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Introduction to Export ControlCompliance: Awareness and EducationDan RungeExport Compliance Officer Export Control OfficeOffice of Research ComplianceIntroduction to Export and Sanctions Compliance

What are Export Controls? Export controls are the U.S.laws and regulations thatgovern the transfer ofcontrolled items orinformation to foreignnationals, countries, andentities for reasons of nationalsecurity and foreign policy.Introduction to Export and Sanctions Compliance2

Export Control Compliance at UGA How and why did this program develop? Dec. 2012, Feb. 2013 - Institutional Effectiveness Reviewof OVPR Recommended investigating the implementation of a formalexport control program April and May 2013 - Fischer and Associates ExportControl Assessment and Recommendations Dec. 2013 – Fischer and Associates on campus training July 2014 – Export Compliance Officer joins UGAIntroduction to Export and Sanctions Compliance3

UGA Export Control AssessmentConducted by Fisher & Associates Based on interviews and discussions withmore than 40 faculty members andadministrators Goals Identify risk sensitive activities (bothresearch and non-research) Outline compliance requirements Provide user-friendly compliance tools Address resource considerationsIntroduction to Export and Sanctions Compliance4

Export Control Regulations andTheir ApplicationIntroduction to Export and Sanctions Compliance5

Who are the Regulators?Department of State, Directorate of Defense Trade ControlsInternational Traffic in Arms Regulations (ITAR) Relates to military and defense articles and services, designed or configuredfor military applications, with no equivalent civilian or commercial products Controlled items found on the US Munitions ListDepartment of Commerce, Bureau of Industry and SecurityExport Administration Regulations (EAR) Relates to “dual use” (civilian and military) items, information or software Controlled items found on the Commerce Control ListDepartment of Treasury, Office of Foreign Assets Control Administers and enforces economic and trade sanctionsIntroduction to Export and Sanctions Compliance6

Commerce Department ControlsCommerce Control List (EAR)Five Product GroupsCommerce Control List CategoriesCategory 0 – Nuclear & MiscellaneousCategory 1 – Materials, Chemicals, Microorganisms,and ToxinsCategory 2 – Materials ProcessingCategory 3 – ElectronicsCategory 4 – ComputersCategory 5 – Part 1: TelecommunicationsPart 2: Information SecurityCategory 6 – Sensors and LasersCategory 7 – Navigation and AvionicsCategory 8 – MarineCategory 9 – Aerospace and PropulsionProduct Group A – Systems, Equipment, andComponentsProduct Group B – Test, Inspection and ProductionEquipmentProduct Group C – MaterialProduct Group D – SoftwareProduct Group E – Technology Export Control Classification Number e.g, 5A992.cDescribes item and indicates controlsItems under Commerce jurisdiction but noton CCL are EAR99Introduction to Export and Sanctions Compliance7

State Department ControlsUnited States Munitions List IV.XV.XVI.XVII.XVIII.XIX.XX.XXI.Firearms, Close Assault Weapons and Combat ShotgunsGuns and ArmamentAmmunition/OrdnanceLaunch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and MinesExplosives and Energetic Materials, Propellants, Incendiary Agents and Their ConstituentsSurface Vessels of War and Special Naval EquipmentGround VehiclesAircraft and Related ArticlesMilitary Training Equipment and TrainingPersonal Protective EquipmentMilitary ElectronicsFire Control, Range Finder, Optical and Guidance and Control EquipmentMaterials and Miscellaneous ArticlesToxicological Agents, Including Chemical Agents, Biological Agents, and Associated EquipmentSpacecraft and Related ArticlesNuclear Weapons Related ArticlesClassified Articles, Technical Data, and Defense Services Not Otherwise EnumeratedDirected Energy WeaponsGas Turbine Engines and Associated EquipmentSubmersible Vessels and Related ArticlesArticles, Technical Data, and Defense Services Not Otherwise EnumeratedIntroduction to Export and Sanctions Compliance8

What is regulated? Physical Export An actual shipment or electronic transmission,out of the United States, of controlled items,services, or technology (including temporaryexports) Deemed Export Release or disclosure of certain controlledinformation or technology/technical data toany foreign person within the United States Transactions with Restricted PartiesIntroduction to Export and Sanctions Compliance9

What is an “Export?” An item or information sent from the U.S. to a foreigndestination, or technology disclosed to a foreignnational, here or abroadEquipmentSoftwareTechnical Data/TechnologyIntroduction to Export and Sanctions CompliancePhysical, electronic,oral, or visual means10

Deemed ExportRelease of certaincontrolled technologyto foreign nationalwithin the USDeemed export tothat foreign national’scountry of nationalityNOTE: Persons with permanent resident status or UScitizenship and persons granted status as “protectedindividuals” are exempt from the deemed export rule.Normal operation of Commerce Department controlled“dual-use” equipment by foreign nationals is typically not adeemed export.Introduction to Export and Sanctions Compliance11

Export Controls Implicated WhenMilitary ApplicationsConcern about the End-UseConcern about an Export’s DestinationSanction RestrictionsIntroduction to Export and Sanctions Compliance12

Potential Scenarios Transactions with restricted partiesContractual restrictions on publishing or foreign national participationReceiving 3rd party export controlled information“Use,” beyond normal operation, of certain “dual-use” items ortechnologies controlled by the Commerce Department Foreign national participationResearch on, or use of, military items or technologies controlled by theState Department Foreign national participationInternational shipments (What is being shipped and to whom?)Traveling outside of the U.S. with controlled items or informationCollaboration with a researcher or institution from outside the U.S.Introduction to Export and Sanctions Compliance13

Export Control ExclusionsIntroduction to Export and Sanctions Compliance

Fundamental Research Exclusion(FRE) Fundamental Research is defined by the National Security Decision Directive 189(NSDD189) as “basic or applied research in science and engineering, the resultsof which are ordinarily published and shared broadly within the scientificcommunity, as distinguished from proprietary research and from industrialdevelopment, design, production, and product utilization, the results of whichordinarily are restricted for proprietary or national security reasons.” Fundamental Research Exclusion (most UGA research) Generally, foreign nationals are allowed to engage in normal operation of EAR controlleditems Except if “use ” includes– Operation, Installation, Maintenance, Repair, Overhaul, AND, Refurbishing– Or if explicitly controlled for one or more of the individual “uses” aboveITAR does not allow the use of controlled instruments or operational data by foreignnationals under FRE (or Public Domain)Protection lost if there are publication and/or foreign national participation restrictionsIntroduction to Export and Sanctions Compliance15

Exclusions/Exceptions to Control Educational Information Covers information commonly taught in schools EAR excludes information released in academic catalog-listedcourses or labs ITAR excludes information concerning general scientific,mathematics, or engineering principles Public Domain (ITAR) and Publicly Available (EAR) Information that is published and which is generally accessibleor available to the public Bona Fide Employee Exemption (ITAR only) Access to ITAR-controlled “technical data” Several conditions must be met EAR Temporary Export Exception Several conditions must be metIntroduction to Export and Sanctions Compliance16

Limits of the FRE The Fundamental Research Exclusion doesnot cover Exports of controlled hardware, software, ortechnology (even temporary exports) Export controlled activities- “defense services” Training related to defense articles or furnishing oftechnical data to foreign nationals Transactions involving embargoed orsanctioned parties/countriesIntroduction to Export and Sanctions Compliance17

Application to University ResearchIntroduction to Export and Sanctions Compliance

Do all controlled exports to everycountry require an export license? NO, under the EAR Depends on the item, its control, and thedestination country YES, under the ITAR About two dozen countries are prohibitedIntroduction to Export and Sanctions Compliance19

What about temporary export?EAR itemTemporary Export Exception:(Numerous Qualifications to meet)Type of exportDestinationDuration of ExportDoes it require a licensefor permanent export?Introduction to Export and Sanctions Compliance20

What about temporary export?ITAR item or dataApplies even if only sent tointernational waters or airspaceNO TEMPORARY EXPORTEXCEPTIONA license is alwaysrequired.Introduction to Export and Sanctions Compliance21

What about Deemed Exportlicensing?EAR itemUnlikely a Deemed Export licensewill be required as normaloperation of equipment isgenerally not controlledMaybe, if license required forpermanent export ANDforeign national access goesbeyond normal operationIntroduction to Export and Sanctions Compliance22

What about Deemed Exportlicensing?ITAR item or dataDefense articles and technical datawill always require a license fromthe State Department for foreignnational access in the U.S.Always, unless the BonaFide Employee Exemptionis availableIntroduction to Export and Sanctions Compliance23

Once I have a license, am I done?No The license may carryspecific governmentrestrictions or limitationson the export activity likeduration of the license, reexport certification, andaccess restrictions.Introduction to Export and Sanctions Compliance24

Potential Consequences ofViolations and Best PracticesIntroduction to Export and Sanctions Compliance

Penalties and SanctionsIntroduction to Export and Sanctions Compliance26

Enforcement Actions University of Michigan: Research Fellow charged with conspiracy to export toan embargoed country Wanted to re export to Iran via Netherlands Other criminal charges: Conspiracy to smuggle goods, money laundering, obstruction of justiceLikely would have been a licensable “humanitarian” exportUMASS-Lowell: Center for Atmospheric Research shipped EAR99 atmosphericdevice to Pakistan Space & Upper Atmosphere Research Commission (CivilianSpace Agency) Refurbished MRI coil to Iran 100,000 fine waived if no further violations during a two-year probationary periodTexas Tech University Health Sciences Center: Unlicensed export (via FedEx)of 30 vials of Yersinia Pestis (Plague bacteria) to Tanzania 1C351 Human and Zoonotic pathogens and toxins False statements on FedEx Air Waybill – “lab materials”Unauthorized export of YPFlorida Atlantic University: Professor caused the export of a thermal imagingcamera to Syria Export required a licenseOne year denial of export privilegesIntroduction to Export and Sanctions Compliance27

Export Control Examples Commerce Control List (EARControlled) Purchasing Example Commerce Control List (EARControlled) Handheld computer with an ECCN of7a994– “Navigation direction findingequipment”– Regional Stability and Anti TerrorismControls License or documented exceptionrequired to export (permanently ortemporarily to controlled destination)Foreign national access (deemedexport) will not require a licensePurchasing Example License likely required to export toCuba, Crimea, Iran, North Korea,Syria, Sudan Open Path CO2/H20 Analyzer withno ECCN, so EAR99Otherwise, No License Required; unlessprohibited end use or end userForeign national access will notrequire a license except, potentially,for Cuban nationalsIntroduction to Export and Sanctions Compliance28