Export Control related law

1. Export Controls and
Trade Sanctions
Eileen Nielsen
Director of Sponsored Projects Compliance
Office of Financial Services
Harvard School of Public Health
Research Operations Managers Meeting
Presentation July 16, 2008

2. 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

3. Agencies that govern export controls
There are three principal agencies
 State Department
 Commerce Department
 Treasury Department

4. Treasury Department
 Office of Foreign Assets Control (OFAC)
 Trade Sanctions, Embargoes, Restrictions on
Transfers to Certain End-User

5. About OFAC
 Embargoes administered by Office of Foreign Assets Control, U.S.
Department of Treasury (“OFAC”)
 Regulates all transactions abroad with prohibited parties, such as
terrorists and countries subject to U.S. embargoes e.g., prohibited
end-users
 U.S. economic sanctions focus on the end-user or country rather
than the technology
 Prohibitions on trade with countries such as Iran, Cuba
 Limitations on activities in certain areas of countries or with certain
non-state actors

6. Export Controls
US 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. State Department
 Directorate of Defense Trade Controls
(DDTC)
 International Traffic in Arms Regulations “ITAR”
 Arms Export Control Act of 1976

8.  International Traffic in Arms Regulations (ITAR)
 Covers military items (“munitions” or “defense articles”)
 Regulates goods and technology designed to kill people or
defend against death in a military setting (e.g., tank, fighter
aircraft, nerve agent defensive equipment)
 Creates “defense articles” (includes tech data which
encompasses software unlike EAR) and “defense services”
(certain information to be exported may be controlled as a
“defense service” even if in the public domain)
 Includes technical data related to defense articles and
defense services (furnishing assistance including design,
engineering, and use of defense articles)
 Includes space-related technology and research; increasing
applicability to other university research areas such as
nanotechnology/new materials and sensors and life sciences
About ITAR

9. Commerce Department
 Bureau of Industry and Security (BIS)
 Export Administration Regulations
 Export Administration Act of 1974

10.  Export Administration Regulations (EAR)
 Covers dual-use items: 10 CCL categories of different
technologies covering equipment, tests, materials,
software and technology
 Covers goods, test equipment, materials, technology
(tech data and technical assistance) and software
 Also covers “re-export” of “U.S.-origin” items outside
the United States
 Regulates items designed for commercial purpose but
that can have military or security applications (e.g.,
computers, pathogens, civilian aircraft)
About EAR

11. FUNDAMENTAL RESEARCH
 Fundamental Research means 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 proprietary or national security reasons.”

12. FUNDAMENTAL RESEARCH
EXCLUSION
 National Security Decision Directive 189 which
stated, 1985
 “It is the policy of this Administration that, to the maximum
extent possible, the products of fundamental research
remain unrestricted. It is also the policy of this
Administration that, where the national security requires
control, the mechanism for control of information generated
during federally-funded fundamental research in science,
technology and engineering at colleges, universities and
laboratories is classification.”

13. FUNDAMENTAL RESEARCH
 Fundamental Research means 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 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.

14. 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

15. DEEMED EXPORTS
 The disclosure or transfer of export controlled
software, technologies or technical data to a
foreign entity or individual inside the US is
“deemed” to be an export to the home
country of the foreign entity or individual.
 Applies to technology transfers under the EAR
and the provisions of ITAR technical data and
defense

16. U.S. Exports Post 9/11
 Top research universities became a focal
point for U.S. government export control
compliance
 Growing intersection of cutting-edge science,
technology and engineering research with national
security, foreign policy and homeland security
 Evolving role of the research university (global in
scope, multidisciplinary, changing innovation role)

17. U.S. Export Controls -- A Growing Focus on
Research Universities
 Growing government perception that universities “are
not serious” about export control compliance and are
misusing the fundamental research exclusion
 Corporate complaints that universities “aren’t playing
by the same rules” with competitive implications
 GAO Report (2002) severely criticizing Commerce’s
oversight of “deemed exports”, especially with foreign
nationals from India, Pakistan, China, Russia and
Israel

18. U.S. Export Controls -- A Growing Focus on
Research Universities II
 Fall 2003 -- Federal interagency export control investigation/audit
of 9 major research universities; OIG Report and Congressional
hearings in 2004
 “Enhanced” export control enforcement focus on universities and
their researchers
 Summer 2006 – GAO “Interviews” of about two dozen research
institutions
 GAO Report – issued December, 2006

19.  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
Penalties for Noncompliance

20.  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.
Penalties for Noncompliance (cont’d)

21.  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!
Penalties for Noncompliance (cont’d)

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. Harvard Export Control Policy and
Procedures
 Harvard University Export Control Policy
http://www.provost.harvard.edu/policies_guidelines/Export%20Contr
ol_Compliance_Policy%20Statement_6-19-07.pdf
 Harvard University Export Control Policy and
Procedures
http://www.provost.harvard.edu/policies_guidelines/Compliance_Ma
nual_June_2007.pdf

24. 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

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

26. Questions?