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What Non-Research Institutions Need to Know About Export Controls

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Title: What Non-Research Institutions Need to Know About Export Controls


1
What Non-Research Institutions Need to Know About
Export Controls
  • Carol T. Carr Carol T. Carr, University
    Consulting Services
  • Nelson G. Dong Dorsey Whitney, LLP
  • Justin H. Smith Washington and Lee University

2
The Basics
3
What are Export Controls?
  • Generally speaking, export controls restrict
  • 1) business/monetary transactions with certain
    countries, entities, and individuals and
  • 2) dissemination of certain technology and
    information.
  • Not limited to tangible items ? Deemed export
  • Exclusions/Exceptions
  • Licenses

4
U.S. Export Control Regimes
  • Embargoes
  • Administered by OFAC
  • Scope Business/monetary transactions
  • EAR Export Administration Regulations
  • Administered by BIS
  • Scope Dual use items
  • ITAR International Traffic in Arms Regulations
  • Administered by DDTC
  • Scope Defense-related items

5
Examples of Triggers
6
Activities That May Trigger Export Controls
  • Dissemination of research/expertise
  • To foreign nationals (within the U.S.)
  • In a foreign country
  • Subject to publication restrictions or
    prepublication review
  • Subject to access/dissemination controls
  • Examples
  • Prepublication review of article by corporate
    sponsor to see whether to protect research
    results as trade secret.
  • Presenting at a prestigious international
    scientific conference where notes and recordings
    are not permitted.
  • Consulting a third world manufacturer of
    sub-micron devices.

7
Activities That May Trigger Export Controls
(cont.)
  • Hiring of foreign nationals whose work will
    involve access to technology or data subject to
    EAR or ITAR
  • Examples
  • Hiring foreign national whose work will involve
    research with biological reagents.
  • Hiring foreign national whose work will involve
    maintenance of supercomputer.

8
Activities That May Trigger Export Controls
(cont.)
  • Travel/shipping to/from any country
  • Examples
  • Shipping advanced telecommunications equipment to
    China for field research.
  • Carrying algorithm to Balkan penninsual on a
    laptop computer.

9
Activities That May Trigger Export Controls
(cont.)
  • Business/monetary transactions
  • Examples
  • Donation (or payment of tuition) by someone on
    prohibited list.
  • Student organization humanitarian trip to Darfur.

10
Exceptions and Exclusions
11
Public Domain/Publicly Available
  • Information which is published and generally
    accessible to the public through (among other
    things) fundamental research.

12
Educational Exemption
  • Generally, a license is not needed for
    classroom/lab teaching to foreign nationals in US
    Universities.
  • Students in degree programs, using controlled
    equipment to conduct research need to be
    registered for a research credit class.

13
Fundamental Research Exclusion
  • Basic and applied research in science and
    engineering, where the resulting information is
    ordinarily published and shared broadly within
    the scientific community.
  • Distinguished from proprietary research and
    industrial development, the results of which are
    ordinarily restricted for proprietary reasons or
    national security reasons.

14
Employment Exemption
  • A license is not required when sharing controlled
    technical data with a foreign national who
  • Is not a national of an embargoed country
  • Is a full-time bona fide university employee
  • Has a permanent address in the U.S. while
    employed at university and
  • Is advised IN WRITING not to share covered
    technical data with any other foreign nationals
    without government approval.

15
TMP
  • The export of items, technology, commercial
    software, and encryption code is subject to
    export control regulations (this includes
    laptops, PDAs and digital storage devices).
  • The TMP exception can be used for tools of the
    trade for a period of less than a year, but does
    not apply to any EAR satellite or space-related
    equipment, components, or software, or to any
    technology associated with high-level encryption
    products and cannot be used for travel to Iran,
    Syria, Cuba, North Korea, or Sudan.

16
BAG
  • Can be used for travel outside the U.S. when you
    are taking PERSONAL items or technology that
    would normally require a license from the
    Department of Commerce.
  • For example, if you plan to take your personal
    laptop rather than a university laptop when
    attending a conference or conducting research
    abroad, and you are taking controlled technology,
    software, or other information that would require
    a license, the BAG license exception is
    available.

17
What do you do if you lose them?
  • Exceptions can be lost if all of the conditions
    for the exception are not met. Then you are
    subject to the export laws and regulations in the
    same way that commercial enterprises are.
  • Importance of a compliance program for your
    institution, including a risk assessment to
    identify where export control issues are arising
    and due diligence in managing them. (More later)

18
AN ILLUSTRATIVE CASE STUDY OF EXPORT CONTROLS IN
ACADEMIA
  • Nelson G. Dong
  • Head, National Security Law Group
  • Dorsey Whitney LLP
  • Seattle Office

NACUA Annual Meeting June 28, 2011 San Francisco,
CA
19
U.S. EXPORT CONTROL REGIMES
  • OFAC embargoes Office of Foreign Assets Control
    in Department of the Treasury
  • International Traffic in Arms Regulations (ITAR)
    Directorate of Defense Trade Controls in
    Department of State
  • Export Administration Regulations (EAR) Bureau
    of Industry Security in Department of Commerce

20
THE CASE STUDY CONTEXT
  • Modern University (MU) wants to update its
    educational model for summer term studies
  • MU will combine teaching scientific research
    methods in a study abroad summer term
  • MU will send faculty, students to a
    Spanish-speaking environment
  • MU science, language faculty decide to jointly
    teach 10-week program on environmental effects of
    the Gulf oil spill and national government
    responses in Mexico, Venezuela and Cuba

21
MU PROGRAM PREPARATIONS
  • MU faculty may send to their foreign colleagues
  • Faculty and student-built ocean motion sensors
  • Faculty and student-created software to refine
    civilian-level satellite imagery into much higher
    resolution images
  • Faculty and student-built remotely operated
    underwater submersibles to study marine life and
    undersea currents
  • Faculty and students will also take own PCs,
    equipment and instruments to help equip naval
    oceanographic research vessels from Mexico,
    Venezuela and Cuba

22
OFAC EMBARGO ISSUES
  • No OFAC embargo issues for Mexico or Venezuela
  • Cuban Transaction Regulations (CTR) in 31 CFR
    Part 515 affect all dealings with or travel to
    Cuba
  • Academic travel to Cuba historically difficult
    but new general license published in January
    2011
  • Still CTR concerns about services being
    rendered to Cuban government officials in MU
    program
  • Still may be other physical export aspects of
    MU program that bear close scrutiny under CTR
  • OFAC general license for publishing covers any
    joint academic papers from program

23
ITAR ISSUES
  • ITAR fundamental research exemption applies
    only in U.S.
  • If any defense articles or defense services
    involved, then ITAR issues raised for Mexico,
    Venezuela and Cuba
  • Mexico might get approval from DDTC
  • But arms embargoes and policy of denial
    against Venezuela, Cuba under 22 CFR Section
    126.1
  • MU faculty collaboration with naval oceanographic
    vessels from Venezuela, Cuba could be classified
    as defense services
  • Some MU technical preparations might also involve
    shipment of defense articles to Venezuela, Cuba
  • Sensors, software, submersibles

24
EAR ISSUES
  • Although fundamental research exemption in 15
    CFR Part 734.8 applies only to on-campus research
    activities, not to any foreign programs
  • Many kinds of advanced lab or field research
    instruments may be subject to EAR export controls
  • Sensors, software, submersibles
  • Both physical export and deemed export issues
    may be raised by research collaborations by MU
    faculty collaborations with colleagues in Mexico,
    Venezuela and Cuba
  • Overlap with OFAC embargo issues as to Cuba no
    items controlled by EAR can be exported to Cuba
  • High levels of scrutiny even for Mexico,
    Venezuela under Country Chart in 15 CFR Part 738

25
LEGAL EXEMPTIONS AND THE MU CASE STUDY
  • OFAC embargoes April 2011 general license for
    Cuban academic travel information and
    informational materials exemption and
    publishing general license for publications
  • ITAR exclusion of fundamental research
    limited to such activity in the U.S. (i.e., not
    available for research conducted outside U.S.
    territory)
  • EAR exclusion of fundamental research limited
    to such activity in the U.S. (i.e., not
    available for research conducted outside U.S.
    territory)

26
Policy and Procedures
27
Policy and Procedures
  • Institutional Policy
  • Risk Assessment and Export Management
  • Website with policies and procedures

28
Policy Considerations
  • Minimum Requirements
  • Statement of Compliance with Federal laws and
    regulations regarding exports
  • Preservation of Fundamental Research Exclusion
  • Commitment to education and training of
    university personnel

29
Export Management Oversight
  • Risk Assessment
  • Institution Overview
  • Identify Responsible Parties
  • Establish Standards of Due Diligence
  • Audits

30
Export Control Website
  • Getting the Message out to your Audience
  • Faculty
  • University Administrative Personnel
  • Federal Agencies
  • Potential Sponsors

31
Make it fit your institution
  • Identify through your risk assessment your
    special concerns
  • Engage administrators, researchers and senior
    administration
  • Keep it user friendly and timely

32
If theres a violation
  • Investigate internally and get all the facts.
  • Voluntary Disclosure is in your institutions
    best interest.
  • Consider engaging outside export counsel.

33
Practical Tips
34
A Few Practical Tips
  • Enlist the assistance of your Business Office /
    Bursar and International Education Office
  • Ensure Business Office / Bursar and Development
    Office know to screen transactions against OFAC
    list of Specially Designated Nationals (SDNs)
  • Coordinate with Human Resources to ensure that
    export controls analysis is conducted before
    certification is made on USCIS Form I-129

35
A Few (More) Practical Tips
  • Add export control review to your contracts
    administration policy/process
  • Review sources of research funding
  • Watch out for any contract that specifically
    mentions export controls
  • Assume nothing
  • Utilize FAQs
  • Know what you dont know, and whom to call for
    help

36
OBAMA ADMINISTRATION EXPORT CONTROL REFORMS
  • Nelson G. Dong
  • Head, National Security Law Group
  • Dorsey Whitney LLP
  • Seattle Office

NACUA Annual Meeting June 28, 2011 San Francisco,
CA
37
OVERVIEW OF REFORM PROPOSALS
  • Obama Administration determined in April 2010
    fundamental reforms of U.S. export control system
    were needed to move toward
  • Single control list
  • Single primary enforcement coordination agency
  • Single information technology (IT) system
  • Single licensing agency
  • Reform efforts originally led by Secretaries
    Gates (Defense), Locke (Commerce) and Clinton
    (State)

38
EXECUTIVE LEGISLATIVE CHANGES
  • Administration is attempting specific reforms
    that can be initiated immediately and implemented
    without legislation
  • Administration is already consulting with key
    Congressional committees to pave way for needed
    legislation to complete entire its reform package
  • Current concerns
  • Two of three key Administration leaders in reform
    effort stepping down (Gates and Locke)
  • Spotty, inconsistent Congressional support for
    such reforms
  • 2012 election cycle and partisan political
    agendas

39
PHASE I
  • Control List Refine, understand, and harmonize
    definitions to end jurisdiction confusion between
    ITAR, EAR lists establish new independent
    control criteria to be used to screen items for
    control into new tiered control list structure
  • Licensing Implement regulatory-based
    improvements to streamline licensing processes
    and standardize policy and processes to increase
    efficiencies 
  • Enforcement Synchronize and de-conflict
    enforcement by creation of an Enforcement Fusion
    Center among agencies
  • Information Technology Determine
    government-wide needs and begin process to reduce
    confusion by creating single U.S. Government
    (USG) point of entry for exporters

40
PHASE II
  • Control List Restructure separate USML, CCL
    into identical tiered structures apply
    criteria remove U.S. unilateral controls as
    appropriate and submit proposals multilaterally
    to add or remove controls
  • Licensing Complete transition to mirrored
    control list system and harmonize licensing to
    allow authorized exports within each control tier
    so as to reduce license requirements without
    detriment to national security
  • Enforcement Expand outreach and compliance
    through primary Enforcement Fusion Center and
    various agencies
  • Information Technology Transition toward single
    electronic licensing system

41
PHASE III
  • Control List Merge current separate USML, CCL
    into a single list and implement systematic
    process to keep current as merged single list
  • Licensing Implement single licensing agency
  • Enforcement Consolidate certain enforcement
    activities into single Primary Enforcement
    Coordination Agency
  • Information Technology Implement single,
    government-wide IT system for licensing and
    enforcement

42
  • Questions?
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