EXPORT CONTROLSThe Challenge for U.S.

Universities

Balancing National Security and

Openness in Research, Education and Public Service

Eileen NielsenDirector of Sponsored Projects ComplianceOffice of Financial ServicesHarvard School of Public Health

International Programs Managers Group

Presentation December 18, 2008

Export controls…

Who controls export controls? What does it mean to be export controlled? When did this all begin? Why do we have them?

“Scientific progress on a broad front results from the free play of free intellects, working on subjects of their own choice, in the manner dictated by their curiosity for exploration of the unknown”

“Science the Endless Frontier,”

Vannevar Bush, 1945

What are export controls?

THEY ARE THE LAW US laws that regulate

the distribution to foreign nationals and foreign countries of strategically, important technology, services and information for reasons of foreign policy and national security

Export control laws apply to all activities — not just sponsored research projects

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

U.S. 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

Today’s national security concerns Missile technology Nuclear nonproliferation Chemical and biological weapons Anti-terrorism, crime control, regional

stability, short supply, UN sanctions Embargoes and trade sanctions

A question…

What is an export? Any oral, written, electronic or visual disclosure,

shipment, transfer or transmission of commodities, technology, information, technical data, assistance or software codes to

Anyone outside the US (including US citizen) A non-US individual (wherever they are) A foreign embassy or affiliate

Agencies that govern export controlsThere are three principal agencies

U.S. Department of State U.S. Department of Commerce U.S. Department of the Treasury

http://www.pmddtc.state.gov/

U.S. Department of State

Directorate of Defense Trade Controls (DDTC) International Traffic in Arms Regulations

(ITAR) US Munitions List

Inherently military technologies

http://www.bis.doc.gov/index.htm

U.S. Department of Commerce Bureau of Industry and Security (BIS)

Export Administration Regulations (EAR) Commerce Control List (CL)

“Dual-Use” technologies (primary civil use)

U.S. Export Control RegulationsDifferences Between ITAR and EAR ITAR [22 CFR 120-130]

Covers military items or defense articles

Regulates goods and technology designed to kill or defend against death in a military setting

Includes space related technology because of application to missile technology

Includes technical data related to defense articles and services

Strict regulatory regime Purpose of regulations is to ensure

U.S. security No balancing of commercial or

research objectives

EAR [15 CFR 730-774]

Covers dual use items Regulates items designed for

commercial purpose but which could have military applications (computers, civilian aircraft, pathogens)

Covers both the goods and the technology

Licensing regime encourages balancing competing interests

Balance foreign availability, commercial and research objectives with national security

http://www.ustreas.gov/offices/enforcement/ofac/

U.S. Department of Treasury

Office of Foreign Asset Control (OFAC) Prohibits transactions and/or interactions

with countries, entities and individuals subject to trade sanctions

Providing services under OFAC In general, OFAC programs prohibit the provision of

services to countries subject to US sanctions without a license

Services may include: Conducting surveys and interviews in sanctioned countries Providing marketing & business services to persons in

sanctioned countries Creating new information materials at the behest of

persons in a sanctioned country Financial transactions Engaging the services of persons in a sanctioned country

to develop new information materials NOTE: Restrictions vary by country

http://www.ustreas.gov/offices/enforcement/ofac/ 15

Sanctions - Examples

Country OFAC Sanction Programs: Cuba, Burma, Iran, North Korea, Sudan, Zimbabwe

Sanction OFAC List-Based Sanctions Programs: Anti-Terrorism, non-proliferation, Specially Designated Nationals

http://www.fas.org/irp/offdocs/nsdd/nsdd-189.htm

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.

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

Public Domain/Publicly Available

Applies to published information through one or more of the following:

libraries open to the public unrestricted subscriptions for a cost

not exceeding reproduction/distribution (including reasonable profit)

published patents conferences, seminars in the United

States accessible to public for a reasonable fee and where notes can be taken (ITAR) --or also abroad only if EAR

Generally accessible free websites w/o knowledge

General science/math principles taught at universities

Public Domain/Publicly Available

Broadest exclusion under EAR and ITAR -- it allows deemed export or export without controls

Preconditions no equipment or encrypted

software involved no reason to believe

information will be used for WMD

U.S. government has not imposed any access and dissemination controls as a funding condition

No side deals

http://www.bis.doc.gov/deemedexports/deemedexportsfaqs.html#1

U.S. export controls cover transfers of technology to a foreign national within the U.S. (the transfer outside the U.S. is deemed to apply when a foreign national receives the information in the U.S.)

Applies to technology transfers under the EAR and the provision of ITAR technical data and defense services

Includes source code (not encrypted source code) Unless the fundamental research exclusion applies, a

university’s transfer of controlled technology to a non-permanent resident foreign national who is not a full-time university employee in the U.S. may be controlled and/or prohibited

Deemed Exports

http://www.bis.doc.gov/deemedexports/deemedexportsfaqs.html#1

Technology is transferred for export when:

it is available to foreign nationals for visual inspection (such as reading technical specifications, plans, blueprints, etc.)

when technology is exchanged orally

when technology is made available by practice or application under the guidance of persons with knowledge of the technology

Deemed Exports

U.S. Exports Post 9/11

Increasing intersection of export controls with post-9/11 regulatory framework

Life sciences as a major security concern -- biological agents, toxins and chemical precursors

Increasing focus on material transfers and use of a wide range of select agents, chemicals and reagents

Select agents: growing export control issues beyond compliance with the Patriot Act and the Biopreparedness Act regulations

Increasing interest not only in the material but also in controlling the underlying technology, information and data

“Sensitive but unclassified” information

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?

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

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

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

Harvard Export Control Policy and Procedures Harvard University Export Control Policy

http://www.provost.harvard.edu/policies_guidelines/Export%20Control_Compliance_Policy%20Statement_6-19-07.pdf

Harvard University Export Control Policy and Procedures

http://www.provost.harvard.edu/policies_guidelines/Compliance_Manual_June_2007.pdf

Where is the information?

Bureau of Industry and Security (BIS) Department of

Commerce http://www.bis.doc.gov/ Directorate of Defense Trade Controls (DDTC)

Department of State http://pmddtc.state.gov/ Office of Foreign Assets Control (OFAC) Department

of Treasury http://www.treas.gov/offices/enforcement/ofac/

Export Administration Regulations http://www.access.gpo.gov/bis/ear/ear_data.html

International Traffic in Arms Regulations http://pmddtc.state.gov/itar_index.htm

Questions?

CONTACT INFORMATION

Eileen Nielsen

enielsen@hsph.harvard.edu

617-432-7350