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Eileen Nielsen Director of Sponsored Projects Compliance Office of Financial Services

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  1. EXPORT CONTROLSThe Challenge for U.S. UniversitiesBalancing National Security and Openness in Research, Education and Public Service Eileen Nielsen Director of Sponsored Projects Compliance Office of Financial Services Harvard School of Public Health International Programs Managers Group Presentation December 18, 2008

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

  3. “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

  4. 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 What are export controls?

  5. 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

  6. 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

  7. 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

  8. 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

  9. Agencies that govern export controls There are three principal agencies • U.S. Department of State • U.S. Department of Commerce • U.S. Department of the Treasury

  10. 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.pmddtc.state.gov/

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

  12. 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 U.S. Export Control RegulationsDifferences Between ITAR and EAR

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

  14. 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

  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.ustreas.gov/offices/enforcement/ofac/

  16. FUNDAMENTAL RESEARCH • Fundamental Research means basic and applied research in science and engineering, the results of whichordinarily 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. http://www.fas.org/irp/offdocs/nsdd/nsdd-189.htm

  17. 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

  18. 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 Public Domain/Publicly Available

  19. Deemed Exports • 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 http://www.bis.doc.gov/deemedexports/deemedexportsfaqs.html#1

  20. Deemed Exports • 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 http://www.bis.doc.gov/deemedexports/deemedexportsfaqs.html#1

  21. 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

  22. 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?

  23. Penalties for Noncompliance • 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!

  24. 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.

  25. 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

  26. 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

  27. Questions?

  28. CONTACT INFORMATION Eileen Nielsen enielsen@hsph.harvard.edu 617-432-7350