Technology Transfer Challenges

1. Technology Transfer Challenges

2. Plan and modify technology development and acquisition strategies to incorporate international considerations Differentiate between the reasons for, the types of, and the legal authorizations of export control Formulate the need for ITAR exemptions Compare and contrast U.S. Government and industry views of export control planning and their subsequent challenges Lesson Objectives

3. “The World Today” • Advances in technology • Foreign availability vs comparability • U.S. national/military security strategies • Economic pressures and imperatives • International harmonization of export controls • Non-traditional ‘partners’ • Balancing benefits and risks

4. Arms Export Control Act (AECA) • Encourages restraint in exports but recognizes that nations have valid defense requirements • Recognizes most nations need help in acquiring defense capabilities and the need for defense cooperation among U.S. friends & allies • Authorizes arms exports under direction of the President; Secretary of State shall administer or control • Recipients must adhere to U.S. terms regarding: • Transfer • Use • Protection

5. Shipment to Foreign Destinations (Including Canada) Shipment to Foreign Entities in U.S. (e.g., Embassies) Foreign Travel Hand-carry Technical Services Electronic Transmission Symposia Presentations Published Articles Common “Exports” • Computer Networks (Internet, Intranet, Web Sites) … Laptops • Conversation • Business Meetings • International Mail • Telephone Conversations • Foreign Visitors: Facility Tours Meetings • Foreign Employees • Trade Shows (U.S. & Overseas)

6. Export Authorizations • License • Executed Agreement • Exemption (self-executing or triggered) • There’s also … • Third Party Transfer (TPT) • Transfer / End Use

7. Licensing Process Applicant DoS/ DDTC Other Agencies DoD DTSA Services JS, NSA Others DoS/ Internal NASA Energy Human Rights Regional Bureau MTEC PM DoS/ DDTC Applicant DDTC – Directorate of Defense Trade Controls DTSA – Defense Technology Security Administration MTEC – Missile Technology Export Committee PM – Bureau of Political Military Affairs

8. DoS Licenses and Related Forms • DSP-5* Permanent export unclassified articles or data (Amended by DSP-6) • DSP-61* Temporary import of unclassified articles (Amended by DSP-62) • DSP-73* Temporary export of unclassified defense articles (Amended by DSP-74) • DSP-83 Non-transfer and Use Certificate – for SME, exports of classified articles/data • DSP-85* Permanent/temporary export/import of classified articles/technical data • DSP-94 Foreign Military Sales (FMS) shipments * Denotes a License

9. AgreementsParts 120.21, 120.22, 120.23 • Manufacturing License Agreement (MLA): An agreement or contract whereby a U.S. person grants a foreign person an authorization to manufacture defense articles abroad • Technical Assistance Agreement (TAA): An agreement between a U.S. person and a foreign person for defense services or recurring disclosure of technical data as opposed to agreement granting a right or license to manufacture • Distribution License Agreement (DLA): An agreement to establish a warehouse or distribution point abroad for defense articles exported from the U.S. for subsequent distribution to entities in an approved sales territory

10. ITAR Licensing Exemptions • Exemptions can save considerable time and money • They are covered in multiple places in the ITAR (Parts 123 [Defense Articles], 124 [Agreements and Services], 125 [Technical Data], or 126 [General]) • Some exemptions are self-executing; others must be approved or “triggered” by a DoD Authorized Exemption Official (AEO) or Exemption Certifying Official (ECO) who are at flag officer or SES level • Exemption must be in support of: USG sales, cooperative agreements, personnel exchange agreements, combined military ops, or unilateral U.S. military ops abroad

11. Exemptions – Part 123(Defense Articles) No license required for unclassified exports: • For temporary import and subsequent export of U.S. articles for repair or overhaul (does not include modifications or upgrades) (Part 123.4(a)(1)) • For exports of U.S. articles in support of an approved MLA, TAA, or Distribution Agreement (Part 123.16(b)(1)) • For spare parts for previously approved exports up to $500 per shipment (no more than 24 per year; can’t enhance capability) (Part 123.16(b)(2)) • For temporary exports to trade shows or exhibitions if same article previously approved for export (Part 123.16(b)(5))

12. Exemptions – Part 124 (Agreements and Services) No agreement or license required: • For provision of training in basic operations and maintenance of classified and unclassified defense articles exported to same recipient ( does not include intermediate and depot levels) (Part 124.2(a)) • For provision of additional maintenance training and information to NATO nations, Australia, Japan, and Sweden for unclassified defense articles (may include some technical data beyond basic; limited to inspection, testing, calibration, or repair, including overhaul, reconditioning and one-to-one replacement of defective items; not upgrades, modifications, or alteration) (Part 124.2(c))

13. Exemptions – Part 125(Technical Data) No license required: • For classified or unclassified technical data at the written request or direction of a DoD official (Part 125.4(b)(1)) – Triggered • For unclassified or classified technical data pursuant to an approved MLA or TAA (Part 125.4(b)(2)) • For unclassified technical data provided to nationals of NATO nations, Australia, Japan, and Sweden at DoD’s request to respond to a quote or bid proposal (RFP) (Part 125.4(c)) – Triggered

14. Exemptions – Part 126(General Policies & Provisions) No license required: • For temporary transfers of unclassified and classified articles and technical data by/for a USG agency in support of a lawful and authorized international program (may be permanent if in support of a foreign assistance or cooperative program or for USG use) (Parts 126.4(a) and (c)) – Triggered • For transfers of unclassified and classified articles and technical data pursuant to an approved LOA (Part 126.6(c)) • Canadian ITAR exemption (Part 126.5) • Special DTSI Authorizations (Part 126.14) • Australia Treaty exemption (Part 126.16) + Supp. 1 • UK Treaty exemption (Part 126.17) + Supp. 1

15. How Do Violations Occur? • Non-compliance with limitations and provisos on approved licenses • Defense services and technical data provided to foreign companies that are not signatories to MLA/TAA/Distribution Agreement • Documents or electronic media containing defense technical data carried on international business trips without proper license/authorization • Marketing presentations, made in the U.S. or abroad, containing defense technical data without proper license/authorization • Foreign national employees … • International trade show displays … •  Remedial Action ??

16. Strategic View (USG) • International programs will involve the required disclosure or release of export controlled information • Many “moving parts” • 3 Committees, 6 major processes, 23 agencies, 45+ offices • Numerous laws, executive orders, policies, regulations apply • There is no single USG official or agency responsible for overall management of foreign disclosure and export control requirements • Processes usually do not run concurrently • Competing / conflicting equities involved • May take several months to complete / reach consensus • Key to success is PLANNING • Disclosure and export control requirements must be integral parts of overall program planning

17. Complicated regulations Multiple bureaucratic processes Involves many USG agencies which handle a high volume of both electronic and hardcopy license requests Some products are controlled more stringently than others Time consuming review cycle Severe penalties for non-compliance Industry gets involved by: Identifying licensing requirements in a timely manner Developing relationships with reviewing USG agencies Briefing international technology transfer issues to cognizant USG agencies Identifying select urgent requirements and facilitating expedited review by the USG Complying with regulations and maintaining an ethical and responsible reputation Strategic View (Industry)

18. Issues Impacting Info Sharing • Need to know versus Need to share • Types of information (CMI, CUI, etc.) • Over-classification • Improper markings (NOFORN) • Information technology tools (AISs) • Multiple authorities (NDPC, AT&L, NGA, NSA, DNI, etc.) • Lack of policy on information sharing with non-traditional partners • Education and training

19. Tech Transfer Realities • U.S. Government often makes policy on a regional basis, not just a bilateral basis • More participants = different equities & priorities • Cultural differences = misunderstandings • Lack of interagency consensus on tech release • FCPA is not the standard in some countries • More countries shifting demand from ‘offsets’ to ‘industrial footprint’ & long-term partnerships

20. Tech Transfer Challenges – 1 • Building partner capacity vs protecting U.S. capability • Technology Security and Foreign Disclosure processes are “consensus-based” • Requests that are not well defined are more difficult to work – requirements vs systems • U.S. and foreign industry cooperation • U.S. Government systems at different acquisition stages present different challenges • Legacy – Recently fielded – Developmental or future

21. Tech Transfer Challenges – 2 • What are the rules that apply? • Is it urgent? (Real or perceived) • Speed + ITAR = Oil + Water • Am I torn between “Share and Protect?” • RFP – Is it releasable to foreign entities? • Planning – Did I determine that there is CPI in the system and have I protected it? • Authorization – Do I have authorization to release the technical data and technology requested?

22. Tech Transfer Challenges – 3 • Supports U.S. Foreign Policy and U.S. Military and Security Objectives • Does not jeopardize U.S. military security • Foreign recipient has the intent and capability to provide the equivalent degree of protection • Results in clearly defined benefits to the U.S. • Information is limited to satisfy authorized purpose • Avoids false impressions