1. Export Controls and Trade Sanctions Eileen Nielsen Director of Sponsored Projects Compliance Office of Financial Services Harvard School of Public Health Research Operations Managers Meeting Presentation July 16, 2008

2. U.S. Export Controls Advance foreign policy goals Restrict export of goods and technology that could contribute to the military potential of adversaries Prevent proliferation of weapons of mass destruction (nuclear, biological, chemical) Fulfill international obligations

3. Agencies that govern export controls There are three principal agencies State Department Commerce Department Treasury Department

4. Office of Foreign Assets Control (OFAC)  Trade Sanctions, Embargoes, Restrictions on Transfers to Certain End-User

5. About OFAC  Embargoes administered by Office of Foreign Assets Control, U.S. Department of Treasury (“OFAC”)  Regulates all transactions abroad with prohibited parties, such as terrorists and countries subject to U.S. embargoes e.g., prohibited end-users  U.S. economic sanctions focus on the end-user or country rather than the technology  Prohibitions on trade with countries such as Iran, Cuba  Limitations on activities in certain areas of countries or with certain non-state actors

6. Export Controls US Export Controls Cover any item in U.S. trade (goods, technology, information) Extend to U.S. origin items wherever located, including U.S. ( Jurisdiction follows the item or technology world wide) Controls have broad coverage and limited exclusions License may be required to export

7. State Department Directorate of Defense Trade Controls (DDTC)  International Traffic in Arms Regulations “ITAR”  Arms Export Control Act of 1976

8. International Traffic in Arms Regulations (ITAR)  Covers military items (“munitions” or “defense articles”)  Regulates goods and technology designed to kill people or defend against death in a military setting (e.g., tank, fighter aircraft, nerve agent defensive equipment)  Creates “defense articles” (includes tech data which encompasses software unlike EAR) and “defense services” (certain information to be exported may be controlled as a “defense service” even if in the public domain)  Includes technical data related to defense articles and defense services (furnishing assistance including design, engineering, and use of defense articles)  Includes space-related technology and research; increasing applicability to other university research areas such as nanotechnology/new materials and sensors and life sciences About ITAR

9. Commerce Department Bureau of Industry and Security (BIS)  Export Administration Regulations  Export Administration Act of 1974

10. Export Administration Regulations (EAR)  Covers dual-use items: 10 CCL categories of different technologies covering equipment, tests, materials, software and technology  Covers goods, test equipment, materials, technology (tech data and technical assistance) and software  Also covers “re-export” of “U.S.-origin” items outside the United States  Regulates items designed for commercial purpose but that can have military or security applications (e.g., computers, pathogens, civilian aircraft) About EAR

11. FUNDAMENTAL RESEARCH  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 and from industrial development, design, production, and product utilization, the results of which ordinarily are restricted for proprietary or national security reasons.”

12. FUNDAMENTAL RESEARCH EXCLUSION National Security Decision Directive 189 which stated, 1985  “It is the policy of this Administration that, to the maximum extent possible, the products of fundamental research remain unrestricted. It is also the policy of this Administration that, 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.”

13. FUNDAMENTAL RESEARCH  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 and from industrial development, design, production, and product utilization, the results of which ordinarily are restricted for proprietary or national security reasons.”  The Fundamental Research Exclusion applies only to the dissemination of research data and information, not to the transmission of material goods.

14. FUNDAMENTAL RESEARCH EXCLUSION IS DESTROYED IF The university accepts any contract clause that:  Forbids the participation of foreign persons  Gives the sponsor a right to approve publications resulting from the research; or  Otherwise operates to restrict participation in research and/or access to and disclosure of research results. NOTE: “Side deals” between a PI and Sponsor destroy the fundamental research exclusion and may also violate university policies on openness in research

15. DEEMED EXPORTS The disclosure or transfer of export controlled software, technologies or technical data to a foreign entity or individual inside the US is “deemed” to be an export to the home country of the foreign entity or individual.  Applies to technology transfers under the EAR and the provisions of ITAR technical data and defense

16. U.S. Exports Post 9/11 Top research universities became a focal point for U.S. government export control compliance  Growing intersection of cutting-edge science, technology and engineering research with national security, foreign policy and homeland security  Evolving role of the research university (global in scope, multidisciplinary, changing innovation role)

17. U.S. Export Controls -- A Growing Focus on Research Universities Growing government perception that universities “are not serious” about export control compliance and are misusing the fundamental research exclusion Corporate complaints that universities “aren’t playing by the same rules” with competitive implications GAO Report (2002) severely criticizing Commerce’s oversight of “deemed exports”, especially with foreign nationals from India, Pakistan, China, Russia and Israel

18. U.S. Export Controls -- A Growing Focus on Research Universities II Fall 2003 -- Federal interagency export control investigation/audit of 9 major research universities; OIG Report and Congressional hearings in 2004 “Enhanced” export control enforcement focus on universities and their researchers Summer 2006 – GAO “Interviews” of about two dozen research institutions GAO Report – issued December, 2006

19. State Department (ITAR) — Criminal violations: up to $1,000,000 per violation, up to 10 years imprisonment — Civil penalties: seizure and forfeiture of the articles and any vessel, aircraft or vehicle involved in attempted violation, revocation of exporting privileges, fines of up to $500,000 per violation Commerce Department (EAR) — Criminal violations: $50,000-$1,000,000 or five times the value of the export, whichever is greater per violation (range depends on the applicable law), up to 10 years imprisonment — Civil penalties: loss of export privileges, fines $10,000-$120,000 per violation Penalties for Noncompliance

20. Treasury Department (OFAC) — Criminal violations: up to $1,000,000 per violation, up to 10 years imprisonment — Civil penalties: $12,000 to $55,000 fines (depending on applicable law) per violation. UCLA recently fined for an OFAC violation involving an activity with Iran. Penalties for Noncompliance (cont’d)

21. Loss of “exporting” privileges (usually for 30-90 days) could cripple a university’s normal activities Puts federal funding at risk -- for the university and for the individual — Violation of specific sanctions laws may add additional penalties Public relations and media attention -- Most settlements with the Commerce, State or Treasury Departments generally become public. Court cases are always public! Penalties for Noncompliance (cont’d)

22. SOME STEPS FOR ANALYZING EXPORT CONTROL ISSUES Who?  Who wants to travel outside the US?  Who is the intended recipient of a piece of equipment or technology? In what country are they located? What?  What piece(s) of equipment are intended for export?  What technology? Where?  Where are the individuals traveling?  What is the intended destination of the equipment or technology?  For a deemed export, what is the nationality of the intended recipient who is a foreign national? When?  What is the time frame for export?  If it will be returned, when?  Has it been sent already? Why?  What is the purpose for the export?  What is the research project involved? Is there a Statement of Work?  Is it the subject of an agreement?

23. Harvard Export Control Policy and Procedures Harvard University Export Control Policy http://www.provost.harvard.edu/policies_guidelines/Export%20Contr ol_Compliance_Policy%20Statement_6-19-07.pdf http://www.provost.harvard.edu/policies_guidelines/Export%20Contr ol_Compliance_Policy%20Statement_6-19-07.pdf Harvard University Export Control Policy and Procedures http://www.provost.harvard.edu/policies_guidelines/Compliance_Ma nual_June_2007.pdf http://www.provost.harvard.edu/policies_guidelines/Compliance_Ma nual_June_2007.pdf

24. Where is the information? Bureau of Industry and Security (BIS) Department of Commerce http://www.bis.doc.gov/http://www.bis.doc.gov/ Directorate of Defense Trade Controls (DDTC) Department of State http://pmddtc.state.gov/http://pmddtc.state.gov/ Office of Foreign Assets Control (OFAC) Department of Treasury http://www.treas.gov/offices/enforcement/ofac/ http://www.treas.gov/offices/enforcement/ofac/ Export Administration Regulations http://www.access.gpo.gov/bis/ear/ear_data.html http://www.access.gpo.gov/bis/ear/ear_data.html International Traffic in Arms Regulations http://pmddtc.state.gov/itar_index.htm http://pmddtc.state.gov/itar_index.htm

25. CONTACT INFORMATION Eileen Nielsen enielsen@hsph.harvard.edu 617-432-7350

26. Questions?