Export Controls 101

1. Julie Taubman Research Compliance Officer (RCO) Graduate School and Office of Research and Sponsored Programs Appalachian State University taubmanjl@appstate.edu or 828-262-7981 http://www.orsp.appstate.edu/compliance/export-controls Export Controls 101

2. Goals of the Presentation • Understand essential aspects of export controls • Recognize export control issues • Contact RCO for assistance • Become familiar with our export control policy and procedures

3. Topics to be Discussed • What is an export? • What are export controls? • Exclusions to export controls • Basics of exporting items and technology • The end user and the destination country of the export • International Travel • Penalties for non-compliance • Red Flags and Questions

4. What is an export? A transfer of items, software or technology to a foreign person, foreign entity or foreign destination.

5. The Definition of Technology • Technology includes information that can be used or adopted for the development, production or use of a good. Information can take the form of technical data or technical assistance. • Examples include but are not limited to: blue prints, sketches, models, drawings, software, manuals, training and technical services

6. Deemed Export A “deemed export” is an export of technology or source code to a foreign person in the U.S. • Examples of a deemed export of technology or source code: • Visual inspection of controlled technology • Oral exchange of technical information • Guidance is given on the practice or application of a technology

7. Foreign Person The definition of foreign person includes: • any foreign government, • foreign corporation or organization that is not incorporated or organized to do business in the U.S., and • anyone who is not a U.S. citizen or lawful permanent resident (a green card holder).

8. Examples of exports • Shipment of physical items outside of U.S. • Discussion of unpublished research at a conference in the U.S. with foreign nationals present • Visit to a lab on campus by a foreign national scholar where technical data is displayed • Participation of foreign nationals in research • Receiving an email with technical data on a foreign national’s computer

9. Export Controls Export controls are the set of laws, policies and regulations that prohibit the unlicensed export of certain items, technology and software. Exports are controlled for various reasons: • Anti-terrorism • Non-proliferation of weapons • National security • Crime control • Regional stability • Foreign policy purposes • Multilateral agreements

10. Export Controls Regulations • Export Administration Regulations (EAR) for dual use items • Department of Commerce, Bureau of Industry and Security (BIS) • International Traffic in Arms Regulation (ITAR) for military items • Department of State • Sanction Programs • Department of Treasury, Office of Foreign Assets Control (OFAC)

11. Example of a Dual Use Item Triggered Spark Gaps can be used in both a medical device that breaks up kidney stones and as a detonations device for a nuclear weapon.

12. Do export controls cover all exports? Almost, but there are some exclusions

13. Exclusions to Export Controls for Information and Software • Public Domain Exclusion • Published information that is generally accessible to the public does not require a license • Education/Teaching Exclusion • Instruction in science, math and engineering courses listed in course catalogues may be conducted without a license • Fundamental Research Exclusion • “Basic and applied research in science and engineering conducted in the U.S. where the resulting information is ordinarily published and shared broadly within the scientific community ” National Security Decision Directive 189

14. Fundamental Research Exclusion • Applies to information and software, not to tangible items • The information or software must be generated within the U.S. • Once it is generated in the U.S., the information and software can be disseminated outside of the U.S.

15. Fundamental Research Exclusion The Fundamental Research Exclusion does not apply if there are any restrictions on publication. The EAR permits a brief (90 day) advance review by sponsors to: • Prevent divulging proprietary information; or • Insure that publication will not comprise patent rights of a sponsor.

16. Fundamental Research Exclusion • Fundamental Research Exclusion does not apply if a grant or contract includes clauses that: • Give a sponsor the right to approve publication; or • Restrict participation of foreign nationals in the research

17. Appalachian’s Export Control Policy Appalachian State University will fulfill its mission of teaching, research, and service in a manner that complies with federal export control and embargo regulations, while also ensuring reasonable efforts to identify situations in which the University may claim exclusions or exemptions under public domain or fundamental research.

18. Appalachian Policy: Protecting the Fundamental Research Exclusion If a proposal includes clauses restricting: • access to or publication of research and technical data; and/or • limiting participation of foreign nationals in research effort Researcher and ORSP can work with the General Counsel in an attempt to remove or modify the restrictive clauses

19. Technology Control Plans • Research that does not qualify for the Fundamental Research Exception requires a Technology Control Plan • All relevant materials, items, software or hardware, data, or technical information must be secured from use and/or observation by foreign nationals without an export license • A template of a Technology Control Plan is available on the Export Controls website

20. What is an export license? An export license is issued by an export agency and authorizes an export, reexport or other regulated activity as specified on the application.

21. Exporting Items and Technology Determining if an export requires an export license • Who will receive the export? • What is the export? • Where is the export going? • What will they do with the export?

22. Appalachian Procedure: Restricted Party Screening It is illegal to conduct business with entities or individuals that are barred by the government. The recipient of any exchange of information, items or monies should be screened through government restricted party lists. • Submit a Request for Restricted Party Screening

23. Embargoed Countries Generally, any transactions with embargoed countries will be constrained or prohibited. Very little unauthorized (license or license exception) activity can happen with these destinations. • Comprehensive sanction programs against Cuba, Iran and Sudan • Limited sanction programs against Burma, North Korea and Syria

24. Jurisdiction and Classifying an Export • Submit an Export Assistance Form for Technology or Goods to RCO; or • Request classification from a vendor of the item

25. Export Control Information from a Vendor

26. Determining if an export requires a license After classifying the item or technology with the Commerce Control List of the EAR, the item or technology will have an Export Control Classification Number (ECCN) which will list: • The reasons for control • Designate any specific License Exceptions and • Provide a List of Items Controlled With this information, we can determine if an Export license is required by consulting the Country Chart

27. If an export license is required Processing an export license can take up to 6 months

28. Foreign Trade Regulations • Items that require an export license or are valued over $2500 require filing of Electronic Export Information (EEI) into the Automated Export System (AES) of the Census Bureau • This provides the export with an International Transaction Number (ITN) • If you have a freight forwarder file for you, prior to shipment confirm that they will provide you with the ITN

29. International Travel After you submit your Travel Authorization: • Read the Export Control Briefing. Even if you frequently travel internationally and have never had a problem, it is a good idea to understand export controls to prevent an unintentional violation. • Please obtain Foreign Travel Insurance from the Office of International Education and Development.

30. Taking A Laptop or Other Item Abroad • Since export controls apply to items that are hand carried abroad, it is important to read the Laptop Briefing. In order to take a laptop abroad with you, you’ll need to: • Classify the laptop, software and stored data to show it does not need a license; or • For Appalachian owned items, determine if a Temporary Export Exception (TMP) applies, and submit a One Time Certification • For personal Items, determine if a Baggage Exception (BAG) applies.

31. Customs Can Seize Your Laptop New York Times (10/24/06) At U.S. Borders, Laptops Have No Right to Privacy • “One member who responded to our survey said she has been waiting for a year to get her laptop and its contents back,” said Susan Gurley, the group’s executive director. “She said it was randomly seized. And since she hasn’t been arrested, I assume she was just a regular business traveler, not a criminal.” • Appeals are under way in some cases, but the law is clear. “They [Customs] don’t need probable cause to perform these searches under the current law. They can do it without suspicion or without really revealing their motivations,” said Tim Kane, a Washington lawyer who is researching the matter for corporate clients.

32. Example Letter to Customs Certifying the Temporary License Exception Example of a letter from NASA: DATE To: CUSTOMS OFFICIALS SUBJECT: HANDCARRY OF LAPTOP COMPUTER 1. The individual named in this letter is a ____________________employee carrying a (______________________-owned /personally-owned) laptop computer authorized for temporary export under EAR Licensing Exception 740.9(a)(2)(i) TMP – Tools of the Trade. Software loaded on the laptop is authorized for export under NLR. Data files on the laptop (do/do not) contain technical data as defined by US export regulations and (do/do not) require authorization for export. The total value of this temporary export is under $ 5000.00 2. The following information is provided: a. Individual Hand Carrying Laptop Computer: Name/Employee Number b. Description of Laptop Computer: Make/Model Number/Serial Number…..

33. Penalties for Non-compliance • Failure to comply with export controls has heavy penalties: • Criminal penalties: • $250,00 fine for individuals and/or 10 years imprisonment; • $1 million fine for businesses • Civil penalties: • $250,000 per transaction

34. GAO Warns of Possible University Export Control Violation • In 2006 GAO study warns that the Departments of State and Commerce “have not fully assessed the potential for transfers of export-controlled information to foreign nationals in the course of U.S. university research.” • The study urged closer attention to available data on foreign students at U.S. universities.

35. Recent Export Control Cases • Dr. J. Reece Roth, former University of Tennessee Professor • Convicted of illegal exporting defense articles • John Carrington, previous State Senator and President of a Fingerprint Lab • Received 12 months probation and a $850,000 criminal penalty for the illegal export of crime control equipment to China through intermediaries in Italy and Hong Kong

36. Areas of Particular Concern • Research in the following areas: • Engineering • Space sciences • Computer Science • Biomedical research with lasers • Research with encrypted software • Research with controlled chemicals, biological agents, and toxins

37. Contracts and Grants • Shipments of equipment to a foreign country • Training or collaboration with foreign nationals • Research activities performed in an embargoed country • Reference to export controlled technologies in an award document • Restrictions on publication rights • Restrictions on foreign participation

38. Red Flags from the EAR • The customer is reluctant to offer information regarding end use. • The product is incompatible with the technical level of the country to which it is being shipped, such as semiconductor manufacturing technology being shipped to a country that has no electronics industry. • The customer is unfamiliar with the terminology of a field but still requests technical data. • E-mails from domains such as Yahoo, Gmail, etc, when it would appear that the requestor should have a .edu or business.com e-mail address

39. Contacts for export controls assistance • Julie Taubman, Research Compliance Officer • Empowered Official: Dr. Edelma Huntley, Chief Research Officer • Susan McCracken, Director of Office of Research and Sponsored Programs • Charlotte Smith, Assistant Director of Office of Research and Sponsored Programs

40. Questions?

41. Question: Foreign National on a Research Project How do export controls apply to a foreign student working on a sponsored project?

42. Answer: Foreign National on a Research Project As long as the sponsored project doesn’t have limitations on the free publication of the results and no foreign national or national security restrictions, foreign nationals may support the fundamental research (basic and applied research) of the project.

43. Question: Suspicious End User What do you do if you don’t know the recipient of your export well or have suspicions that they may re-export to another country or another person?

44. Answer: Suspicious End User If you are suspicious about an end user, one way to protect yourself and the University is to ask them to sign an End-User Certificate. A Destination Control Statement may also be included with an export to combat re-exports.

45. Thanks Thanks for coming to Export Controls 101! Thanks to NASA Kennedy Space Center for allowing us to use their letter to Customs for the carrying of a laptop. The certification material for laptops is adapted from the basic design and content of Stanford University’s Export Controls Page.  We appreciate Stanford in granting us to permission to use its content for the benefit of Appalachian State University.