRE Export Regulations ITAR EAR OFAC Sensitive Technologies Civil Use Military or Space Applications

Regulations likely to affect your export are . . . U.S. Department of State International Traffic in Arms Regulations (ITAR) - Controls Defense Articles & Defense Services (technical data and know-how) found in the U.S. Munitions List (USML). For example: Category XV - spacecraft systems, science instruments on spacecraft & associated equipment and software U.S. Department of Commerce Export Administration Regulations (EAR) - Controls items on the Commerce Control List (CCL) having a commercial or dual-use (military/strategic and commercial) application For example: high performance computers and encryption software Treasury Department Office of Foreign Assets Control (OFAC) - Trade Sanctions, Embargoes, Restrictions on Transfers to Certain End-Users, Terrorism, Anti-Narcotics

Export . . . When does it occur? An export is the transfer of export controlled information, commodities or software either inside the U.S. (deemed export) or outside the U.S. Exports can occur in many ways: Email Mail Agent or broker acting on your behalf – i.e., a Freight Forwarder Face-to-Face Website Visual inspection that reveals technical data Conference Hand-carried items – laptop, memory devices

Foreign Person is defined as . . . Any person not a U.S. citizen or legal permanent resident (green card holder) Any person not granted political asylum Any U.S. Person employed by or representing a foreign entity Foreign Entity Any partnership or group not incorporated or organized to do business in the U.S. Any foreign government

Technical Assistance . . . “Know-how” . . . Defense Service . . Training Technical Assistance (defense service) means the furnishing of assistance (including training) to Foreign Persons . . . in the United States (deemed export) . . . or abroad (technology transfer) . . . about the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing, or use of an export controlled item -- whether EAR or ITAR controlled.

Technical Data . . . Technology Transfer Technical Data or Technology is information required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of an export controlled item. The information can be in the form of blueprints, drawings, models, photographs, plans, instructions and documentation; tech data includes software related to an export controlled item.

Sensitive Technologies COMMERCIAL APPLICATIONS SPACE, ROCKETs & MILITARY APPLICATIONS

“The EAR” (Export Administration Regulations): Commercial & Military Use (Dual-Use) Commerce Control List Categories 0 = Nuclear materials, facilities and equipment (and miscellaneous items) 1 = Materials, Chemicals, Microorganisms and Toxins 2 = Materials Processing 3 = Electronics 4 = Computers 5 = Telecommunications and Information Security 6 = Sensors and Lasers 7 = Navigation and Avionics 8 = Marine 9 = Propulsion Systems, Space Vehicles, and Related Equipment

“The ITAR” (Int’l Traffic In Arms Regulations): Military, Rockets or Space Applications USML Categories (The ITAR) I Firearms, Close Assault Weapons and Combat Shotguns II Guns and Armament III Ammunition/Ordnance IV Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines V Explosives and Energetic Materials, Propellants, Incendiary Agents and Their Constituents VI Vessels of War and Special Naval Equipment VII Tanks and Military Vehicles VIII Aircraft and Associated Equipment IX Military Training Equipment and Training X Protective Personnel Equipment and Shelters XI Military Electronics XII Fire Control, Range Finder, Optical and Guidance and Control Equipment XIII Auxiliary Military Equipment XIV Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment XV Spacecraft Systems and Associated Equipment XVI Nuclear Weapons, Design and Testing Related Items XVII Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated XVIII Directed Energy Weapons XX Submersible Vessels, Oceanographic and Assoc. Equipment XXI Miscellaneous Articles (Software, components, etc.)

Long Reach of the ITAR ITAR includes Includes commodities and technologies that have predominant military use or space application; Items that started out as having civil application but were later adapted or modified for military application; Dual-Use items that contain or use ITAR controlled articles/technology, i.e., “see through rule”

What’s not export controlled? Information in the public domain. Information excluded under the Fundamental Research Exclusion (FRE) Basic marketing and general system descriptions

Fundamental Research Exclusion in the Regs & Nat’l Policy (NSDD-189) Fundamental Research Exclusion (FRE) in the regs and Nat’l Policy directive: NSDD-189 creates a safehaven… “Accredited Universities of higher learning conducting basic and applied research the results of which are intended to be published…and are not subject to access or publication restrictions.”

National Policy re Fundamental Research --NSDD-189 “Fundamental Research means basic and applied research in science and engineering, the results of which ordinarily are published and shared broadly within the scientific community, as distinguished from proprietary research . . . the results of which ordinarily are restricted for proprietary or national security reasons.”

Limits to Fundamental Research Exclusion – Subject to Export Controls or Other Prohibitions Fundamental Research does NOT cover -- Exports of Hardware, Software, Technology Financial Dealings with Prohibited Parties or Entities Export Controlled activities – “technical assistance” Other Transactions Involving Embargoed or Sanctioned Parties/Countries

What is a Restricted or Prohibited Party? Debarred Parties Drug Traffickers Specially Designated Nationals U.S. Government [OFAC, BIS, State Dept.] lists of individuals & entities both in the U.S. and abroad that have committed export violations or other offenses. Financial dealings or export transactions with Restricted or Prohibited parties is prohibited. Violations are subject to severe penalties and fines. Restricted Party Screenings (RPS) recommended depending on transaction

Payments to entities/persons on the denied lists could result in fines Vendor Payments Payments to entities/persons on the denied lists could result in fines Includes payments to entities in the U.S. or abroad Payment to foreign entity should raise a red flag! 22

Staying inside the “Safehaven” IDENTIFYING RED FLAGS IN YOUR Proposals, Solicitations, AGREEMENTS

Outside FRE: Red Flags Certain restrictions will take you out of FRE: Don’t accept publication or access restrictions in Non-disclosure agreements, contracts, agreements, etc.: Review the Topic, Statement of Work Is it a Military component for research? Is it a Space-related component for research? Foreign national participation Sponsor is a foreign entity or government Restrictions on foreign national participation International Travel or work being done abroad

Red Flags in Non-Disclosure Agreements, RFPs, Proposals & Contracts Got Publication or Foreign Person Access Restrictions in your agreement? Export control language (not all result in restriction) “Sponsor Approval” vs “Sponsor Review” DFAR clauses and other “flow down” provisions from a “Prime” agreement References to Classified information or Security Plans

Determining the need for a license (Export Controls Review) Questions to Ask: What is the nationality of researchers INCLUDING Professors and Research Assistants (grad students/post-docs)? Will the researcher or grad student be receiving restricted information? Is it EAR controlled? Is it ITAR controlled? 26

Determining the need for a license (Export Controls Review) Questions to Ask: Is the project strictly defense-related? If it’s ITAR, will the foreign national grad student need to discuss the data with the sponsor? Destination: Is the research technology or goods going overseas to a foreign company, government or individual? Does the PI want to take the technology/equipment/data with him or her? 27

Determining the need for a license Steps to Take: Determine if license is needed for the technology/end user/end use Determine if license exemption or exception is available 28

Do I need to be concerned about export controls in this research? Public domain, and No equipment, encrypted software, listed-controlled chemicals, bio-agents or toxins, or other restricted technologies are involved, and Information/software is already published, and There is no contractual restriction on export, or Fundamental Research (note definitions and caveats associated with this exemption) Equipment or encrypted software is involved, or Technology is not in the public domain, and Technology may be exposed to foreign nations (even on campus) or foreign travel is involved, and The equipment, software or technology is on the Commerce Control List, or Information or instruction is provided about software, technology, or equipment on the CCL, or The foreign nationals are from or the travel is to an embargoed country The contract has terms e.g. a publication restriction that effect the Fundamental Research Exemption Equipment, software, chemical, bio-agent, or technology is on the US Munitions List (ITAR), or Equipment, software, chemical, bio-agent or technology is designed or modified for military use, use in outer space, or there is reason to know it will be used for or in weapons of mass destruction, or Chemicals, bio-agents or toxins on the Commerce Control List are involved, or The contract contains a restriction on export or access by foreign nationals Probably (further review is required) License May Be Required YES License Will Be Required NO 29

When to Consider Obtaining an Export License: Exporting controlled h/w, s/w or technology?  Yes No Exemption or Exclusion applies? “See through rule” applies? (ITAR) Foreign Collaboration? Outside FRE? Denied Party or Sanctioned Country involved? STOP! License May be Required!

Managing export controlled research Assuming you can’t negotiate out the restrictive clauses - how do you manage the export controlled project?

Determining the need for a license If no exceptions or exemptions, determine what kind of license is needed - EAR ITAR OFAC 32

What next?! Get a license and/or Set up a Technology Control Plan Next steps: Get a license and/or Set up a Technology Control Plan Train the project personnel Audit the Plan Keep records

License or Technology Control Plan? In some situations it is possible to put a TCP in place instead of applying for a license A TCP is simply a plan that outlines the procedures to secure controlled technology (e.g., technical information, data, materials, software, or hardware) from use and observation by unlicensed non-U.S. citizens If this is not possible, then a license or technical assistance agreement would be needed

When do you need a TCP? In conjunction with a Technical Assistance Agreement (TAA) – Dept. of State In conjunction with a Deemed Export license – Dept. of Commerce In conjunction with an agreement that does not allow foreign nationals In conjunction with an agreement that involves controlled technology – includes NDAs Or in conjunction with any project that involves controlled technology!

How to keep your faculty out of trouble! Travel Abroad How to keep your faculty out of trouble!

How do the export regulations affect travel abroad for university employees? Commerce and State have regulations that affect: Physically taking items with you on a trip such as Laptops, smart phones, PDAs Encryption products on your laptop Data/technology Blueprints, drawings, schematics Information/data presented at meetings or conferences Equipment, data, presentations should be vetted for export control issues prior to travel

How do the export regulations affect travel abroad for university employees? The Office of Foreign Assets Control (OFAC) has regulations that affect: Money transactions and the exchange of goods and services in certain countries – providing “value” Travel to sanctioned countries: Balkans, Belarus, Burma, Cote d’Ivoire, Cuba, Democratic Republic of the Congo, Iran, Iraq, Former Liberian Regime of Charles Taylor, Lebanon, Libya, North Korea, Sudan, Syria, and Zimbabwe Doing business with certain people or entities Commerce, State, and OFAC have “lists”

What does this mean? The bad news…. A license could be required depending on what you are taking and the country you are traveling to A technical assistance agreement would be required if you were providing a “defense service” to a foreign person There are consequences if you violate the regulations!

What does this mean? The good news… Travel to most countries does not usually constitute an export control problem! Taking a laptop with only Microsoft Office Suite, Internet Explorer, Adobe, etc. okay to most countries – no license required In most cases, if you are taking or need to work with export controlled info or equipment abroad, a “License Exception” is available!

Department of Commerce Exception - (TMP) What does it cover? Temporary “export” of items such as: Laptops with controlled technology and/or data Digital storage devices with controlled technology and/or data Most software Designs, drawings that are export controlled Other “tools of the trade”

Department of Commerce Exception - (TMP) What is not covered? The exception does not apply to: Satellite or space-related equipment, components, or software Exports related to nuclear activities except for a limited number of countries Technology associated with high-level encryption Iran, Syria, Libya, Cuba, North Korea, or Sudan Another exception, “BAG” can be used for Syria, Cuba, N. Korea Can’t take University property to these countries without a license Anything regulated by the Department of State’s International Traffic in Arms Regulations (ITAR)

Recordkeeping Requirements State and Commerce require documentation of exceptions and exemptions Paperwork must be in place before you travel Records must be kept for five years PI/employee should keep a copy Copy for Export Control Officer’s file Copy for PI’s award file (if applicable)

Tips on Staying Compliant Final Thoughts

Develop an Export Compliance Management Plan within your unit Risk Assessment Stop the Bleeding in Potentially High Risk Areas Shipping Procurement Sponsored Research projects Develop “best practices” Technology Control Plans Checklists to review for export issues Recordkeeping Required to keep records for five years

Tips on How to keep your Faculty Out of Trouble Before adding a foreign national to a project, did you check to see if there are export control issues? A license could be required and must be in place prior to work on the project Acceptance of Export Controlled information – Know your responsibility: Is the controlled research protected? TCP and/or license must be in place before work begins Understand the conditions and restrictions of agreements Did you just agree to export an instrument to China that requires a license? Did you allocate enough $$ for the duties and fees?

More Tips…. Travel Abroad faculty briefings advisable No Side-deals Exports of export controlled hardware, technology or software require export compliance review (includes presentations) PRIOR to travel No Side-deals Make sure all agreed upon terms are included in the agreement Export Recordkeeping Requirements – keep for at least 5 years from date of export or expiration of the license whichever occurs last

Where to get more information http://www.vpr.arizona.edu/export-control - UA Vice President for Research Export Controls Webpage http://www.bis.doc.gov/ - Commerce - Bureau of Industry & Security - EAR http://pmddtc.state.gov/ - State - Directorate of Defense Trade Controls - ITAR http://www.ustreas.gov/offices/enforcement/ofac/ - Office of Foreign Assets Controls http://www.cbp.gov/ - Customs and Border Protection For more information on the UA export compliance organization including contact information and to access our processes and tools, please visit the UA export webpage at www.vpr.arizona.edu/export-control. For more information about the regulations, please visit any of the websites listed on this slide. Thank you for taking the time to complete this briefing. We hope it has been informative.