2
Perspectives on Recent Developments and Current Implementation of International Traffic in Arms Regulations

The first workshop session provided an opportunity for all participants to hear perspectives of a variety of stakeholders—universities, government agencies, and Congress—regarding the status of the implementation of the International Traffic in Arms Regulations (ITAR) and thereby provided a context for more focused discussions. Planning Committee Chair Norman P. Neureiter and Session Moderator Spence M. (Sam) Armstrong opened the session with comments about the importance of the workshop topic. There is widespread agreement about the national-security importance of controlling the export of munitions and munitions technology, but as subsequent speakers often repeated, the implementation of such controls via ITAR has had many unintended consequences and created serious problems and concerns. Those concerns have prompted many to call for a careful assessment of ITAR from a cost-benefit perspective.

The first speaker was Claude R. Canizares (vice president for research, associate provost, and professor at the Massachusetts Institute of Technology). He summarized key aspects of a meeting between university representatives and Department of State officials in November 2003 that was intended to open a discussion of issues involving universities, fundamental research, and the Arms Export Control Act. Dr. Canizares believes that State Department officials recognize that the impact of ITAR on universities is important and that universities have various degrees of expertise for dealing with ITAR, that the State Department does not seek to control fundamental research, that the State Department believed that the process of issuing licenses had been expedited, and that the State Department wanted to find ways to communicate with universities. From the university perspective, Dr. Canizares noted that participants at the 2003 meeting had emphasized that universities play a major beneficial role in space research and are inherently open and increasingly global. However, for a number of reasons, ITAR is ill suited to the realities of university research. Dr. Canizares said that the earlier meeting highlighted two specific problems: the application of the fundamental-research exclusion from ITAR controls was ambiguous in several ways, and interactions between universities and industry and federal laboratories posed a number of ITAR compliance problems.

Dr. Canizares observed that the 2003 meeting succeeded in opening up communication channels and identifying specific follow-up actions. He did not believe that the latter were ever finalized, and follow-up had been difficult partly because of changes in personnel at the State Department, the press of other external events, and reactions to General Accounting Office (now Government Accountability Office [GAO]) and agency inspector-general reviews of the implementation of ITAR.

Anne K. Ganzer (director of defense trade controls policy in the State Department Directorate of Defense Trade Controls [DDTC]) provided a perspective from the State Department. She emphasized that in spite of concerns that



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2 Perspectives on Recent Developments and Current Implementation of International Traffic in Arms Regulations The first workshop session provided an opportunity for all participants to hear perspectives of a variety of stakeholders—universities, government agencies, and Congress—regarding the status of the implementation of the International Traffic in Arms Regulations (ITAR) and thereby provided a context for more focused discussions. Planning Committee Chair Norman P. Neureiter and Session Moderator Spence M. (Sam) Armstrong opened the session with comments about the importance of the workshop topic. There is widespread agreement about the national-security importance of controlling the export of munitions and munitions technology, but as subsequent speakers often repeated, the implementation of such controls via ITAR has had many unintended consequences and created serious problems and concerns. Those concerns have prompted many to call for a careful assessment of ITAR from a cost-benefit perspective. The first speaker was Claude R. Canizares (vice president for research, associate provost, and professor at the Massachusetts Institute of Technology). He summarized key aspects of a meeting between university representatives and Department of State officials in November 2003 that was intended to open a discussion of issues involving universities, fundamental research, and the Arms Export Control Act. Dr. Canizares believes that State Department officials recognize that the impact of ITAR on universities is important and that universities have various degrees of expertise for dealing with ITAR, that the State Department does not seek to control fundamental research, that the State Department believed that the process of issuing licenses had been expedited, and that the State Department wanted to find ways to communicate with universities. From the university perspective, Dr. Canizares noted that participants at the 2003 meeting had emphasized that universities play a major beneficial role in space research and are inherently open and increasingly global. However, for a number of reasons, ITAR is ill suited to the realities of university research. Dr. Canizares said that the earlier meeting highlighted two specific problems: the application of the fundamental-research exclusion from ITAR controls was ambiguous in several ways, and interactions between universities and industry and federal laboratories posed a number of ITAR compliance problems. Dr. Canizares observed that the 2003 meeting succeeded in opening up communication channels and iden- tifying specific follow-up actions. He did not believe that the latter were ever finalized, and follow-up had been difficult partly because of changes in personnel at the State Department, the press of other external events, and reactions to General Accounting Office (now Government Accountability Office [GAO]) and agency inspector- general reviews of the implementation of ITAR. Anne K. Ganzer (director of defense trade controls policy in the State Department Directorate of Defense Trade Controls [DDTC]) provided a perspective from the State Department. She emphasized that in spite of concerns that 

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 PERSPECTIVES ON RECENT DEVELOPMENTS AND CURRENT IMPLEMENTATION OF ITAR have been expressed about aspects of ITAR, everyone must recognize that it reflects action by Congress in response to the Cox Committee report1 in 1999 and that the inclusion of space technology in the U.S. Munitions List is the law. Consequently, not much has changed since the 2003 meeting that Dr. Canizares summarized; although there have been discussions of revisions in a few items,2 one should not expect sweeping changes in the near future. Ms. Ganzer noted that DDTC is eager to reach out more to the university community, and she cited three examples of how that outreach could be accomplished. First, DDTC partnered with Johns Hopkins University (JHU) and the Federal Demonstration Partnership to hold an information-exchange conference with university representatives in May 2007, and she hopes that such a cosponsored conference will become an annual event; to that end, DDTC is interested in finding a cosponsor for the 2008 conference to provide the kinds of assistance that JHU did in 2007. Second, DDTC’s Defense Trade Advisory Group3 (DTAG) comprises outside persons who provide the Bureau of Political-Military Affairs with a formal channel for regular consultation and coordination with U.S. private-sector defense exporters and defense trade specialists on issues involving U.S. laws, policies, and regulations for munitions export. Ms. Ganzer noted that DTAG is dominated by industry and has no university representatives. She invited the university community to provide members who can lend university perspectives to DTAG activities. Third, DDTC has always had a university-based science fellow serving in the office, and she looked forward to continuing that practice. A workshop participant asked whether an export license is needed when an employee of a company or other entity wishes to place information in the public domain and thereby satisfy a requirement that excludes funda- mental research from export controls. Ms. Ganzer said that the State Department could not license the placement of something in the public domain and that the pertinent question is whether information intended for publication is eligible to be placed in the public domain, that is, is not linked to information with prior controls or in some other way restricted. John F. Hall (director of the Export Control and Interagency Liaison Division of the National Aeronautics and Space Administration [NASA]) summarized NASA’s experience with ITAR and challenges for the future. He indicated that NASA’s export-control policy is centralized in a single office at NASA headquarters and implemented agencywide by 21 officials who are in place at each NASA center. The agency uses an active training program, standardized documentation requirements, and internal and independent external audits to ensure export-control compliance. Mr. Hall noted that NASA has enjoyed a long, cooperative, and productive relationship with the State Department, the Department of Defense (DOD), and the Department of Commerce (DOC), the results of which included prompt turnaround of critical NASA licenses when requested. However, Mr. Hall described the following important challenges that NASA still faces: • Foreign governments’ reluctance to sign required technical-assistance agreements (TAAs), especially when NASA already has concluded government-to-government agreements with those international partners for the activities covered by the TAAs. • Problematic TAA provisos or conditions regarding resolution of space-mission anomalies, involvement of persons who have third-country or dual nationality, and nondisclosure agreements. • Delays in processing NASA contractors’ licenses and TAAs, especially when mission-critical or safety issues arise or when TAA amendments are required, even for simple changes in programs with major partners, such as the European Space Agency (ESA) and the Canadian Space Agency (CSA). Mr. Hall also offered several ideas for potential solutions to the problems above. First, he suggested that there be a tightly circumscribed NASA ITAR exemption, similar to DOD’s foreign military sales exemption, that will ensure that DDTC is regularly apprised of any contractor exports or services authorized or directed by NASA 1U.S. House of Representatives, U.S. National Security and Military/Commercial Concerns with the People’s Republic of China, Select Committee on U.S. National Security and Military/Commercial Concerns with the People’s Republic of China, U.S. Government Printing Office, Washington, D.C., January 1999. 2One such change that is now in the works is an increase in the radiation-tolerance threshold at which radiation-hardened microchips would be subject to ITAR export licensing. 3See http://www.pmddtc.state.gov/dtag_index.htm.

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0 SPACE SCIENCE AND THE INTERNATIONAL TRAFFIC IN ARMS REGULATIONS and that adheres to specific criteria that limit the types of activities covered and the parties that can be involved. Second, he suggested that the government could eliminate unduly restrictive provisos in TAAs for U.S. government contractors implementing NASA international programs. He argued that there is a fundamental difference between supporting a government cooperative activity and making a foreign sale of controlled goods or technology. Finally, he noted that DDTC, NASA, ESA, and CSA had been exploring approaches to provide limited relief and that DDTC had also agreed to revise some provisos for resolution of anomalies on a case-by-case resubmission basis. In answer to a question, Mr. Hall indicated that all NASA contractors and grantees are permitted to publish their research results after review by NASA. He pointed out that it is NASA’s mandate to provide “the widest practicable and appropriate dissemination of information concerning its activities and the results thereof.” Bernard Kritzer (director of the DOC Office of National Security and Technology Transfer Controls) sum- marized activities of DOC’s Deemed Export Advisory Committee, which was established in 2006 to address the complex issues surrounding technology transfers involving the release of controlled dual-use technology to foreign nationals in the United States. The committee has traveled throughout the country, visited national laboratories and major research universities, and heard from representatives of leading U.S. high-technology companies and industry associations on how current deemed-export policy affects them and how it can be improved. He indicated that the committee’s report was due to go to the secretary of commerce in late 2007 and to be made publicly available soon after.4 Mr. Kritzer noted that the challenge has been about how to find the tipping point between America’s need for vigilant security and its equally great desire to sustain and enhance scientific and commercial innovation. He also noted that his office had been evaluating the health of the U.S. space industry; preliminary conclusions are that export controls have slowed the increase of U.S. competitiveness in the international marketplace. Robie Samanta-Roy (assistant director for space and aeronautics in the Office of Science and Technology Policy [OSTP]), provided a perspective from the Executive Office of the President. He noted that OSTP has been interested in the impact of ITAR on the space community but added that there is a distinct lack of quantification of that impact. He made the point that there needs to be a balance among the goals of national security, foreign policy, economic security, and academic freedom but that to ensure the balance there has to be a quantification of the issues. He noted several opportunities for improving DDTC’s capacity to respond to ITAR license requests, all of which can be accomplished without legislative change, including • Providing adequate resources for the office. • Using modern information technology to speed processing and streamline the process. • Adopting best practices from other agencies, such as DOD. • Use of detailees from DOD and NASA. • Explaining DDTC’s processes to outside entities more clearly. • Regularly reviewing the items on the Military Critical Technologies List to remove items that are state of the art but globally available commercially, as opposed to items that need to be protected. Dr. Samanta-Roy offered two observations about the future: that there is no appetite for fundamental reform of ITAR either in the administration or in Congress, and that because ITAR is prescribed by law, any changes will have to come from Congress. John P. Hutton (director of acquisition and sourcing management at GAO) noted that ensuring the effective protection of technologies critical to U.S. national interests has recently been added to GAO’s list of federal- government high-risk areas,5 and he summarized a recent GAO review of export controls at U.S. universities. GAO found that the U.S. export-control system places the onus on universities and other exporters to under- stand and comply with export-control regulations. However, universities reported to GAO that training provided by the DOC and the State Department is too general or focuses on industry issues, rather than those related to 4The committee’s report, The Deemed Export Rule in the Era of Globalization, was delivered to the Department of Commerce on Decem- ber 20, 2007. 5GAO defines high-risk areas, in part, as “areas associated with broad-based transformations needed to achieve greater economy, efficiency, effectiveness, accountability, and sustainability of selected key government programs and operations.” See GAO, High-Risk Series:An Update, GAO-07-310, GAO, Washington, D.C., January 2007.

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 PERSPECTIVES ON RECENT DEVELOPMENTS AND CURRENT IMPLEMENTATION OF ITAR universities; that Web sites are unclear or provide only general introductions to topics; and that help desks can provide useful information, but getting immediate help can be difficult. He said that the State Department and DOC officials had indicated that their top priority is to process license applications—the vast majority of which are from industry—and that effort left few resources for guidance and outreach to exporters. GAO noted agencies’ concerns that export-control regulations and guidance may be misinterpreted. GAO made two recommendations to improve federal oversight of export-controlled information at universities. First, the agencies should strategically assess potential vulnerabilities in the conduct and publication of academic research by becoming more knowledgeable about research being conducted on university campuses and, in con- sultation with other agencies, make use of available information on technology development and foreign-student populations to assess the extent to which research at universities may be subject to export controls. Second, on the basis of the strategic assessment, the agencies should improve interagency coordination, conduct additional outreach, and improve guidance to ensure that universities understand when to apply export controls. David Fite (senior member of the professional staff of the House Committee on Foreign Affairs) provided a congressional perspective. He noted that the Committee on Foreign Affairs had not focused on the issue of ITAR’s impacts on science and is unfamiliar with them. He encouraged members of the space research community to talk to the relevant congressional committees about this issue. He added that it is important for the space research community to distinguish facts from “hysteria,” because proposals for regulatory changes need to be substantiated by specific arguments. Mr. Fite said that in general members of Congress are supportive of science and technology and of the impor- tance of U.S. progress in space research. However, he cautioned that if proposed actions were seen as having any potential to jeopardize national security, national security would always prevail. In the post-Cox-Committee-report era, there is great consciousness of Chinese espionage efforts to gain technology from the United States, so leg- islative actions to expedite technology transfer abroad could be viewed by members of Congress as unsafe votes. In the post-9/11 environment, anything that can be represented, or even misrepresented, as abetting terrorism is a tough vote for members. In concluding his assessment of the near-term outlook, Mr. Fite noted that although there probably is no longer time for a reasoned debate on ITAR reform in the current administration, the executive branch has a great deal of authority to make regulatory changes without legislation. Robert Hardy (director of contracts and intellectual-property management at the Council on Governmental Relations) concluded the session with an overview of current export-control issues of concern to universities. He indicated that ITAR is outside the scope of most university activities, but when ITAR is applicable, it may affect • The ability of foreign students or researchers to participate in research involving controlled technology. • The ability to provide training for foreign nationals where access to controlled technical data is required. • The ability to send controlled equipment to foreign countries. • Disclosures for patent applications and licenses when controlled technology is involved. He added that universities do not necessarily all share the same views or concerns, nor are they affected to the same extent by ITAR (that is, the ones that do substantial space or defense research are affected more heavily). Mr. Hardy said that ITAR’s treatment of the limitations on the definition of “fundamental research” is criti- cally important to universities because fundamental research, as defined in the regulations, is not subject to ITAR controls. Mr. Hardy noted that the fundamental-research exclusion (FRE) from ITAR restrictions is invalidated if a university accepts any award or agreement clause that forbids or requires approval of the participation of foreign nationals, gives the sponsor a right to approve publications resulting from the research, 6 or otherwise operates to restrict participation in research or access to and disclosure of research results (for example, through a nondisclosure agreement with an industry sponsor). One particularly troublesome publication-restriction problem 6The presumption is that a short (30-90 days) period for prepublication review (not approval) for patent protection or to permit a sponsor to remove inadvertently included sponsor-proprietary information does not destroy exclusion.

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 SPACE SCIENCE AND THE INTERNATIONAL TRAFFIC IN ARMS REGULATIONS for universities is related to inclusion of the Defense Federal Acquisition Regulation Supplement 252.204-7000 clause in contracts with universities.7 Mr. Hardy said that universities seek to protect their coverage under the FRE by eliminating whenever pos- sible any contractual clauses that destroy the ability to claim the exclusion. When that is not possible and export licenses are needed, the process may require substantial faculty and administration staff time and effort. The process of obtaining a license can take months and may result in limitations or conditions that are unacceptable to the university. Another key issue for universities is the potential government distinction between the conduct and the products of research. National Security Decision Directive (NSDD) 189 provides that “no restriction may be placed upon the conduct [emphasis added] or reporting of federally funded fundamental research that has not received national security classification, except as provided in applicable U.S. statutes.” 8 DOC has reiterated the distinction between products of fundamental research and conduct of fundamental research; conduct is subject to regulation where access to controlled technical data is required. The university community believes that the DOC interpretation of the scope of the FRE is inconsistent with NSDD 189 and has resulted in considerable confusion at the operating level. At the State Department, DDTC has not expressed a view in the debate. A third key issue cited by Mr. Hardy revolves around ambiguities in an ITAR license exemption for university export of scientific, research, or experimental satellite components fabricated for fundamental-research purposes. 9 Such exports must be to universities or research centers in NATO countries (and centers of some other U.S. allies), and information about the articles must be in the public domain. However, license requirements to export exempted public-domain information beyond the specified recipients appear to conflict with other ITAR provi- sions and impose special conditions on satellite and space-based research at universities. Because of ambiguity, universities tend to err on the side of caution and apply for licenses for any exports of technology or information related to satellite research. Furthermore, universities may be reluctant to use this exemption also because of the need to pass U.S. access restrictions through to foreign university partners. Mr. Hardy questioned whether this is good public policy. A fourth key problem area for universities pertains to the ITAR defense-services concept and related need for TAAs. Implementation of the TAA requirements is often burdensome (see Chapter 4) and the requirements unclear. Mr. Hardy noted that ITAR implies that providing foreign nationals with public-domain information may require a license or a TAA if providing the information falls within the definition of performing a defense service (furnishing of assistance in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing, or use of a defense article). He posed a question about the possibility that such an activity would occur in the course of fundamental research, and he noted that as a consequence of the ambiguity universities have tended to be cautious in interpreting the requirement. Mr. Hardy concluded by commenting that universities now are devoting much time and effort to ITAR (and overall export-control) compliance, especially because of the wide scope of ITAR-related issues that may arise and the lack of clarity about them. The chapters that follow in this report summarize workshop discussions of those and related matters as they apply to space-research activities at universities, national laboratories, and industry. 7This section of the Defense Federal Acquisition Regulation Supplement is often passed on in contracts from federal sponsors of research at universities. It restricts the release of unclassified information without prior government approval even when the information is about the results of fundamental research. 8National Security Division Directive 189, “National Policy on the Transfer of Scientific, Technical and Engineering Information,” Septem- ber 21, 1985, reaffirmed on November 1, 2001, Washington, D.C. 9U.S. Congress, International Traffic in Arms Regulations, Section 123.16(b)(10), April 1, 2007, Washington, D.C.