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EXPORT COMPLIANCE. Export Compliance Awareness RUEC Module RU001 Robert Phillips Rutgers Export Compliance Officer 09/11/2012. Some History.

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export compliance


Export Compliance AwarenessRUEC Module RU001

Robert Phillips

Rutgers Export Compliance Officer


some history
Some History

1774- The First Continental Congress convened in Carpenter's Hall in Philadelphia and the following December the Congress declared the importation of British goods to be illegal. Twelve months later the Congress outlawed the export of goods to Great Britain, thus establishing the first American export controls.

1940-Congress passes the Export Control Act, forbidding the exporting of aircraft parts, chemicals, and minerals without a license. This prohibition was a reaction to Japan's occupation of parts of the Indo-Chinese coast.

1976- The Arms Export Control Act –gives the President the authority to control the import and export of defense articles and defense services.

1979- The Export Administration Act -legal authority to the President to control U.S. exports for reasons of national security, foreign policy, and/or short supply.

2001-Patriot Act- Post 9/11

why rutgers why now
Why Rutgers Why Now ?
  • Following the events of 9-11, the Federal government has increasingly viewed export control regulations as a means to potentially guard against terrorism and other threats. As a result, there is renewed focus on compliance and enforcement of these regulations, in particular at universities.
  • Foreign governments are targeting universities to “obtain restricted information or products.
    • FBI said in a 2011 report.
  • The number of voluntary disclosures by industry and academia is increasing 10 percent a year
    • State Department official.
what are the export control laws
What are the Export Control Laws?

U.S. federal government laws and regulations that require review and in some cases federal agency approval prior to the export of items, commodities, technology, software or information to foreign countries, persons and entities (including universities).

Exporters obligation to determine the applicable export control regulations and to apply those regulations to the export transaction.

what is an export
What is an Export

Any oral, written, electronic or visual disclosure, shipment, transfer or transmission outside of the United States to anyone, including a U.S. citizen, of any commodity, technology (information, technical data, or assistance) or software/codes.

Any oral, written, electronic or visual disclosure, transfer or transmission of a commodity, technology or software/codes to a non-U.S. entity or individual, wherever located (even to a foreign professor/student at The University).

also an export
Also an Export
  • Deemed Export-
    • "Deemed Export" is a term used by the Commerce Department. An export of technology or source code is "deemed" to take place when it is released to a foreign national within the United States.
    • Although the State Department does not use this term, but rather includes this concept in its definition of export, Rutgers University will use the term "deemed export" when discussing access by foreign nationals to controlled information within the United States, without regard to which agency may have cognizance over the transaction.
also an export1
Also an Export

Re-export-shipment or transmission of an item subject to the EAR from one foreign country (i.e., a country other than the United States) to another foreign country.

A reexport also occurs when there is “release” of technology or software (source code) subject to the EAR in one foreign country to a national of another foreign country.

foreign national
Foreign National

The term "foreign national" refers to everyone other than a U.S. citizen, a permanent resident alien, and certain "protected individuals" (refugees and those with asylum), it includes any company not incorporated in the United States.

For purposes of Export Controls, individuals on a visa (including foreign visiting faculty) are considered foreign nationals.

why control exports
WHY Control Exports ?

Restrict exports of goods and technology that could contribute to the military potential of adversaries

Prevent proliferation of weapons of mass destruction (nuclear, biological, chemical)

Prevent terrorism

Comply with U.S. trade agreements and trade sanctions against other nations

Rutgers policy is to maintain a strict compliance with all export control regulations. Failure to comply with applicable export control regulations may result in denial of export privileges, imprisonment, fines and or other penalties.

export laws and rutgers
Export Laws and Rutgers
  • Majority of research not impacted
  • But potential impact on:
    • Ability of foreign students to participate in research involving a controlled technology
    • Ability to provide services (including training in the use of controlled equipment) to foreign nationals
    • Ability to send controlled equipment, faculty and students to foreign countries
    • Ability to publish and perform open research
who controls exports
Who Controls Exports?
  • There are three federal government agencies responsible for implementing the export control regulations:
    • Commerce Department: “Dual-Use” technologies (primary civil use and some military) -- Export Administration Regulations (EAR)
    • State Department: Inherently military technologies--International Traffic in Arms Regulations (ITAR)
    • Treasury Department, Office of Foreign Assets Control (OFAC): Prohibits transactions with countries subject to boycotts, trade sanctions, embargoes
  • Enforcement is grounded in voluntary compliance, in essence an honor system.
what is controlled
What is controlled?

Department of Commerce Export Administration Regulations (EAR)

The EAR implements the provisions of the Export Administration Act (EAA). It regulates the export and re-export of dual-use commodities, software and technology. Dual-use items have both civil (commercial) and military (proliferation) applications.

Within the Department of Commerce, the Bureau of Industry and Security (BIS) maintains the Commerce Control List (CCL), which covers trade items (commodities, software and technology) that are subject to the agency’s export licensing authority.


commerce control list ccl
Commerce Control List CCL

Category 1 - Materials Chemicals Microorganisms and Toxins

Category 2 - Materials Processing

Category 3 - Electronics Design Development and Production

Category 4 - Computers

Category 5 Part 1 - Telecommunications

Category 5 Part 2 - Information Security

Category 6 - Sensors and Lasers

Category 7 - Navigation and Avionics

Category 8 - Marine

Category 9 - Propulsion Systems Space Vehicles and Related Equipment

department of state international traffic in arms regulations itar
Department of State – International Traffic In Arms Regulations (ITAR)
  • Department of State – International Traffic In Arms Regulations (ITAR)
  • The ITAR implements the provisions of the Arms Export Control Act (AECA). ITAR covers articles, services and related technical data designated as defense articles and services as contained in the US Munitions List (USML).
  • http://www.pmddtc.state.gov/regulations_laws/itar_official.html
    • OR
  • http://www.fas.org/spp/starwars/offdocs/itar/p121.htm

Category I-Firearms

Category II-Artillery Projectors

Category III-Ammunition

Category IV-Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines

Category V-Explosives, Propellants, Incendiary Agents, and Their Constituents

Category VI-Vessels of War and Special Naval Equipment

Category VII-Tanks and Military Vehicles

Category VIII-Aircraft, [Spacecraft] and Associated Equipment

Category IX-Military Training Equipment

Category X-Protective Personnel Equipment

Category XI-Military [and Space] Electronics

Category XII-Fire Control, Range Finder, Optical and Guidance and Control Equipment

Category XIII-Auxiliary Military Equipment

Category XIV-Toxicological Agents and Equipment and Radiological Equipment

Category XV-Spacecraft Systems and Associated Equipment

Category XVI-Nuclear Weapons Design and Test Equipment

Category XVII-Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated

Category XVIII-[Reserved]

Category XIX-[Reserved]

Category XX-Submersible Vessels, Oceanographic and Associated Equipment

Category XXI-Miscellaneous Articles

department of treasury office of foreign assets control ofac
Department of Treasury– Office Of Foreign Assets Control (OFAC)

OFAC enforces trade, anti-terrorism, narcotics, human rights and other national security and foreign policy based sanctions prohibiting the provision of anything of value, either tangible or intangible, to sanctioned countries, organizations or individuals. OFAC publishes the Specially Designated Nationals and Blocked Persons (SDN) List, which contains the names of individuals and organizations deemed to represent restricted countries or known to be involved in terrorism and narcotics trafficking.

Embargo-Cuba, Iran Syria, Sudan, North Korea


the unscrupulous
The Unscrupulous
  • Department of Commerce – Bureau of Industry and Security
    • Denied Persons List- 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 are prohibited.
    • Unverified List - End-users who BIS has been unable to verify 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 - Parties whose presence in a transaction can trigger a license requirement supplemental to those elsewhere in the Export Administration Regulations (EAR). The list specifies the license requirements and policy that apply to each listed party.
  • Department of State – Bureau of International Security and Non-proliferation
    • Nonproliferation Sanctions - Parties that have been sanctioned under various statutes. The linked webpage is updated as appropriate, but the Federal Register is the only official and complete listing of nonproliferation sanctions determinations.
  • Department of State – Directorate of Defense Trade Controls
    • AECA Debarred List – Entities and individuals prohibited from participating directly or indirectly in the export of defense articles, including technical data and defense services. Pursuant to the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR), the AECA Debarred List includes persons convicted in court of violating or conspiring to violate the AECA and subject to “statutory debarment” or persons established to have violated the AECA in an administrative proceeding and subject to “administrative debarment.”
  • Department of the Treasury – Office of Foreign Assets Control
    • Specially Designated Nationals List – Parties who may be prohibited from export transactions based on OFAC’s regulations. The EAR require a license for exports or reexports to any party in any entry on this list that contains any of the suffixes "SDGT", "SDT", "FTO", "IRAQ2" or "NPWMD".”
  • Consolidated List
    • http://www.bis.doc.gov/export_consolidated_list/consolidated_party_list_final.txt
export licensing
Export Licensing
  • Classification Determination
    • Commodity Classification Automated Tracking System (CCATS)
    • Commodity Jurisdiction (CJ)
    • Self Classification
    • Rutgers Export Classification Matrix
  • Paper license
    • Submission
    • Review -30-90 days
      • Approval
      • Denial
  • Appeal / New license application
exclusions exceptions and exemptions
Exclusions, Exceptions and Exemptions

Exclusion-Not Subject to EAR or ITAR regulations.

Exception-Authorization to export items subject to the EAR without obtaining an export license.

Exemption-Permit the permanent or temporary export or temporary import of defense articles and technical data by U.S. persons in lieu of obtaining a U.S. license from the U.S. Department of State.

If your research/project does not meet the requirements of an Exclusion, Exceptions and Exemptions will be reviewed on a case by case basis.

  • Fundamental Research
    • 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 proprietaryor national security reasons.
  • Public Domain
    • Publicly accessible through books, periodicals (hardcopy or electronic) and generally distributed media, unrestricted subscriptions and websites that are free (or available for less than production/distribution costs), libraries, patents or open (published) patent applications, release at open conferences, seminars and trade shows.
  • Educational Information
    • Instructional content of curriculums for all students, including foreign nationals, that exist in general science, math and engineering principles commonly taught through courses, and associated teaching laboratories. Must be listed in course catalogs.
  • Employment
    • An ITAR license not required for colleges and universities to share information in the U.S. with a foreign person if that person:
    • Is a bona fide employee of the university — full time with benefits
    • Is not a national from an embargo country
    • Resides at a permanent address in the U.S. while employed
    • And, is advised in writing not to share covered technical data with any other foreign nationals without government approval.
university strategy
University Strategy

Protect fundamental research exclusion by eliminating contractual clauses that deny our ability to claim the exclusion.

what is not covered
What is not covered
  • ITAR Controlled Hardware, Technology or Services.
  • EAR controlled equipment:
  • Equipment classified under EAR:
    • Rutgers will NOT disclose technology necessary for the "development," "production," or "use" of High Tech or experimental equipment.
      • New definition of “use” – must meet ALL SIX of the following activities:
        • Operation
        • Installation
        • Maintenance
        • Repair
        • Overhaul
        • Refurbishing
the following may deny fundamental research
The Following may deny “Fundamental Research”
  • Forbids the participation of foreign nationals
  • Restrictions on the publication of the results of the project
  • Any agreements outside original
    • Non-disclosure agreement or acceptance of export-controlled information
  • The agreement requires sponsor approval prior to publication
    • Sponsor “Review” vs “Approval”
    • Okay to review and comment up to 60 days, but not approve
  • The government contract involves an ITAR project with access and dissemination of information controls
  • There is a transfer of defense services
    • Potential license requirements for work with foreign nationals
non disclosure agreement nda
Non-Disclosure Agreement (NDA)
  • NDA’s containing a confidentiality clause may not compromise the Fundamental Research clause.
    • If the purpose of the NDA is to safeguard proprietary background information and in no way restricts research results.
  • BUT
    • If the purpose of the NDA is also to safeguard export controlled information, we need to determine classification (EAR/ITAR) and the extent to which the project can be performed with either no transfer of controlled data or restrictions on transfer of controlled data to Foreign Nationals.
red flags
Red Flags
  • Does the Project involve
    • Export Control Clause
    • Access to location
    • Publication Restrictions (Approval Needed)
    • Foreign National Restrictions
    • Confidential Research
    • Shipping Equipment to a Foreign Country
    • Collaboration with Foreign Colleagues Abroad
    • Classified/Sensitive Matter
    • Software, Controlled Chemicals, Bio-Agents
    • Use for Weapon of Mass Destruction
    • Item or Software Modified for Military Use
  • EAR
    • Criminal: $50K to $1 million or 5 times value of export, whichever is greater, per violation, 10 years imprisonment
    • Civil: revocation of exporting privilege, fines $10K-$120K per violation
    • Examples
      • Bass-Pro - $510K for shipping guns without a license
      • Dr. Thomas Butler, Texas Tech – 2 years in prison for making fraudulent claims and unauthorized exports (plague bacteria)
      • ITT fined $100M for exporting night vision materials without license
  • OFAC
    • Criminal: $50K TO $10M per violation and 10 to 30 years imprisonment
    • Civil: $11K to $1M per violation
    • Example
      • Augsburg College, Minneapolis, MN fined $9,000 for 4 trips to Cuba; attorney negotiated reduction in fine from $36,000
      • Sep 2009 - Thermon Manufacturing, San Marcos, Texas, fined $14,613 for three shipments to Sudan. Fine significantly reduced because they disclosed to OFAC
  • ITAR
    • Criminal: Up to $1 million per violation and 10 years imprisonment
    • Civil: seizure and forfeiture of article, revocation of exporting privilege, up to $500,000 fine per violation
      • Professor Roth (Univ. TN) convicted on 9/3/08 and recently sentenced to four years
      • Raytheon fined $25M
      • Hughes Electronics and Boeing Satellite Systems - $32M
      • Boeing - $4.2M
      • Lockheed Martin - $13M
  • Adding insult to injury
    • Termination of export privileges (EAR and ITAR)
    • Suspension and/or debarment from government contracting (EAR and ITAR)
  • Don’t let this happen to you:
    • http://vpr.rutgers.edu/export.php#happen
lets review
Lets review

Q: Are export controls at a University something new?

A: No, but focus on compliance of export controls has been increased since 9-11 (pg 2 &3).

Q: I have a foreign national at Rutgers working on research, is that an export?

A: Yes, this is called a deemed export (pg 6), but remember not all exports are controlled, you may be covered under an exclusion (pg 19).

lets review1
Lets review

Q: I am giving a presentation in China next week.

A: You may be covered by an exclusion or exception (pg 19). You can review the Rutgers International Travel Module or contact the Rutgers Export Control Officer.

Q: The presentation is at Beijing University of Aeronautics and Astronautics, I see they are on the consolidated list you have on page 17. What should I do?

A: Beijing University of Aeronautics and Astronautics is on the BIS Entity List (EL). You still maybe may covered by an exclusion (pg 19), this will probably require a review by the Rutgers Export Control Officer.

lets review2
Lets review

Q: My research is covered under the Fundamental Research exclusion but I have foreign nationals using the Blue-Gene/P, IBM super computer. Should I be concerned?

A: The Blue-Gene/P is controlled by the EAR. As long as the technology disclosed to the foreign national does not meet the EAR definition (pg 23), you remain under the Fundamental Research exclusion.

Q: I am working on a sub-contract to a NASA grant, what issues might I have?

A: With any agreement you want to keep within the Fundamental Research guidelines. NASA also has other restrictions that pertain to the Chinese Government and Chinese Entities. You may want to review: NASA Funding Restrictions with China-http://vpr.rutgers.edu/export.php

  • Rutgers Export Compliance Officer (RECO), Robert Phillips, is available to meet with individuals or groups to provide assistance, training or explain the regulations as they may be applicable to the work being done.
  • He can be reached at 848-932-4522, or via email at robert.phillips@rutgers.edu
  • The Export Compliance website:
    • http://vpr.rutgers.edu/export.php