Where Industry and Security Intersect
What's New | Sitemap | Search
DFO Mark Crawford Called the Open Session to Order at 1:45 p.m. – Rm. 4830
Eileen Albanese, Director- National Security and Technology Transfer Controls
Ms. Albanese presented on the export control history of deemed exports. The number of deemed export licenses processed has increased with a slight dip in 2005, 2006; most licenses are approved. Most denials occur because the technology is considered too “high-tech.”
-Top 4 countries: China, Russia, India, Iran
-Top ECCNs: 3E001, 3E002, 4D003, 4E001, 5E001, 9E001
-56% of 860 licenses granted in 2008, most were issued to one company. (10 licenses were issued to labs; none to universities)
Albanese: Reasons for denial: technology is greater than wanted to export or persons of concern.
Reasons for returns without action: green card (U.S. lawful permanent residence (LPR) status)
was acquired prior to license being granted and request is canceled or the request was incomplete.
[Note: These four countries constitute a high fraction predominantly due to the fact that peers are not export restricted.]
[Note: 56% of Deemed Export Licenses are from 4 companies. 0% from universities.
Only 10 license applications were submitted by U.S. government labs.]
[Note: Once every year, three CCL categories will be reviewed. Use = operation, installation, maintenance, repair, overhaul, AND information.]
Discussion
Questions from ETRAC members to Ms. Albanese:
Q. Is there a distinction between deemed export and export?
Albanese: No, there’s no distinction between exports and deemed exports… you’d have to remove items from the Commerce Control Lists (CCL) to remove it from deemed exports. BIS hopes that ETRAC will develop the methodology to remove items independent of the CCL.
Q: What is the non-compliance rate, given four companies make up the majority of deemed licenses?
Albanese: You will have to follow up with Export Enforcement
Q: Why do universities make up 0% of licenses?
Albanese: No License Required. Also, they may not accept contracts that require licenses. BIS also has sought to educate the universities on these matters.
ETRAC member comment: It also depends on whether the work is published because of the Fundamental Research Exclusion, which impacts universities’ ability to attract foreign nationals.
ETRAC member comment: Do we know if there have been [R&D] opportunities that were lost or have persons just obtained a green card.
ETRAC member comment: This loophole is reducing the regulation’s effectiveness.
ETRAC member comment: Universities may also not be accepting contracts that require export control compliance.
Q: Of 860 licenses, were any in life sciences or biotech?
Albanese: Uncertain if any had been in these categories. The majority were software and electronics.
Q: If the work is intended to be published, it falls under the fundamental research exclusion. Does State Department hold that “intent to publish, not publication itself” as the Commerce Department.
Albanese: No. ITAR is different. You’d have to ask State how they interpret this regulation.
Q: How many licenses are for “use” technology as opposed to production and development?
Albanese: Very few
Discussion: The term “intended for” is not in State language- but is in Department of Commerce (DOC) language. According to State language, until the work is published you need a license under ITAR. In DOC language, the work can be published any time.
ETRAC Member Comment: Regarding control for use of equipment in laboratories. If you use a controlled piece of equipment for fundamental research, the equipment is still controlled, although the research is not. The controls on the equipment remain independent of the research goal.
ETRAC Member Comment: How many research professors would think that their Chinese or other graduate students can or cannot use a particular piece of equipment [or software]? If we stick with the “and” versus “or” in the Use Technology definition, we may avert over restricting universities.
Q: How many universities receive BIS briefings?
Albanese: BIS conducts over 100 outreach events annually; roughly 30-40 universities have received briefings in the past three years.
Q: Did you get an increase or a decrease in the number of applications as a result of the briefings?
Albanese: Neither, but the briefings may have allayed some of the fears.
ETRAC Member Comment: It may have also raised additional confusion. Many universities hired lawyers to try to clear up the confusion—but, this hasn’t worked.
The United States is one of a limited number of countries with deemed export rules. DOC regulates dual-use items with DOD and State. Other agencies don’t have their own rules for dual use items. DTSA does the reviews for ITAR and EAR. There are Technology Assistance Agreements (TAAs), which are State’s tech transfer licenses for dual and deemed exports. State recently issued guidance to go back to a DSP-5 for foreign nationals coming into the country – as opposed to a TAA. A Commodity Jurisdiction (CJ) goes to State, then DOC and DOD. The Defense Technology Security Administration (DTSA) determines whether the item belongs on the Commerce Control List (CCL) or U.S. Munitions List (USML).
[Note: U.S. Department of State, Directorate of Defense Trade Controls -- Form DSP-5
Application/License for Permanent Export of Unclassified Defense Articles and Related Unclassified Technical Data. DSP-5 license applications cover items listed on the U.S. munitions list. A DSP license must be approved prior to any foreign national being given access to controlled technical data subject to International Traffic in Arms Regulations (ITAR).]
Q: Does BIS know how many export control compliance officers there are in universities?
Albanese: No, we don’t.
ETRAC Audience Comment: Many for-profit institutions don’t fall under the fundamental exclusion because they hold their information as proprietary.
Albanese: A patent is publically available information.
Q: Creating a separate list and rules for deemed exports will result in something different than today’s rules. How much additional burden will creating deemed export rules put on BIS? And how can we avoid creating rules that overlap with other Government departments?
Albanese: State, Energy, and Defense must review and approve any changes to Dual-Use rules. There should not be overlapping rules.
Q: Do you have information on what DOD does?
Albanese: DOD’s Defense Technology Security Administration (DTSA) does the technical reviews. State does about 50,000 per year; DOD…
Q: Technology Assistance Agreement (TAA) for you to transfer tech to it – real export or deemed export.
ETRAC Audience Comment: State issued a statement that it will go back DSP5 licensing for foreign nationals (FNs) coming to the US, because they want more detailed information than what was available on the TAA request.
Albanese: When you submit a CJ, it goes to State first, then on to Commerce and DOD. If State says something is USML and Commerce believes otherwise, it gets escalated.
Q: How many technical persons does DOC have?
Albanese: 40 Licensing Officers and 15 policy analysts.
Q: How many of these people got their degree in the last 10 years?
Albanese: About half have Ph.D.s
Q: What steps does DOC take to ensure that licensing officers are up-to-date on current technology?
Albanese: We use technical advisory committees (TACs). And, Commerce engineers meet with subject matter experts (SMEs) on a quarterly basis when Commerce’s budget allows.
Q: What percent of TAC membership is industry versus academic?
Albanese: Mostly Industrial, e.g., 90%
Q: Was the decision to populate the committees with industrial people driven by a view that they lead research and development?
Albanese: No, the goal is to make sure that the CCL is correct. The industrial organizations might be motivated by exporting their products so we carefully review the TAC membership.
Q: Are you confident that the committee members for the TACs aren’t outdated? Are the people advising you knowledgeable on the cutting edge R&D and can identify the emerging technologies that would be of concern?
Albanese: For certain categories, yes: semiconductors, microprocessing, and thermal imaging. The majority of the members are leading professionals that remain current on the cutting edge technologies. We have a dialog with industry. ENC and Avionics hasn’t seen much change. We should add that the lists come together in a transparent process and this process is open to industrial groups.
Q: How many categories are not well covered and what are they?
Albanese: 5-6, but I’m not certain I could list them.
Q: What is the turnover of items onto the CCL?
Albanese: It’s a gradual evolution. As far a de-controlling, there’s more of a stepping down. We have TACs, but also international cooperation. Many of the list materials are governed by international regulations. The US put forward 30 proposals to Wassenaar and more than half were the result of removals from CCL. In the proliferation regime, the majority of the proposals were governed by changes to the CCL.
Q: Is there a difference between a student and a temporary worker who’s here for 1-2 years.
Albanese: People who will be here and stay here don’t need a license. A license used to be required if you suspected the person would go back to the home nation. For example, you cannot send crime control items to China. If a Chinese national went to work in a handcuff factory, he or she is learning how to make handcuffs—so their work requires a deemed license.
Q: So if ETRAC removed handcuffs from the deemed export list, would we still have to have a license to export the items to China?
Albanese: You’d still have to get an export license if you shipped handcuffs to China.
Q: Are visas used to determine a deemed export license for a foreign national?
Albanese: Yes. If the visa is good for four years, the deemed export license is good for the same amount of time. The deemed export license is determined based on whether the person has an intention to leave the United States with the technology. If you know the person is going to leave the United States then a license would be required.
Q: What about people who are here on a Visa? If we “clean up” the DE language in some way, at universities, if for some reason it is not covered under the fundamental research. When they return to their country, do they need a license?
Albanese: A foreign citizen requires a license, and the license is based on their Visa. There’s currently no difference between export controls and deemed exports. We hope this committee will help clear up the language and help identify what needs to be controlled as a deemed export.
Q: Should we be willing to clear it off the deemed export list if we’re not willing to remove it from the CCLs?
Albanese: It boils down to the intent. Is there an intention to leave the US with that technology? For a person whose intention is to remain in the US, then a license may not be required.
Q: With a foreign national, if you don’t know intent since you could not accurately determine if they will leave the US?
Albanese: Intent is determined by whether they have documents/evidence (i.e. green card, visa) that they plan to stay in the United States.
ETRAC Member Comment: For students, most of them are going back.
ETRAC Member Comment: We don’t really think about intention, because we don’t evaluate what the visitor plans are.
Albanese: That’s why we have all non-green card foreign nationals.
Q: A person who is a technical optics expert got a J-1 visa applies for green card? Once applied, he doesn’t need to have a deemed export license?
Albanese: Correct.
ETRAC Member Comment: A change to the deemed export regulation would have no positive impact on academia. If the academic institution is covered by the Research Exemption, the change is moot. There would be no advantage to universities.
ETRAC Member Comment: The EAR states that the transfer of information to a FN is an export. There’s nothing in the EC rules that states “intent.”
Q: To what extent does foreign availability play a role in removing items from the list?
EA Staff Member: Wassenaar—nothing on list is available outside Wassenaar. There’s a current liberalized license treatment that prompted items in Wassenaar to be…
ETRAC Discussion of Factors To Be Considered in Building a Zero-Based Technology Filter
ETRAC Member Comment: Is it Fundamental Research -- if an item is proprietary (or intended to remain proprietary), or for public consumption (to be published or patented)?
ETRAC Member Comment: Some level of technical maturity must be assumed in the fundamental research clause.
ETRAC Member Comment: We need to have some level of refinement that discriminates between common commercial items, and those items that pose significant military risk/threats.
ETRAC Member Comment: It seems like what is necessary is something like a credit scoring system that applies different weights for each criteria. Proposes a weighting scheme similar to a FICO score.
Members discussed the need for balance in a filter methodology, including the possibility of weighting technology factors on a preliminary filter list. Some members did not see the benefit of putting every technology through the filter. They were concerned this would be too complicated to administer effectively. It was noted that the Deemed Export Advisory Committee had recommended that Commerce aim to build high fences around a smaller set of technologies than now regulated under the CCL.
Sam Stanley observed that at the initiation of the process filter it would be important to deter-mine whether a technology is subject to regulation under other laws or exclusions. Two such exclusions discussed by members were for fundamental research; and where public publication of critical aspects of a technology has occurred, or where there is intent to publish. In the case of proprietary research covering a technology, members said it may be necessary to consider whether the research is intended to remain proprietary.
Also discussed was it necessary to evaluate the maturity level of a technology to determine whether it falls under fundamental the research or constitutes applied research. In addition,
ETRAC members questioned whether the potential “significant military applications” of a technology should be factored in some manner in the filter – a step that could require input from the military experts on each technology.
George Burdock suggested that the filter should not be based on binary decisions. Instead, filter elements and scoring should have weightings similar in approach to processes employed in credit scoring used in the financial industry. There was discussion that the system would not be perfect and there would be trade-offs. Members supported Burdock’s proposal and Co-Chairman Tierney asked Burdock to lead the effort to develop a weighted scoring system to be employed in the filter methodology. Burdock was asked to provide a model for discussion at ETRAC’s June meeting.
Members agreed that any filter that is developed should be run by BIS licensing officers for comments and eventual testing using existing technologies. There was also a request that members be briefed on multilateral export control regimes at a future ETRAC meeting.
Consensus was reached on holding the next meeting of ETRAC on June 10-June 11, over a two-day period.
Designated Federal Officer Mark Crawford terminated the meeting at 5:00 p.m.
Members of ETRAC Attending Open & Closed Sessions
Location: Hoover Bldg., WashingtonDC
Members Attending in Person
Pamela Ann Abshire
George Burdock
Robert P. Breault
Claude R. Canizares
Jeffrey Hamilton
Brooks A. Keel
Laurie Locasio
Seth R. Marder
Steven Robert Patterson
Carl A. Picconatto
Jeffrey H. Reed
Samuel L. Stanley
Marlin U. Thomas
Thomas E. Tierney
James M. Tour
Via Teleconference
Jeffrey M Ashe
A. Stephen Dahms
Gregory Tarr
Gerald Kulcinski
Steve Patterson
Absent
Bob Gleichauf
Rick McCullough
Jeff Puschell
Maja Matari’c
Harry Kington
Nokolai Leung
Michael K. Reiter
R. Bruce Thompson
U.S. Government Observers to ETRAC Sessions
Location: Hoover Bldg., WashingtonDC
Eileen Albanese* BIS
Mark Benson NASA/OIG
Mark Crawford BIS
Will Fisher BIS
Kelly Gardner BIS
Tim Mooney BIS
Ashley Miller BIS
Teresa Telesco BIS
Yvette Springer BIS
Karen Swasey BIS
*Speaker
Observers to ETRAC Meeting – Open Afternoon Session
Location: Hoover Bldg., WashingtonDC
Meeting Room
Mary Fromyer IBC
Eric Horschhorn Winston & Strawn
Ken Montgomery Tech America
Jonah Agus WTTL
Eric Lundell ITTA, Inc.
Via Teleconference
Mike Bottins Interdesign USA
Ed Crowell Steptoe & Johnson
Katie Carey HIPAGE Company
Philip Chaulker AAAS
Twila Dreiberg HRL Laboratories, LLC
Samuel Evans University of Oxford
Janelle Gamble The Boeing Company
Ken Hutton Pyperion Catalysis Intl.
Joseph Kim Global Trade
Edward Krauland Steptoe & Johnson
Renee Latour Greenberg Traurig LLP
Mark Renfeld HP Global Trade
Jeff Rittener Intel Corp.*
Jennifer Smith Baker & Hostetler LLP
Steven Talkovsky Siemens
Joe Vicario Texas Instruments
Jonathan Wise Agilent Technologies, Inc.**
Sharon Wozniak Tyco/Scott Health & Safety
* Member of Regulations and Procedures Technical Advisory Committee; ** Member of Information Systems Technical Advisory Committee.