Export Compliance Workshop for
University Folks: The Basics
April 2008
NCURA Western Regional
Conference
Adilia F. Koch
Overview
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Export Basics
What are Strategic Technologies?
What is your Responsibility?
The Myths about Export
Fundamental Research Exclusion (FRE)
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Know the limits.
How to keep your faculty out of trouble.
Basic Elements of a University Export Compliance
Plan
Why do Universities need to comply
with the Export Regulations?
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It’s the law.
Security around the world changed
after 9/11.
Consequences of non compliance can
result in negative publicity, penalties,
fines or imprisonment.
• Violations can range from $250,000 to
$1 million per violation.
Export Compliance
Implementation Basics
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Basics for Implementing a University Export Compliance Plan
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Campus Risk Assessment
Develop Best Practices Recommendations
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Import Issues – Duty, Value, HTS & Duty-Free Shipments
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Focused Export Training depending on Role & Responsibility:
• Shipping
• Procurement
• Faculty
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Travel Abroad
Encryption Restrictions
Defense Service; FRE Stops at the Border
Handcarried Items
Upper Management Training
Restricted Party Screening
ITT & Universities in the Media
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ITT – Night vision goggles
http://www.msnbc.msn.com/id/21134540/vp/178
15796#17815796
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Border Protection – laptops/electronic devices
http://www.washingtonpost.com/wpdyn/content/article/2008/02/06/AR2008020604763_pf.html
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University Students – charged with terrorist charges
for carrying “explosives” (homemade fireworks)
http://www.msnbc.msn.com/id/21134540/vp/20534365#2
0534365
What does “Export Control” mean?
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Export controls are U.S. government
regulations that govern the export of
strategic technologies, equipment,
hardware, software or providing
technical assistance to Foreign
Persons.
What is a Foreign Person?
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Any person who is not a U.S. citizen or not a
lawful U.S. Permanent Resident (green card).
Any U.S. person employed or representing a
foreign entity.
Anyone who has not been granted Political
Asylum.
Any foreign corporation, entity, partnership or
group that is not incorporated or organized to do
business in the US.
Any foreign government.
What’s an export?
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An export is the transfer of export controlled information,
commodities or software either inside the U.S. or outside
the U.S. States.
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Exports can occur in many ways:
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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
Why does the government control
exports?
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The government controls certain technologies that it
considers to be strategically important for:
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National Security Reasons
Nuclear Non-Proliferation Reasons
Missile Technology Controls
Anti-Terrorism
Chemical & Biological Controls
Regional Stability
Crime Control Measures
Anti-boycott Reasons
What is a Restricted or
Prohibited Party?
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The US Government issues various lists of
individuals and entities both in the U.S. and abroad
that have committed export violations or other
serious offenses.
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Financial dealings or export transactions with
Restricted or Prohibited parties is prohibited.
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Drug Traffickers
Export Violations
Terrorists
Sanctioned Countries
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Unilateral and bilateral country
sanctions.
They change frequently.
Check country lists.
(See attached Sanctioned/Embargoed Country Resource page.)
What do the Regulations
Control? -- Dual Use Items
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The EAR (Export Administration
Regulations) Commerce Control List
(BIS):
• Controls technologies and goods that have
dual-use: both military and civil
application.
Where is it going?
What will it be used for?
Various controls apply: End-use/End-user
Sensitive Technologies with Dual-Use
Applications
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
ITAR – Military Application or
Spacecraft & Associated Equipment
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The ITAR (International Traffic in Arms
Regulations) controls commodities and
technologies that have predominant
military use or space application.
Adapted or Modified
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Also includes items that started out as
having civil application but were later
adapted or modified for military
application.
Strategic Technologies –
Military or Space Applications
USML Categories (The ITAR)
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
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
XIV Toxicological Agents, Including Chemical Agents, Biological Agents, and
Associated Equipment
XV Spacecraft Systems and Associated Equipment
XX Submersible Vessels, Oceanographic and Assoc. Equipment
XXI Miscellaneous Articles (Software, components, etc.)
What does all this have to do with
my Faculty?
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Faculty Expertise Chart
http://pr.caltech.edu/media/expertsguide
Administration
Aeronautics
Anthropology
Astronomy
Biology
Chemical Engineering
Chemistry
Civil & Earthquake Engineering
Computation & Neural Systems
Computer Science
Economics
Electrical Engineering
Environmental Engineering
Geology
Geophysics
History
Language & Literature
Materials Science
Mathematics
Mechanical Engineering
Neuroscience
Philosophy
Physics
Planetary Science
Political Science
Seismology
Social Science
Example of Sensitive Emerging
Technologies on Campus
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RoboFly. Aerodynamic unmanned flight vehicles, especially
the size of an insect, is a highly sought after technology by
military agencies around the world, including the U.S.
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Development of “a flying robot weighing less than a paperclip
that could be used in search, rescue, monitoring and
reconnaissance” could have dual-use or have . . .
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Potential military application: Technology can start out being
developed for a civil application (toys or other scientific use) but
can later become modified or adapted for DARPA, Army,
Navy, DOD under a sponsored research project and be
transformed into an item for the military which the government
may wish to control for national security reasons.
What’s not export controlled?
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Information in the public domain.
Information excluded under the
Fundamental Research Exclusion (FRE)
Basic marketing and general system
description
The Fundamental Research
Exclusion (FRE)
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“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.”
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It doesn’t cover everything . . .
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Exports of Hardware, s/w & Technology
Dealing with Prohibited Parties or Entities
Transactions involving Embargoed-Sanctioned Countries
Encryption Controls
FRE stops at the border
DRILLING DOWN
Navigating through exclusions
and exemptions.
What are they and when can you use
them?
Kathleen Reneau Lorenzi
What’s not export controlled?
Fundamental Research ( 15 CFR 734.8 .a) (EAR)
“The intent behind these rules is to identify as “fundamental research” basic
and applied research in science and engineering, where the resulting
information is ordinarily published and shared broadly within the scientific
community. Such research can be distinguished from proprietary research
and from industrial development, design, production, and product
utilization, the results of which ordinarily are restricted for proprietary
reasons or specific national security reasons.”
What is NSDD-189?
NSDD 189, September 21, 1985
PURPOSE This directive establishes national policy for controlling the flow of
science, technology, and engineering information produced in federally-funded
fundamental research at colleges, universities, and laboratories. Fundamental
research is defined as follows:
• "'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."
University Based Research
University Based Research (15 CFR 734.8 b)(EAR)
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Research conducted by scientists, engineers, or students at a university normally will
be considered fundamental research, as described in….. this section. (“University”
means any accredited institution of higher education located in the United States.)
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Scientific and technical information resulting from the research will nonetheless
qualify as fundamental research once all such restrictions have expired or have been
removed.
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The provisions of §734.11 of this part will apply if a university or its researchers accept
specific national security controls (as defined in §734.11 of this part) on a research
project or activity sponsored by the U.S. Government.
EAR
What’s not export controlled?
Details, Details, Details…
Reference 15 CFR 734, Supplement 1
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Information in the public domain or freely available on the internet;
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Basic marketing and general system descriptions;
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Published information and software;
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Technology already publicly available and technology that is made public by a
transaction (planned publication, even in a foreign journal – PI is in charge of
where and when);
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Software and information published and available for general distribution either
for free or at a rice that does not exceed the cost of reproduction and
distribution;
Examples of what’s allowed:
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“Release of information by instruction in catalog courses and associated
teaching laboratories of academic institutions not subject to EAR; “
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“General scientific, mathematical or engineering principles commonly taught in
colleges and universities;”
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Foreign students in a university lab working on fundamental research;
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“Patents and open (published) patent applications available at the USPTO;”
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Release of information at an open conference, meeting, seminar, trade show or
other open gathering;
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Thesis available in the university library;
Published Information and Software (EAR)
Published Information and Software (EAR)
(a) “Information is “published” when it becomes generally accessible to the
interested public in any form, including:
(1)
Publication in periodicals, books, print, electronic, or any other media
available for general distribution to any member of the public or to a
community of persons interested in the subject matter, such as those in a
scientific or engineering discipline, either free or at a price that does not
exceed the cost of reproduction and distribution .”
(b) “Software and information 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.”
University Exemptions - ITAR
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Defense Service – 125.4(d)(1)
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Limited to certain items, to certain countries and for certain activities -limited to discussions about assembly and/or integration when
conducting fundamental research.
Technical Data – 120.10(5)
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Information concerning general scientific, mathematical or engineering
principals commonly taught in . . . universities.
Scientific instruments – 123.16(b)(10)
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articles fabricated for research purposes only . . . Information will be
published or shared w/scientific community
Bona fide Employee – 125.4(b)(10)
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transfers of tech data only, no defense services. Permanent abode
required.
How does the ITAR define
Public Domain?
Public domain. (ITAR 22 CFR 120.11)
Public domain means information which is published and which is generally
accessible or available to the public:
1) Through sales at newsstands and bookstores;
2) Through subscriptions which are available without restriction to any
individual who desires to obtain or purchase the published information;
3) Through second class mailing privileges granted by the U.S. Government;
4) At libraries open to the public or from which the public can obtain
documents;
Public Domain (cont’d);
Authority to Publish . . . .
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Through patents available at any patent office;
6)
Through unlimited distribution at a conference, meeting, seminar, trade
show or exhibition, generally accessible to the public, in the United States;
OBTAINING AUTHORITY TO PUBLISH  COGNIZANT U.S. GOVERNMENT:
Through public release (i.e., unlimited distribution) in any form (e.g., not
necessarily in published form) after approval by the cognizant U.S.
government department or agency (see also Sec. 125.4(b)(13) of this
subchapter);
What’s not export controlled?
Details, Details, Details…
(8) Through fundamental research in science and engineering at accredited
institutions of higher learning in the U.S. where the resulting information is
ordinarily published and shared broadly in the scientific community.
Fundamental research is defined to mean basic and applied research in
science and engineering where the resulting information is ordinarily
published and shared broadly within the scientific community, as
distinguished from research the results of which are restricted for
proprietary reasons or specific U.S. Government access and
dissemination controls. University research will not be considered
fundamental research if:
The University or its researchers accept other restrictions on publication of
scientific and technical information resulting from the project or activity, or
The research is funded by the U.S. Government and specific access and
dissemination controls protecting information resulting from the research
are applicable.
And, then there is OFAC
Office of Foreign Asset Control – (Department of the
Treasury) “administers and enforces economic and
trade sanctions based on US foreign policy and
national security goals against targeted foreign
countries, terrorists, international narcotics
traffickers, and those engaged in activities related to
the proliferation of weapons of mass destruction.
OFAC acts under Presidential wartime and national
emergency powers, as well as authority granted by
specific legislation, to impose controls on
transactions and freeze foreign assets under US
jurisdiction.”
And, then there is OFAC
“OFAC was formally created in December
1950, following the entry of China into the
Korean War, when President Truman declared
a national emergency and blocked all Chinese
and North Korean assets subject to U.S.
jurisdiction.”
And, then there is OFAC
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“War of 1812, Secretary of the Treasury Gallatin administered
sanctions imposed against Great Britain for the harassment of
American sailors;
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Civil War - Congress approved a law which prohibited transactions
with the Confederacy, called for the forfeiture of goods involved in
then there
is OFACregime under rules and
such transactions, andAnd,
provided
a licensing
regulations administered by Treasury;
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OFAC is the successor to the Office of Foreign Funds Control (“FFC''),
which was established at the advent of World War II following the
German invasion of Norway in 1940.
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administered by the Secretary of the Treasury throughout the war.
purpose was to prevent Nazi use of the occupied countries' holdings of foreign
exchange and securities and to prevent forced repatriation of funds belonging to
nationals of those countries.”
And, then there is OFAC
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Lists of Sanctioned Countries
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Specially Designated Nationals (SDN)
List
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Financial Crime Enforcement Network
(FinCEN) Advisories
And, then there is OFAC
International Emergency Economic Powers Act (“IEEPA”) - 50
USC 35 (War & National Defense, International Emergency
Economic Powers)
OFAC Country Sanctions Programs – Executive Order 13224
Bank Secrecy Act – 31 USC 5311-5314, 5316-5332
“to require certain reports or records where they have a high
degree of usefulness in criminal, tax, or regulatory
investigations or proceedings, or in the conduct of intelligence
or counterintelligence activities, including analysis, to protect
against international terrorism. “
BRINGING IT HOME
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Putting it to Practice
Dispelling the Myths
#1:
The Fundamental Research Exclusion means
Caltech is not subject to the Export Regulations.
#2:
My Faculty can publish anything including export
controlled information received from a 3rd party.
#3
My freight forwarder or Custom Broker is responsible
for the accuracy of the information contained in my
shipping documents.
#4
I’m not selling anything so my shipment has a zero $
value.
Tips on How to keep your
Faculty Out of Trouble.
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Acceptance of Export Controlled information – Know your responsibility:
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Travel Abroad faculty briefings advisable
Exports of export controlled hardware, technology or software require
export compliance review
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Safeguard data in locked cabinet
Cannot publish without export authority or removal
Understand the conditions and restrictions of export licenses, agreements
Some exports may require an export license.
No Side-deals
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Make sure all agreed upon terms are included in the agreement.
Understand the terms of the agreement:
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Did you just agree to export an instrument to China that requires a
license? Did you allocate enough $$ for the duties and fees?
Export Recordkeeping Requirements – keep for at least 5 years from
date of export or expiration of the license whichever occurs last.
When to seek expert advice
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Enforcement officials visit your student or faculty
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Know purpose of the visit
Your shipment has been seized by U.S. Customs.
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Accurate export docs: Value, Description & Qty.
Export of export controlled hardware, software or technology.
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A license can take months to obtain.
Foreign Procurements
Faculty or student has been asked to sign:
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NDA
TAA or
Other Agreement containing access or publication restrictions
Receipt of Export Controlled information . . . marking language;
safeguarding of information
Foreign Travel to T-5 Countries: Iran, Sudan, Syria, North Korea,
Cuba
Develop an Export Compliance
Management Plan
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Risk Assessment
Stop the Bleeding in Potentially High Risk Areas
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Shipping
Procurement
Sponsored Research
Develop “best practices”
Recordkeeping
Hire experts to help you navigate the export control
terrain -- It’s the cost of doing business in the international
arena.
Contact Info
Adilia F. Koch
Director of Export Compliance
California Institute of Technology
adilia.koch@caltech.edu
Phone: (626) 395-4469
Fax:
(626) 795-4571
Kathleen Reneau Lorenzi, CPCM
Associate Director
The University of Colorado at Boulder
Kathleen.Lorenzi@Colorado.edu
Phone: 303-492-2692
Fax:
303-735-1899
RESOURCES
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Glossary
Useful Links
The Law and Regulations
Lists to Check
Glossary
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Commodity: Material, equipment, and services (e.g., instruments, computers, information, tools,
assistance).
Dual-Use: EAR-controlled items that can be used both in USML and commercial applications.
End-User: The Foreign Person that receives and ultimately uses the exported commodity.
End-Use: A detailed description of how the Foreign Person intends to use the commodities being
exported.
Export: Transfer of a commodity, technology, or software to any person or entity, by physical,
electronic, oral, or visual means with the knowledge or intent that the item will be shipped,
transferred, or transmitted to a Foreign Person.
License: A legal authority to export (permanent or temporary), re-export, or temporarily import an
article controlled by the ITAR or EAR.
Public Domain: Information, which is published and generally accessible or available to the
public.
Release: Technology is “released” for export to Foreign Persons through visual inspection of U.S.
origin equipment and facilities, or through oral exchanges of information with Foreign Persons,
either in the U.S. or abroad.
U.S. Munitions List (USML): Articles, services, and related technical data designated as defense
articles and defense services under ITAR. Note: Originally, spacecraft related technology was
under EAR. In 1999, by act of Congress it was moved under ITAR and put on the USML.
Prohibited/Restricted Party Lists
http://www.bis.doc.gov/complianceandenforcement/liststocheck.htm
Lists to Check: The following lists may be relevant to your export or re-export transaction.
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Denied Persons List
A list of individuals and entities that have been denied export privileges. Any dealings with a party on this list that
would violate the terms of its denial order is prohibited.
Unverified List
A list of parties where BIS has been unable to verify the end use in prior transactions. The presence of a party on
this list in a transaction is a “red flag” that should be resolved before proceeding with the transaction.
Entity List
A list of parties whose presence in a transaction can trigger a license requirement under the Export Administration
Regulations.
Specially Designated Nationals List
A list compiled by the Treasury Department, Office of Foreign Assets Control (OFAC). OFAC’s regulations may
prohibit a transaction if a party on this list is involved. In addition, the Export Administration Regulations require a
license for exports or re-exports to any party in any entry on this list that contains any of the suffixes "SDGT". "SDT",
"FTO" or "IRAQ2".
Debarred List
A list compiled by the State Department of parties who are barred by §127.7 of the International Traffic in Arms
Regulations (ITAR) (22 CFR §127.7) from participating directly or indirectly in the export of defense articles,
including technical data or in the furnishing of defense services for which a license or approval is required by the
ITAR.
Nonproliferation Sanctions
Several lists compiled by the State Department of parties that have been sanctioned under various statutes. The
Federal Register notice imposing sanctions on a party states the sanctions that apply to that party. Some of these
sanctioned parties are subject to BIS’s license application denial policy described in §744.19 of the EAR (15 CFR
§744.19).
General Order 3 to Part 736 (page 9)
This general order imposes a license requirement for exports and re-exports of all items subject to the EAR where
the transaction involves a party named in the order. This order also prohibits the use of License Exceptions to
export or re-export to these parties. These parties are currently located in: Dubai, United Arab Emirates; Germany;
Syria; Lebanon; Malaysia; Iran; and Hong Kong.
The Export Laws & Regulations
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U.S. Department of State: International Traffic in Arms
Regulations (ITAR)
http://www.treas.gov/offices/enforcement/ofac/
U.S. Department of Commerce, Bureau of Industry &
Security (BIS): Export Administration Regulations (EAR)
http://www.access.gpo.gov/bis/ear/ear_data.html
U.S. Department of the Treasury, Office of Financial and
Asset Controls (OFAC)
http://www.treas.gov/offices/enforcement/ofac/
U.S. Customs Regulations
Imports -- Harmonized Tariff Code (HTS #)
http://www.usitc.gov/tata/hts/bychapter/index.htm
Schedule B (US Census) http://www.census.gov/
Embargoed/Sanctioned
Countries & Policies
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State Department
http://pmddtc.state.gov/country.htm
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Office of Foreign Assets Control
http://www.treas.gov/offices/enforcement
/ofac/
Useful Links
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The ITAR Regulations
http://pmddtc.state.gov/consolidated_itar.htm
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Department of Commerce http://www.bis.doc.gov/
Commerce Control List (CCL) (EAR)
http://www.access.gpo.gov/bis/ear/ear_data.html#ccl
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US Customs & Border Protection
http://www.customs.ustreas.gov/
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Other US Government Links
http://www.bis.doc.gov/about/reslinks.htm
Travel
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US State Department Travel Warnings
http://travel.state.gov/travel/cis_pa_tw/tw/tw_17
64.html
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CIA Factbook
https://www.cia.gov/library/publications/t
he-world-factbook/
November 1, 2001
Dr. Harold Brown
Co-Chairman
Center for Strategic & International Studies
1800 K Street, N.W.
Washington, D.C. 20006
NSDD-189
Dear Dr. Brown:
Thank you for conveying the concerns of the Council on the Future of Technology and Public Policy
regarding export controls and fundamental research. On behalf of the President, I would like to respond
to your comments on this matter.
The key to maintaining U.S. technological preeminence is to encourage open and collaborative basic
research. The linkage between the free exchange of ideas and scientific innovation, prosperity, and U.S.
national security is undeniable. This linkage is especially true as our armed forces depend less and less
on internal research and development for the innovations they need to maintain the military superiority
of the United States. In the context of broad-based review of our technology transfer controls that will
begin this year, this Administration will review and update as appropriate the export control policies that
affect basic research in the United States. In the interim, the policy on the transfer of scientific, technical,
and engineering information set forth in NSDD-l89 shall remain in effect, and we will ensure that this
policy is followed.
Again, thank you for your views on this important matter. I hope that we will be able to draw upon the
Council's expertise as we review this issue in the coming months.
Sincerely,
Condoleezza Rice, Assistant to the President for National Security Affairs
Questions?
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Questions & Answers