export compliance & controls training july 31 2009
TRANSCRIPT
NAME OF GROUP TO BE ADDRESSED
PREPARED AND PRESENTED BY
EXPORT EXPERTS LLC
July 2009 Presentation By James Shaw of Export Experts LLC 1
PLEASE PAY ATTENTION…….
THERE WILL BE A TEST AT THE CONCLUSION OF THIS PRESENTATON AND THOSE THAT FAIL TO PASS MAY FIND THEMSELVES SUBJECT TO A FINE AND/OR IMPRISONMENT FOR FAILURE TO COMPLY WITH THE LAWS AND REGULATIONS OF THE UNITED STATES OF AMERICA NO JOKE!
July 2009 Presentation By James Shaw of Export Experts LLC
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July 2009 Presentation By James Shaw of Export Experts LLC 3
All Personnel Must Receive Sufficient Awarenes & Compliance Training As
Required By The United States Government For Dealing With Export &
Import Controls, International Trade Activities, And National Security.
EXPORT EXPERTS LLC – Presents Today Important Information on the United States Government’s Code of Federal Regulations; National Security Programs, Export Controls, Import Security Programs, and Material Classifications for Purposes of Control and Taxation.
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THE ELEMENTS WE WILL REVIEW TODAY: Why Are Export Control’s important? What Does The United States Government
Control? The Listing of the Multiple Government Agencies
that have applicable controls. Which Agencies are involved in topics of concern;
including International Trade along with some Domestic Impact as well.
Applicability of “Export Controls” Special Terminology and Definitions of Terms
used in these activities.
Presentation By James Shaw of Export Experts LLC
THE ELEMENTS WE WILL REVIEW TODAY
Definition of Terminology Used Applicability of Export Controls by
various Agencies of the United States Government
Department of Commerce Department of State Department of Defense Office of Foreign Asset Control
July 2009 Presentation By James Shaw of Export Experts LLC
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More Elements We Will Review…
Development of Compliance Programs, Policies, Training and Enforcement Activities.
General Prohibitions To Be Observed. Understanding “Deemed Export” and
“Transfer of Technology” issues. Exceptions, Exemptions & Exclusions. And more…….
July 2009 Presentation By James Shaw of Export Experts LLC
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Governing Agencies
Several government agencies are involved in the regulation of exports; however, the U.S. Department of Commerce, Bureau of Industry and Security, Department of Homeland Security, Customs and Border Protection, and the U.S. Department of State regulate most of our export situations,
The Department of State •Implements the International Traffic in Arms Regulations, known as (ITAR)
•ITAR regulates permanent and temporary Export/Import of defense articles, space related technologies, and the performance of defense services on the United States Munitions List
http://www.pmddtc.state.gov/itar_index.htm
Presentation By James Shaw of Export Experts LLC
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Governing Agencies (Continued...)
The Department of Commerce – Bureau of Industry and Security – (Formerly Known As The Export Administration Department)
•Implements the Export Administration Regulations, referred to as (EAR),
•Regulates the export of commodities found on the Commerce Control List including dual use commodities (goods and services having both military and civilian uses)
These are items that are not inherently military in nature; they are primarily commercial items with potential military useKeep in mind time factor in determining requirements and then applying for and receiving licenses - could be as long as 90-120 days, or longer or even be denied, depending on an outside agency review
http://www.access.gpo.gov/bis/index.html
Presentation By James Shaw of Export Experts LLC
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The Department of the Treasury specifically administers both comprehensive and partial embargoes against various foreign countries.
Office of Foreign Assets Control (OFAC) enforces economic and trade sanctions against specific countries and individuals
Focus is on terrorists, narcotics traffickers, proliferation of weapons of mass destruction
Prohibited activities (examples): • Conducting surveys and interviews
• Engaging services to develop informational materials
• Engaging persons to support research activities
• Providing marketing and business services
Governing Agencies (Continued)
http://www.treas.gov/offices/enforcement/ofac/
Presentation By James Shaw of Export Experts LLC
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In addition to the U.S. Department of Commerce and the U.S. Department of State, these U.S. governmental agencies are also involved in the regulation of exports:
The U.S. Department of Homeland Security administers U.S. tariff and trade laws and enforces export/import laws and regulations, partially through the Customs and Border Protection Service (CBP).
The U.S. Department of Justice enforces laws and regulations relating to alcohol, tobacco products, firearms, explosives, and arson, and receives issues from other Departments and Agencies.
Governing Agencies (Continued)
Presentation By James Shaw of Export Experts LLC
Export Controls Are Important!
The system of controls is designed for the avoidance of release of data or technology in an unauthorized manner (defined as being “in violation of the Export Administration Regulations [EAR], or any other applicable laws”).
The EAR requires record-keeping and reporting requirements to the government.
Potential fines include up to $1,000,000 and up to 10 years in prison per count charged.
July 2009 Presentation By James Shaw of Export Experts LLC
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Federal Export Control Programs are Extensive!
The U.S. Government restricts the release of the following information to foreign nationals within the United States and abroad through the U.S. export regulations and embargoes: • critical technologies,
• technical data/software code,
• equipment,
• chemicals/biological materials, and
• other materials, information and services
Penalties for violating export control regulations include fines, loss of export privileges, personal liability to personnel, and damage to an organization’s business and reputation in the community.
Presentation By James Shaw of Export Experts LLC
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Federal Export Control Regulations apply to many elements of our daily work activities:
• TA primary reason is “National Security”; to prevent weapons, defense articles, services, or dual use commodities from harming the United States or its allies.
• Designed to prevent controlled articles from being transmitted in any way outside the U.S. or within the U.S. to foreign person, or organization, or to knowingly cause or permit any other person to do so unless the following conditions are fully complied with:
• The information, service or export is lawfully provided and has been covered by an appropriate license, agreement, permit, exception, or exemption.
• Preparation of all appropriate documentation and/or submitted to the cognizant government authority, prepared, records maintained, to permit the communication, service, export, or import, or re-export activity.
• Avoidance of release of data or technology in an unauthorized manner (in violation of the Export Administration Regulations).
• U.S. Government record-keeping and reporting requirements are satisfied as required by the Federal Regulations.
Export Controls ? Why is this important to you?
Presentation By James Shaw of Export Experts LLC
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It is essential to understand and accept this concept:“Exports” include the following –
•Shipment* of a controlled material, item, or good. •Transmission (including fax, digital or hand-carried) of any controlled information related to a controlled item•Release or disclosure (including verbal or visual) of any controlled technology, software or technical data either abroad, or in the U.S. (e.g. “deemed export”)•Use or application of controlled technology on behalf of, or for the benefit of, any foreign person or entity, either abroad or in the U.S.A.•Specific definitions, regulations, exemptions and exclusions depend upon the governing agency for the exported item.
* Even within the United States!
Export Control Facts:
Presentation By James Shaw of Export Experts LLC
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And there are trends towards more controls…
As you need to be aware, the increased focus on imports and exports is due to the fact that their potential for use as terrorism tools is a reality.
The United States Government is increasing the focus on enforcement of technical information to persons within the United States that may not be entitled to receive such information (a “deemed export”) FBI College and University Security Effort
“CAUSE” Program and Academic Alliance http://www.fbi.gov/page2/april06/
academicalliance040506.htm Increased focus on life sciences and biological
materials.Presentation By James Shaw of
Export Experts LLC
Controls Also Apply to “Deemed Exports”
What is a “Deemed Export”? This is an activity wherein goods or technology may not actually transfer from the United States, but can be information or technology (including educational materials) given to non-resident foreign persons…
NOTE: The “CAUSE” Security Program between the FBI and Educational Institutions is a useful example.
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•Comply with all export laws and regulations in the US, and of each foreign country in which an activity may take place, except where the law of a foreign country may be inconsistent with U.S. law and in that case the U.S. Law will absolutely prevail!•Only develop and disseminate approved training and compliance-related materials as may be found within the United States’ government’s laws, regulations, policies, processes and controls with regard to such “Export Controls” to persons present in the United State, or in conjunction with persons located outside of the United States (i.e. employees, contractors, or other parties.) •Ensure that all records of Exports, Deemed Exports, & Import records and licenses are maintained in accordance with all U.S. government regulations and treaties.•Ensure all persons; employees, executives, management, supervisors, associates, trainees, academic faculty, administrative staff, and students understand their roles and responsibilities with regard to Export Control, including authorized agents, Import & Export Compliance License requirements (ECLPS), and shipping requirements
Compliance Requirements: (not optional!)
Presentation By James Shaw of Export Experts LLC
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Export Control Facts (Continued...)
The Government also utilizes the term “Deemed Export” to describe export of technology, data, designs and R&D, or source code when released to a foreign national within the United States.
•“Release” is the making of technology or software available to foreign nationals, either visually, orally or by practice or application, under guidance of persons with knowledge of the technology or software
•Such conditions Includes “use technology” – information on the operation, installation, maintenance, repair, overhaul, and/or refurbishing of controlled equipment and access to proprietary manual.
•Be careful!Presentation By James Shaw of
Export Experts LLC
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Exports can occur when someone provides foreign persons “access” to technical information. For example, in the hosting of a visitor, the hiring of a consultant, and through the use of an outside legal/auditing/translation or other service. Simply giving a factory tour, giving a tour or demonstration in a laboratory, or the publishing or otherwise promulgation of technical data, including the making of presentations, even through casual talk and conversations, and do not overlook the impact of sending emails, faxes, data file transfers, etc.
Export control obligations may well exist if you provide data, drawings, technology or sample commodities to a person or business and/or have a reason to believe it will be passed on subsequently to a foreign country or person.
Export Control Facts (Continued…)
Presentation By James Shaw of Export Experts LLC
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United States Munitions List (ITAR)Category I Firearms, Close Assault Weapons and Combat ShotgunsCategory II Materials, Chemicals, Microorganisms, and Toxins Category III Ammunition/OrdnanceCategory IV Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and MinesCategory V Explosives and Energetic Materials, Propellants, Incendiary Agents and Their ConstituentsCategory VI Vessels of War and Special Naval Equipment.Category VII Tanks and Military VehiclesCategory VIII Aircraft and Associated EquipmentCategory IX Military Training EquipmentCategory X Protective Personnel EquipmentCategory XI Military ElectronicsCategory XII Fire Control, Range Finder, Optical and Guidance and Control EquipmentCategory XIII Auxiliary Military EquipmentCategory XIV Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated EquipmentCategory XV Spacecraft Systems and Associated EquipmentCategory XVI Nuclear Weapons, Design and Testing Related ItemsCategory XVII Classified Articles, Technical Data and Defense Services Not Otherwise EnumeratedCategory XVIII Directed Energy WeaponsCategory XX Submersible Vessels, Oceanographic and Associated Equipment
Presentation By James Shaw of Export Experts LLC
Establish the Export Commodity Control Number:
The “ECCN” is an “intelligent number”, with at least 5 characters.
The first character is a Group Number The second character is an Alpha
designation of the Category of the Commodity
The Third through Fifth are numerical designations and details on the scope of control. Characters beyond #5 mean more strict restrictions may well apply.
July 2009 Presentation By James Shaw of Export Experts LLC
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Commerce Control List (EAR)
0 Nuclear Materials, Facilities & Equipment & Misc.1 Materials, Chemicals, “Microorganisms”, and Toxins2 Materials Processing3 Electronics4 Computers5 Telecommunication & Information Security6 Sensors and Lasers7 Navigation and Avionics8 Marine9 Propulsion Systems, Space Vehicles & Related
Equipment
Presentation By James Shaw of Export Experts LLC
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How to Determine If You Need A License
License requirements are dependent upon:
What you are exporting (item’s characteristics)
Where you are exporting (destination)
Who will receive your item (s) (end-user)
What your item will be used for (end-use)
This determination is made by the organization’s Export Control and Compliance Manager, with assistance from other persons or agencies as may be needed. All of this can take time and effort.
Presentation By James Shaw of Export Experts LLC
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• Export controls apply if the information/materials appear on either the International Traffic in Arms Regulations, known as ITAR Munitions List or the Export Administration Regulations’, (EAR), Commerce Control List (CCL).
• ITAR places strict controls on the export of “defense articles” and “defense services.” Defense articles include any item or technical data on the United States Munitions List (USML), and defense services include the furnishing of assistance to foreign persons, whether or not in the United States, with respect to defense articles, and the furnishing of any technical data associated with a defense article
• There are exclusions that cover work performed in academic institutions and a license is not required to disseminate information if an exclusion applies
When Do Export Controls Apply?
Presentation By James Shaw of Export Experts LLC
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Export Control Decision Tree For Sponsored Projects Export Control Decision Tree For Sponsored Projects
Project involves equipment, software,
chemicals, bio-agent or
technology which is on the US
Munitions List
(ITAR)
Project involves equipment, software,
chemicals, bio-agent or technology
is classified as a defense article
designed or modified for military
use, use in outer space, or weapons
(ITAR)
Project involves
encryption software in source or
object code (EAR)
No No
Yes
Yes
Yes
See Compliance Manager for an Export Export
Control Review;Control Review;Is foreign travel or
shipment of articles under the project
anticipated?
Project involves items on the
Commerce Control List (CCL) that are dual use in nature; having commercial
or military application
(EAR)
Yes
Project meets criteria for
Research Exclusion and Not Subject to ExportNot Subject to Export
Controls
Sponsored Programs and Grants Office shall prepare for required licenses upon award of government grant
Yes
No
Yes
Project involves a
country with US imposed
sanctions stipulated or
restricted travel to an embargoed country by the US
No
Key Research and Review Web Sites
http://www.pmddtc.state.gov/itar_index.htm (ITAR)
http://www.access.gpo.gov/bis/index.html (EAR)
http://www.treas.gov/offices/enforcement/ofac/programs/index.shtml (OFAC)
Project involves equipment, software,
chemicals, bio-agent or
technology which is on the US
Munitions List
(ITAR)
Project results will be freely
published with no restrictions,
no NDA’s or Confidentiality Agreements
No
Yes
Compliance Manager investigates and evaluates
the nature of Export, foreign travel, license requirements, and any
restrictions – Compliance Manager completes an
Annual Export Certification when traveling abroad
Presentation By James Shaw of Export Experts LLC
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Definitions
“U.S. Person” is defined by ITAR 22 CFR §120.15 as:
A person who is a lawful permanent resident or who is a protected individual. It also means any corporation, business association, partnership, society, trust, or any other entity, organization, or group that is incorporated to do business in the United States. It also includes any governmental (federal, state, or local) entity. It does not include any foreign person as defined in section ITAR 120.16 below
Presentation By James Shaw of Export Experts LLC
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“Foreign Person” is defined by ITAR 22 CFR §120.16 as:
Any natural person who is not a lawful permanent resident as defined by 8 USC. 1101(a)(20) or who is not a protected individual as defined by 8 USC. 1324b(a)(3). It also means any foreign corporation, business association, partnership, trust, society, or any other entity or group that is not incorporated or organized to do business in the United States, as well as international organizations, foreign governments, and any agency or subdivision of foreign governments (e.g. diplomatic missions)
Definitions (Continued…)
Presentation By James Shaw of Export Experts LLC
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“Technical Data” is defined by ITAR 22 CFR §120.10 as: Information, other than software as defined in ITAR 120.10(4), which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance, or modification of defense articles. This includes information in the form of blueprints, drawings, photographs, plans, instructions, and documentation.
This definition does not include information concerning general scientific, mathematical, or engineering principles commonly taught in schools, colleges, and universities or information in the public domain as defined in 120.11. It also does not include basic marketing information on function or purpose or general system descriptions of defense articles.
Most University teaching and research falls under one or more of several possible exemptions
Definitions (Continued…)
Presentation By James Shaw of Export Experts LLC
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Classified information relating to defense articles and defense services
Information covered by an invention secrecy order
Software as defined in ITAR 121.8(f) directly related to defense articles
Be careful, double check and triple check the information to validate it.
Examples of technical data include:
Presentation By James Shaw of Export Experts LLC
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Definitions (Continued…)
“Technical Data” defined by EAR 15 CFR §772: (Title 15 Code of Federal Regulations Section 772)
May take forms such as blueprints, plans, diagrams, models, formulae, tables, engineering designs and specifications, manuals, and instructions written or recorded on other media or devices such as disk, tape, or read-only memories (CD, DVD, et al.)
Presentation By James Shaw of Export Experts LLC
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An “Export” is defined in ITAR 22 CFR §120.17 as: Sending or taking a defense article out of the United States in
any manner, except by mere travel outside of the United States by a person whose personal knowledge includes technical data
Transferring registration, control, or ownership to a foreign person of any aircraft vessel, or satellite covered by the U.S. Munitions List, whether in the United States or abroad
Disclosing (including oral or visual disclosure) or transferring in the United States any defense article to an embassy, any agency or subdivision of a foreign government (e.g., diplomatic missions)
Disclosing (including oral or visual disclosure) or transferring technical data to a foreign person, whether in the United States or abroad
Performing a defense service on behalf of, or for the benefit of, a foreign person, whether in the United States or abroad
A launch vehicle or payload shall not, by reason of the launching of such vehicle, be considered an export. However, for certain limited purposes, controls may apply to any sale, transfer, or proposal to sell or transfer defense articles or defense services
Definitions (Continued…)
Presentation By James Shaw of Export Experts LLC
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“Export” is defined by EAR15 CFR §734.2(b) as: An actual shipment or transmission of items subject to the
EAR out of the United States, or release of technology or software subject to the EAR to a foreign national in the United States, as described in paragraph (b)(2)(ii) of the EAR, and paragraph (b)(9) for exports of encryption source code and object code software subject to the EAR.
Definitions (Continued…)
Presentation By James Shaw of Export Experts LLC
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Exclusions Possibly Applicable to Universities and Educational Facilities• Fundamental Research• Public Domain• Educational Information• Employment
Presentation By James Shaw of Export Experts LLC
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Fundamental Research Exclusion
Is defined in the EAR and ITAR as Basic and applied research in science and engineering where the
resulting information is ordinarily published and shared broadly within the scientific community
University research will not be considered fundamental research if:
(i) The University or its researchers accept restrictions on publication of scientific and technical information resulting
from the project or activity, or
(ii) The research is funded by the U.S. Government and
specific access and dissemination controls apply. Foreign nationals may participate in research projects involving
export-controlled information on campus in the US only, provided the foreign person is not restricted by OFAC
Transfer of export-controlled information including “Materials” or “Items” abroad, even to research collaborators, is still prohibited
Presentation By James Shaw of Export Experts LLC
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Exclusions (Continued…)
Information that is in the Public Domain is not subject to export controls (ITAR) and (EAR) if already published through
(a) Libraries open to the public, including most University libraries(b) Unrestricted subscriptions; news-stands, or bookstores(c) Published patents(d) Conferences, meeting minutes seminars, trade shows, or exhibits
held in the US (ITAR) or anywhere (EAR) which are generally accessible to the public for a fee and without the hosts’ knowledge of or control of who visits or downloads software/information
Educational Exclusion from EAR and ITAR • Covers teaching to foreign nationals in the US or abroad general
science, math , and engineering commonly taught in schools and Universities in formal course and in teaching laboratories of academic institutions – including information related to controlled Material or items
• Does not cover controlled information conveyed outside the classroom or teaching lab of an academic institution
Presentation By James Shaw of Export Experts LLC
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Exclusions (Continued…)
Employment exclusion may apply to individuals who:
(a) are full-time, bona fide corporate or university employees
(b) have permanent addresses in the U.S. while so employed
(c) who are not nationals of embargoed or sanctioned countries (i.e. a Cuban National, etc.)
http://www.treas.gov/offices/enforcement/ofac/programs/
And,
(d) are advised in writing not to share controlled information with other foreign persons (keep records!)
Such persons are not considered foreign nationals under the ITAR
Presentation By James Shaw of Export Experts LLC
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• All persons, under any conditions, employees and/or students faced with a potential export situation must:
• Be aware of and comply with all policies, procedures, laws, and regulations concerning the organizations Export/Import activities
• Ensure that no controlled information or equipment is shipped within or to outside the United States except with a license from the Department of Commerce, Department of State or other Agency, and utilizing an approved freight carrier (unless an exclusion applies, such as for a laptop computer used for fundamental research and under owner’s control at all times)
• Always determine nationality of all collaborators, who they work for, and where they are located, before engaging in any controlled activity . Understand the “national identity of the persons under the defined terms.”
• Compliance is a management responsibility, enforcement is required without exception and with no excuses.
Establish A Formal Corporate Policy
Presentation By James Shaw of Export Experts LLC
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• Ensure NO shipments are made to a country subject to OFAC sanctions or embargoes or Denied Parties,
• The Policy shall be clearly understood that personnel are not to take chances or make assumptions, but consult with the Control and Compliance Chief before engaging in any Export/Import activities
• Established Policies shall seek to protect the fundamental research exemption by negotiating the elimination of clauses that restrict
Publication Access Participation in research, teaching, or disclosure of
results
Establishment of Policy (Continued…)
Presentation By James Shaw of Export Experts LLC
Getting More Information Via The Web
VIEW THE FOLLOWING:• http://www.fbi.gov/page2/April06/
academicalliance040506.htm
OR VIEW RECENT VIOLATIONS:• http://efoia.bis.doc.gov/
ExportControlViolations/TOCExportViolations.htm
“Don’t Let This Happen To You!”
July 2009 Presentation By James Shaw of Export Experts LLC
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NOW IT IS TEST TIME!! Question #1
Giving facility tours to students or employees of a foreign country may constitute an export. True or False?
True
False
Presentation By James Shaw of Export Experts LLC
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Answer For Question #1
Giving facility tours to students or employees of a foreign country may constitute an export. Have your specific situation reviewed by the Manager of Export Control and Compliance and ensure that tours do not contain access to areas that contain export controlled material or technologies.
True
False
Presentation By James Shaw of Export Experts LLC
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Question #2Once a license is obtained for exporting certain equipment, and all of the equipment on the license has been exported, there is no need to obtain additional licensing authority to export the same equipment in the future. True or False?
True
False
Presentation By James Shaw of Export Experts LLC
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Answer for Question #2Each situation must be reviewed by the Department of Commerce or the Department of State licensing authority even if you intend to export the same equipment in the future.
False
Presentation By James Shaw of Export Experts LLC
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Question #3You teach a graduate course on solid-state lasers which is listed in the course catalog. Materials on such lasers is available at the Library. Many of the students are foreign persons. You need to obtain a license from the Department of State for each such person before this information is disclosed to these foreign students?
True
False
Presentation By James Shaw of Export Experts LLC
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Answer for Question #3Release of information by instruction in catalog courses and course laboratories of academic institutions, and in the Library, is not subject to EAR so no export license is (generally) required,
True
False
Presentation By James Shaw of Export Experts LLC
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Question #4You are traveling abroad to Germany as part of a Government Grant activity. Since the trip abroad is not to an embargoed country there are no restrictions on your travel.
True
False
Presentation By James Shaw of Export Experts LLC
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Answer for Question #4All personnel, faculty, staff and students traveling abroad must ensure by actual inspection and confirmation that no encrypted software exists on your laptop, PDA or cell phone and that these items are used as tools of the trade only.
True
FalsePresentation By James Shaw of
Export Experts LLC
Conclusion Statement…
There are persons within the United States that are on a “Denied Persons List”, and organizations (e.g. Banks, Corporations, Educational Institutions) that are also on a prohibition list…..
So be aware and be careful that you do not violate the laws and regulations of the United States Government.
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Questions? Now is the time to ask?
This presentation was intended as a primary orientation and not an in-depth course on the scope of all of the controls promulgated by the United States Government.
WHEN IN DOUBT, CHECK IT OUT FIRST!
Contact http://www.Export Experts LLC.com
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