Living with Export Controls in Clinical Research

Transcription

1 Vol. 6, No. 8, August 2010 Can You Handle the Truth? Living with Export Controls in Clinical Research By Jennifer P. May My son loves the movie Night at the Museum: Battle of the Smithsonian. There is a scene early on that nicely summarizes export controls. Our intrepid hero, Larry, is examining an exhibit when he is accused of attempting to touch the item by museum guard Brandon. 1 Here s what happens: Larry: I m sorry. Last time I checked, I thought we lived in a free country. So... Brandon: No, we don t. Larry: No? Brandon: It s the United States of Don t Touch That Thing Right in Front of You. 2 Export controls are a sticky wicket for research organizations. Investigators rely on publication and open exchange of research results to move forward in their given disciplines. Export controls, however, block open access to certain information and materials considered to be important to national security. 3 Finding a balance between don t touch the protected data and fostering an open research environment is a challenge for today s research enterprises. Overview U.S. export controls provide protection for domestic technologies in both commercial and military settings. They touch a wide variety of U.S. interests: protecting U.S. national security, preventing terrorism and other illicit activities like drug trafficking, supporting nuclear nonproliferation, fulfilling obligations to our allies, and advancing U.S. foreign policy and economic goals. 4 But whatever the policy reasons behind the law, application of the regulations is largely the same. The transfer of controlled technology, information, equipment, software or services to a foreign person in the U.S. or abroad by any means (e.g., actual shipment outside the U.S., visual inspection in or outside the U.S., or written or oral disclosure) must comply with the regulations. 5 For all items originating in the U.S., federal jurisdiction over exports follows the item worldwide, regardless of any transfers outside the country. 6 Fortunately for most academic and other clinical research settings, export controls exclude technology in the public domain and therefore do not affect such work. However, exports of biological and chemical warfare agents, military and most highly technical or specialized items (such as anthrax spores, sarin gas, supercomputers, or mass spectrometers), as well as any associated technology, may require U.S. export authorization (either a license or an applicable exemption). 7 Also, it is critical to keep the related U.S. trade sanctions system in mind because providing financing, commodities and services to countries that directly or indirectly, pose the greatest security or foreign policy threats is controlled as well. 8 U.S. Export Controls While many U.S. federal agencies touch on export control regulations, three agencies are primarily involved: The U.S. Department of State s Office of Defense Trade Controls (DDTC) regulates munitions exports through the International Traffic in Arms Regulations (ITAR). 9

2 The U.S. Department of Commerce s Bureau of Industry and Security (BIS) regulates dual-use items, i.e., those with a primarily civilian purpose, through the Export Administration Regulations (EAR). 10 The U.S. Department of the Treasury manages economic and trade sanctions through various restrictions on transfers to certain end-users (countries and/or individuals) through its Office of Foreign Assets Control (OFAC). 11 ITAR is a strict regulatory regime with the purpose of ensuring national security. 12 The DDTC does not typically consider commercial or research objectives when decisions are made about controls under these regulations. ITAR covers both offensive and defensive military items and regulates goods and technology designed for a military setting (e.g., tanks, fighter aircraft, and nerve agent defensive equipment). It also includes most spacerelated technology, due to its application to missile technology. Services are controlled and defined as furnishing assistance, such as design, engineering and use of defense articles. ITAR also covers technical data related to defense articles and services. The Commerce Department certainly has an interest in national security, but its use of EAR takes into consideration the nation s economic goals. EAR 13 therefore covers dual-use items or materials designed for commercial purposes, even if the items also have military application (e.g., computers, pathogens and civilian aircraft). EAR regulates both the items and the technological data used to create the items. Technology is defined as information beyond basic and general marketing materials on use, development or production of controlled items or materials. Dual-use items can be controlled under either ITAR or EAR; the technology behind the item determines which regulations provide control. Items that are primarily used by the military are controlled under ITAR. Dual-use items that are primarily used by civilians are controlled under EAR. If a company produces two versions of a product, e.g., a GPS unit, the version containing military-grade technology would be controlled under ITAR and the civilian version controlled under EAR, as the technology would be of a lower level. Items that may have no obvious military use may, in fact, be regulated by EAR. For example, technology to produce fine aerosols for pulmonary inhalers might also be used to produce mists for chemical and biological warfare. It is thus important for someone at the research institution to ask whether such technology might create a plausible military risk and should thus be controlled. The OFAC 14 sanctions program focuses on the end-user or country, rather than the technology. It may prohibit export of specific types of items or enforce blanket prohibitions on most or all trade with certain countries, such as Iran and Cuba. Sanctions may consist of limitations on trade in certain areas within countries or with certain actors (e.g., terrorists and drug traffickers). OFAC prohibits payments to nationals of sanctioned countries and to entities designated as terrorist-supporting. Such end-user-based restrictions are not limited to the OFAC; some end-user-based prohibitions also appear in ITAR and EAR. Therefore, it is important to know not only what items and technology you plan to work with, but also with whom and where. The old journalist s creed of Who, What, When, Where, Why and How is a great tool when analyzing a research project for possible export restrictions. Deemed Exports 15 In the realm of export control regulations, it is important to understand the government s use of the term export. An export means an actual shipment or transmission of commodities, software or technology out of the United States. 16 However, do not think that that export controls do not apply just because something is not shipped in a box. Export controls apply to the transfer of technology behind a physical item just as they do to the 2

3 actual item itself. The transfer of controlled technical information by any method to a foreign national in the U.S. is deemed to be an export to that individual s country of citizenship. Transfers of controlled technical information to a foreign national by a U.S. person while in a foreign country are simply considered exports. Depending on the technology and the country involved, such transfers may require a license. Methods of disclosure include, but are not limited to, mail, fax, telephone conversation, message, computer data disclosure, face-to-face discussion, training sessions, or tours that involve visual inspections. People with permanent resident status (e.g., green card holders) have the same right to controlled information as U.S. citizens, so the deemed export rules allow transfers of technical information to them while they are in the U.S., but they are then subject to the same export controls as any other U.S. person. Many post-doctoral appointees and graduate students have non-immigrant visas, so an export control license may be required for them. Do Export Controls Apply to Clinical Research? Now that we know a little bit about the structure and policy reasoning behind export controls, we can ask how such regulations affect the activities of clinical researchers. Understanding the nature of the research environment is important. It does not matter that a research institution is academic or non-profit. What matters are the products it produces. The products of clinical research are data, information and knowledge, all of which are potentially covered by export controls. Sharing information is a vital part of scientific process, so export controls may cause bumps in the journey. Most clinical research is obviously not subject to export controls. Treatments for diabetes, asthma, cancer and most other diseases and medical conditions do not have plausible military applications. Research projects on the treatment, diagnosis and prevention of transmissible, serious and quick-acting diseases are more likely to be subject to controls. 17 Common sense and some imagination is required to identify research projects that may be subject to export controls. Public Domain Information and Fundamental Research 18 The State Department formally announced that it does not regulate, never has regulated, and does not intend to regulate fundamental research. 19 Fundamental research generates a type of public domain information. According to EAR and ITAR, public domain information is already published or will be published; arises during, or results from fundamental research; is educational; or is included in certain patent applications. 20 In the context of clinical research at research institutions, any restriction, such as requiring sponsor approval prior to publication, prevents use of the public domain exception. Under ITAR and EAR, the conduct, products and results of public domain research in science and engineering whether basic or applied should be unfettered by access or dissemination restrictions. 21 Research information subject to access, dissemination or participation restrictions does not qualify as fundamental research. Participation, access and dissemination must be open in a given research project or export controls may apply. Problematic restrictions may take the form of pre-publication approval requirements; U.S.- citizen-only meetings; classified, proprietary or otherwise secret work; or national security controls. Limited pre-publication reviews (e.g., for patent or proprietary data) are permissible, so long as the intent is to publish without unreasonable delays. Acceptance of participation, dissemination or access restrictions sought by the government or other sponsor may destroy a university s or research institute s ability to characterize its work in a project as fundamental research, i.e., not public domain information. 3

4 Why, again, is this a bad thing? If research is not considered fundamental, some researchers may not be admitted to conferences and seminars; presentation of results or discussions of projects may be limited to audiences that exclude foreign nationals; or presentations at international conferences without a government-issued license may be precluded. Also, prohibition of the export of technical data to a foreign national, regardless of whether the foreign national is in the U.S. or abroad, would effectively limit the freedom to publish and talk about research. Restrictions on access to information by foreign nationals (including faculty, students and post-docs) could prohibit foreign nationals from working on projects. Restrictions on publications of research results could impose time delays for review and approval. Compliance While it is obvious that restricting academic research by frustrating the publication and dissemination of research results is problematic, it is still a bit difficult to understand just what types of research might be considered export-controlled. A good example for the life sciences community is in the area of biological agents, pathogens and toxins. Given the expansive nature of research in this area, these types of materials can be controlled by either EAR or ITAR. 22 Which one applies depends on the technology involved and the nature of the work in the project. A seemingly innocent study on a vaccine may also have military implications. Any U.S. research activity that is directly or indirectly related to the design, development, production, stockpiling or use of a biological weapon will always require an export license, without exception. 23 Technology required for the development, production or disposal of export-controlled pathogens, toxins and microbiological materials is also controlled, including training on the use of equipment necessary to dispose of such items. However, oddly enough, technology for the use of export-controlled pathogens, toxins and microbiological materials is not currently subject to deemed export rules. This distinction is important because it means that researchers may be able to share such information with foreign nationals in the U.S.; however, export of the information could be restricted. Additionally, internationally based research activities could be affected. International activities are impacted not only by EAR and ITAR, but also the sanctions programs administered by OFAC. Travel to conduct research or provide technical assistance in sanctioned countries, such as the Sudan, might require export licenses or the application of narrow exceptions. Simple business-related travel may be eligible for an exception, but larger projects or service arrangements in sanctioned countries may require licensing for equipment regularly used in the U.S., such as a laptop or satellite telephone. Navigating the waters of export controls can be complicated. Good communication with your research administration and, in particular, your export compliance staff, is vital. The terms of a government contract may limit access to a project s information by foreign nationals for national security reasons. Determining whether a restriction is a specific access and dissemination control is important before assuming that a foreign national will be able to participate in a government-funded project. Corporate contracts may also limit access by foreign nationals. It is important to watch for flow through clauses from corporate sponsors when responding to a proposed sub-contract of a government contract. Following the 9/11 attacks, government agencies were criticized by oversight offices for failing to enforce deemed-export rules. As a result, scrutiny of exports increased and application of export control regulations became more stringent. Acting under a government grant is no defense. For example, Los Alamos and Lawrence Livermore National Labs were investigated and ultimately agreed to enhanced compliance commitments for their roles in providing a computer and other items to a Russian lab to help control Russian nuclear material under a U.S. government research program. 24 4

5 If an industry-sponsored research project might be in an area subject to export controls, it is important to carefully read the clinical trial agreement and any material transfer agreements to avoid restrictions on information dissemination that make the project nonpublic-domain research and thus may trigger export controls. Conclusion The U.S. export control system is necessary for the security and economic prosperity of our nation. Academic and other clinical research supports both these objectives but must be conducted in compliance with the laws and regulations. Government agencies are serious about export enforcement, with penalties reaching up to $1,000,000 per violation and up to 10 years imprisonment. 25 Headlines about supporting terrorism or sanctioned countries would not be welcome. Compliance with export controls can be difficult for research organizations because they conflict with the fundamental goals of creating and sharing knowledge. Nevertheless, it is possible to find the balance so research institutions can continue their role in advancing public welfare. Notes & References 1. Night at the Museum: Battle of the Smithsonian, Twentieth Century Fox Film Corporation, Id. 3. Export Administration Regulations 15 CFR 730 et.seq.; International Traffic in Arms Regulations 22 CFR 120 et.seq; Office of Foreign Assets Control 31 CFR 500 et.seq CRF 734; 22 CFR Id. 6. Id CFR 120 et.seq CFR 500 et.seq. 9. Id. At CFR 130 et.seq. 11. Id. At Id. At Id. At Id. At Id. At CFR 772; 22 CFR IATA has published a list of infectious substances at df.pdf CFR 734.8; 22 CFR Fed. Reg , 29 March CFR 734.3(b)(3); 15 CFR Id. At EAR Category I; ITAR Category XIV 23. Required technology is that which is peculiarly responsible for achieving the development, production or disposal or the pathogens, toxins and materials. Id. At 16. 5

6 24. On 26 June 2000, the Commerce Department announced agreements with Los Alamos National Laboratory (LANL) and Lawrence Livermore National Laboratory (LLNL) concerning alleged shipments of various commodities without the proper Department of Commerce authorizations CFR 764; 22 CFR 127 Author Jennifer P. May, J.D. is Chief, Export Controls Compliance at the University of Missouri. Contact her at or 6