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Deemed-Export-Compliance-PM880T

VIEWS: 10 PAGES: 41

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									Live Webinar – February 16, 2011




                                   1
Panel of Presenters
Program Moderator
Samuel M. Gilston
Editor & Publisher - The Export Practitioner
                 Sam Gilston has over 35 years of experience as a journalist in
                 Washington. Starting in 1972, he has reported on U.S. government regulations,
                 international trade policies, foreign relations and legislation. He became editor
                 and publisher of The Export Practitioner in 2003, but he has covered and reported
                 on U.S. export controls and trade sanctions since 1981 when he founded and
                 Became editor and publisher of Washington Tariff & Trade Letter, the sister
                 publication of The Export Practitioner.

                 Mr. Gilston has followed the evolution of U.S. export control policies and
                 enforcement activities from their Cold War days to the current focus on
                 terrorism, proliferation and new countries of concern. His reports have provided
                 insights and analysis of successful and unsuccessful efforts to renew the Export
                 Administration Regulations, as well as the Obama administration’s new plans for
                 major reform of U.S. export controls.




                                                                                                     2
Panel of Presenters
Steven Brotherton
Partner - Fragomen, Del Rey, Bernsen and Loewy, LLP

                Steven Brotherton manages the firm's Export Controls Practice Group with
                locations in Washington, D.C. and San Francisco, CA. He counsels clients on
                export control laws and regulations, including compliance with the Export
                Administration Regulations (EAR), International Traffic in Arms Regulations
                (ITAR), and sanctions regulations administered by the Office of Foreign Assets
                Control (OFAC). He advises a wide variety of clients on export control issues,
                ranging from Fortune 100 companies to mid-size companies and start ups.

                Steven has developed and implemented export compliance programs, led audits,
                investigations and reviews, prepared export licenses and agreements, and has
                successfully represented companies in connection with government
                investigations and enforcement actions. He also leads export control
                classification projects, working directly with engineers, chemists and scientists to
                assess the applicability of export controls to a given technology.



Tel. (415) 263-8442 - sbrotherton@fragomen.com
www.fragomen.com/exportcontrols
                                                                                                       3
Panel of Presenters
Michael D. Ferguson
Export Control Manager - New Mexico State University

                  Michael Ferguson has been employed as Export Control Manager for
                  New Mexico State University, Las Cruces, New Mexico since 2004.

                  Prior to that, Mr. Ferguson spent over twenty years as a corporate
                  attorney in the energy business. He retired as General Counsel of El
                  Paso Natural Gas Company, El Paso, Texas in 2001.

                  Before that, he was employed by the United States Department of
                  Justice in Washington, D.C.




                                                                                         4
Program Agenda
In-depth review of:
    -- New Deemed Export requirements in Form I-129 Petition for a Nonimmigrant Worker
    -- Export Administration Regulations (EAR)
    -- International Traffic in Arms Regulations (ITAR)
    -- Fundamental research exception
    -- Commerce’s Deemed Export Advisory Committee’s recommendations
    -- Advice coming from the BIS Emerging Technology and Research Advisory
    Committee

University compliance guidance:

    -- Contracting language
    -- Information security
    -- Key compliance program elements
    -- Tools to maintain compliance

PLUS:
Analysis on the impact of the verdict in the J. Reece Roth case on university research

                                                                                         5
New Deemed Export Requirements
in Form I-129
   Form I-129 petition
     Used for various types of visa petitions for foreign national workers
     New initiations, amendments and renewals


    Numerous changes to I-129 petition
     New form released to public November 23, 2010
     Mandatory as of December 23, 2010
     Export control certification mandatory as of February 20, 2011


   Requires upfront determination of whether a foreign national will be provided
    access to controlled technology
     In the university context, this may not be known at the time the form is completed


   Good News:
    The new Form I-129 requirement imposes no new legal requirement




                                                                                           6
Export Control Certification:
“The Big One”
   Various visa types subject to new certification requirement
       H-1B, H-1B1
       L-1
       O-1A
       Certification not required, but deemed export rules still apply to other visa types such
        as J-1
        ○ (see attached glossary for visa types and definitions)
   Not a new legal requirement;
   Affirmative review and certification required;
   In most cases an export license is not required (from I-129 instructions):




7
New Export Control Certification
Form I-129, Part 6




                                   8
Overview:
Deemed Export Rule




9
Background
   2002 Government Accounting Office (GAO) Report

     Title: “Department of Commerce Controls over Transfers of
      Technology to Foreign Nationals Need Improvement”

     Goal: GAO was asked to assess Commerce efforts to
      ensure that organizations (1) apply for these licenses when
      required to do so; and (2) comply with license conditions.

     Key Finding: “Because Commerce does not review all
      relevant visa and immigration data, it may overlook foreign
      nationals potentially subject to deemed export licensing
      requirements.”


                                                                    10
2002 GAO Report
   Recommendation:

     “We recommend that the Secretary of Commerce work with
      INS to use all existing U.S. government data in its efforts to
      identify all foreign nationals potentially subject to deemed
      export licensing requirements.”




                                                                       11
What is a “Deemed Export”?

    A release or transfer of technology or technical data to a Foreign
     Person in the U.S.
      Physical export out of U.S. is NOT required
      Transfer takes place in the U.S.
      “Release” could occur by providing technical data stored on shared
       network drives


    “Deemed” to be an export to the Foreign Person’s “Home
     Country”

    May require a U.S. government export license or other approval




12
How Can a “Deemed Export” Occur?
    Technical training                  Providing drawings to a
                                          Foreign Person employee
    Working with Foreign Person
     interns or consultants              Technical conversations/
                                          collaboration with Foreign
                                          Persons
    Collaborations w/ U.S.
     customers’ Foreign Person           Telephone conversations
     employees

    Access to database that
     contains controlled technology


13
     Who is a “Foreign Person”?
        Any Person who is not:
            A U.S. Citizen;
            A U.S. Lawful Permanent Resident (Green Card Holder);
            A Person Granted Asylum;
            A Refugee;
            A Temporary Resident granted amnesty.

        Foreign National includes persons with status such as
         H-1B, H-3, L-1, J-1, F-1 Practical Training, L-1, etc.


         Tip: Though the deemed export requirements apply more
         broadly, the I-129 export control certification is only required for
         H, L and O petitions.




14
Implications
   An export license may be required
     Limited exceptions and exemptions may apply in a university
      setting

   License processing times for foreign persons
     Currently 2-3+ months
     Denial possible
     Approval may contain restrictive conditions


   Must curtail or modify activities pending license
    issuance




                                                                    15
Deemed Exports
                                                                  I-129, Part 6




    Export Administration Regulations (“EAR”)
      Agency: U.S. Department of Commerce, Bureau of Industry and Security
       (“BIS”)

      Covers: “Dual use” or purely commercial technologies



    International Traffic in Arms Regulations (“ITAR”)
       Agency: Department of State, Directorate of Defense Trade Controls
         (“DDTC”)

      Covers: Items that are specifically designed or modified
        for military or space application


16
            EAR                                   ITAR
• “Dual Use”/Commercial               • Military/Space

• Controlled items appear on          • Controlled items appear on U.S.
Commerce                              Munitions
  Control List                          List

• A number of exceptions available    • License typically required for foreign
                                        person employees
• Examples of EAR Controlled Items:
                                      • ITAR controlled items:
     •   semiconductors
     •   telecommunications            Specifically,
     •   high speed computers            • designed
     •   manufacturing equipment         • modified
     •   encryption                      • adapted
     •   many others                     • configured

                                      …for military/space application



17
   Typical EAR License Hierarchy
   (Dual Use/Commercial Technologies)

Highest     “Terrorist Supporting Countries”
Controls
                • Cuba, Iran, North Korea, Sudan, Syria

            “Countries of Concern”
                • List of approximately 22 countries, including former Soviet
                  Republics, China, Vietnam

            “Friendly Countries”
                • All others (Europe, Australia, Central/South America, etc.)
Lowest
Controls




                                                                                18
ITAR Licensing Policy
(Military/Space Technologies)

   Policy of Denial for nationals from an ITAR Prohibited
    Country
     Listed at 22 C.F.R. Part 126.1


     Includes, among others:

      ○ State Sponsors of Terrorism
             Cuba, Iran, North Korea, Sudan, Syria


      ○ Arms Embargo
             PR China, Burma, Liberia, Sudan


      ○ Cote d’Ivoire, Belarus, Eritrea, Venezuela, others




                                                             19
Exemptions




             20
The Basics
   Exemption will alleviate need for export license

   Limited in scope and purpose

   Must review facts on case-by-case basis

   General University Rule: Accepting restrictions on the publication of
    information may trigger export control requirements




                                                                            21
Publicly Available/Public Domain
Information
    Published Information

    Open Conference/Meeting

    Educational Information

    Patents

    Fundamental Research




                                   22
 Fundamental Research
 EAR §734.8

“Basic and applied research in science and engineering, where the resulting
information is ordinarily published and shared broadly within the scientific
community. Such research can be distinguished from proprietary research
and from industrial development, design, production, and product utilization,
the results of which ordinarily are restricted for proprietary reasons . . .”




                                                                                23
University Fundamental Research
EAR §734.8

• Must be conducted at accredited institutions of higher learning
  in U.S.

• University based research is not considered “fundamental
  research” if the university or its researchers accept (at the
  request, for example, of an industrial sponsor) restrictions on
  publication of scientific and technical information resulting
  from the project or activity.

• Exemption does not apply to the “use” of controlled equipment.




                                                                    24
Tech. Data to University Employees
ITAR §125.4(b)(10)

   University may disclose technical data to Foreign Persons
    who are bona fide employees if:

       Employee permanently resides in U.S. throughout the period of
        employment;

       Employee is not a national of a restricted country; and

       University informs employee that data may not be transferred to
        other foreign persons without U.S. government written approval




                                                                          25
Commerce’s Deemed Export Advisory
Committee’s Recommendations

   DEAC resulted from a 2004 DOC IG Report critical of deemed
    export compliance

   DEAC was organized in 2006, and recommended broad export
    control reforms

   BIS has increased training and outreach, and has initiated new
    Rulemakings




                                                                     26
“Use” Technology
EAR Definition Part 772

   “Use” Technology:
     Operation;
     Installation (including on-site installation);
     Maintenance (checking);
     Repair;
     Overhaul; and
     Refurbishing


   BIS interprets “use” technology to include all of the elements




                                                                     27
University Compliance Guidance
   Contracting language
     Screening for restrictive contract clauses
      that limit publication rights or the use of
      foreign nationals
     Negotiation of restrictive clauses out of
      contracts
     Determination of whether research is
      “fundamental” or “developmental”




                                                    28
University Compliance Guidance
   Information security
     Controlled information must be protected not only from
       purposeful but also inadvertent disclosure

     A particular problem at universities, which frequently have
      substantial exposure to foreign nationals

     Information security is usually implemented through a
      “Technology Control Plan” covering physical and electronic
      security




                                                                    29
University Compliance Guidance
   Key compliance program elements
    Management commitment
   Training
   Formal policies and procedures
    ○ Contract screening process
    ○ Technology Control Plan
   Export Control information dissemination
    ○ Webpage, with links
    ○ Contact Information
    ○ Written guidelines, summaries, FAQs




                                               30
University Compliance Guidance
   Tools to maintain compliance
     Ongoing periodic training
     Information updates
     Maintenance of updated guidelines, checklists and other tools
     Maintenance of licensing prerequisites
      ○ ITAR registration
      ○ Electronic security certificates
      ○ DTrade and Snap-R certification






                                                                      31
Case Study




             32
The Roth Case
Retired University Professor Sentenced
to Four Years in Prison for Arms Export
Violations Involving Citizen of China


 “John Reece Roth, 72, of Knoxville, Tenn., was sentenced to 48
months in prison for violating the Arms Export Control Act by
conspiring to illegally export, and actually exporting, technical
information relating to a U.S. Air Force (USAF) research and
development contract.”

Source: U.S. Department of Justice, Press Release, Wednesday, July 1, 2009




                                                                             33
The Roth Case
   Key Facts:

     Department of Defense contract with Atmospheric Glow
      Technologies (AGT) to develop advanced plasma technology for
      use on Air Force Unmanned Aerial Vehicles (“drones”)

     AGT entered into a subcontract with Prof. Roth in his individual
      capacity;

     Prof. Roth used University facilities and hired foreign nationals
      (China and Iran) to serve as graduate assistants;

     University Export Compliance Officer informed Prof. Roth that
      foreign nationals could not receive ITAR Technical Data
      under the contract



                                                                          34
The Roth Case and It’s Impact on
University Research
   First prosecution of deemed export violation in the context
    of university research

   Limited direct impact on university export compliance
    ○ The research work in the Roth case was only indirectly
      related to the affected university’s compliance responsibility
    ○ The individual convicted was unusually recalcitrant




                                                                       35
Visas Mantis Program




                       36
 Visas Mantis Reviews
• Initiated at U.S. Consulates Abroad
• Review for Technology Alert List (“TAL”) Activity
• If TAL Activity -
    –   Mandatory Review: Cuba, Iran, North Korea, Sudan, Syria
    –   Likely Review: China, Russia
    –   Discretionary Review: If reason to believe entry will result in
        violation of U.S. export control laws
    –   I-129 Review: May be triggered if selecting Box 2 (license
        required)




                                                                          37
Technology Alert List
(last published version)

  Conventional Munitions             Remote Sensing, Imaging and
                                       Reconnaissance
  Nuclear Technology
                                      Advanced
  Rocket Systems                      Computer/Microelectronic
  Rocket System and Unmanned          Technology
   Air Vehicle Subsystems             Materials Technology
  Navigation, Avionics and Flight    Information Security
   Control                            Laser and Directed Energy
  Chemical, Biotechnology, and
                                       Systems
   Biomedical Engineering             Sensors and Sensor
                                       Technology
  Urban Planning
                                      Marine Technology
                                      Robotics




                                                                     38
Visas Mantis Process
   Initiated by Consular Officer

   Interagency Review

   Potential Referral for Office of Export Enforcement Investigation

   Visa Application Held in Abeyance Pending Completion of Mantis
    Review (20+ days)




                                                                        39
             Audience Q&A
   Utilize the chat box to the bottom of your
    screen to submit a question to the panel.
    Please address your question to a specific
    presenter.

                      OR

   Press 01 on your touchtone phone and this
    will place you into the phone queue.


                                                 40
Thank Your For Your Attendance




                                 41

								
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