Export Control Basics Tutorial

Export Controls: Just the Basics –
How to Keep Your Faculty &
Researchers Out of Trouble!
Kay Ellis
Export Control Officer
Josh Estavillo
University Attorney
Export Basics: Terms & Regs
Strategic Technologies
Kay Ellis
Josh Estavillo
Identifying Red Flags
Travel Abroad
Tips on Staying Compliant
Export Alphabet Soup
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
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
• Technical Data
• Limits
• Jeopardizing
• Civil Use
• Military or
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
 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:
Agent or broker acting on your behalf – i.e., a Freight Forwarder
Visual inspection that reveals technical data
Hand-carried items – laptop, memory devices
Foreign Person is defined as . . .
Foreign Person
Foreign Entity
• Any person not a U.S.
citizen or legal permanent
resident (green card
• Any partnership or group
not incorporated or
organized to do business
in the U.S.
• Any person not granted
political asylum
• Any foreign government
• Any U.S. Person employed
by or representing a
foreign entity
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
“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
“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
 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
Tanks and Military Vehicles
Aircraft and Associated Equipment
 IX
Military Training Equipment and Training
 X
Protective Personnel Equipment and Shelters
 XI
Military Electronics
Fire Control, Range Finder, Optical and Guidance and Control Equipment
Auxiliary Military Equipment
Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated
 XV
Spacecraft Systems and Associated Equipment
Nuclear Weapons, Design and Testing Related Items
Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated
 XVIII Directed Energy Weapons
 XX
Submersible Vessels, Oceanographic and Assoc. Equipment
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
Research does NOT
cover --
Exports of
Hardware, Software,
Financial Dealings
with Prohibited
Parties or Entities
Export Controlled
activities –
“technical assistance”
Involving Embargoed
or Sanctioned
What is a Restricted or Prohibited Party?
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
Vendor Payments
 Payments to entities/persons on the
denied lists could result in fines
 Includes
payments to entities in the U.S. or
 Payment to foreign entity should raise a red
Staying inside the “Safehaven”
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
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?
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
Does the PI want to take the technology/equipment/data with
him or her?
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
Do I need to be concerned about export controls in this research?
Public domain, and
a) No equipment, encrypted
software, listed-controlled
chemicals, bio-agents or
toxins, or other restricted
technologies are involved,
b) Information/software is
already published, and
c) There is no contractual
restriction on export, or
Fundamental Research
(note definitions and caveats
associated with this
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
a) The equipment, software
or technology is on the
Commerce Control List, or
b) Information or instruction is
provided about software,
technology, or equipment
on the CCL, or
c) 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
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
(further review is required)
License May Be
License Will Be
When to Consider Obtaining an Export License:
Exporting controlled h/w,
s/w or technology?
•  Yes
No Exemption or Exclusion
•  Yes
“See through rule” applies?
•  Yes
Foreign Collaboration?
Outside FRE?
•  Yes
Denied Party or Sanctioned
Country involved?
•  Yes
• 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
What next?!
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!
Travel Abroad
How to keep your faculty out of
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
 There are consequences if you violate the
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
Develop an Export Compliance
Management Plan within your unit
 Risk Assessment
 Stop the Bleeding in Potentially High Risk Areas
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
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
 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
 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