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7

Impediments in Carrying Out Approved and Funded Collaborative Projects

Government agencies, universities, research institutions, private-sector companies, and individual scientists in the United States and Russia have derived many benefits for both countries and for individual participants through bioengagement projects. At the same time, however, these institutions and individuals have often encountered operational impediments that have complicated implementation of activities after project approval at appropriate levels of the governments, as well as by the leaders of the institutions that are involved.

OVERVIEW OF DIFFICULTIES

Issues surrounding visas, taxes, customs duties, money transfers, financial accountability, access to geographic areas and facilities, and transfer of biological samples, for example, persist despite repeated efforts by the governments to resolve difficulties. At times, the two governments have taken the initiative to resolve problems that have arisen during implementation of projects. But more often, the institutions responsible for program implementation and the individual project participants have assumed the responsibility for finding ways to overcome barriers.

Most difficulties hindering bioengagement also permeate cooperation in other fields of science. In particular, government agencies in the two countries have often singled out proposed “science” exchanges for special visa and other types of reviews, resulting in delays and complications. A common reason for such reviews of applications from participants in science programs is the possible linkage of proposed activities with export-control regulations or with other security concerns.



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7 Impediments in Carrying Out Approved and Funded Collaborative Projects Government agencies, universities, research institutions, private-sector com- panies, and individual scientists in the United States and Russia have derived many benefits for both countries and for individual participants through bioen- gagement projects. At the same time, however, these institutions and individuals have often encountered operational impediments that have complicated imple- mentation of activities after project approval at appropriate levels of the govern- ments, as well as by the leaders of the institutions that are involved. OVERVIEW OF DIFFICULTIES Issues surrounding visas, taxes, customs duties, money transfers, financial accountability, access to geographic areas and facilities, and transfer of biologi- cal samples, for example, persist despite repeated efforts by the governments to resolve difficulties. At times, the two governments have taken the initiative to resolve problems that have arisen during implementation of projects. But more often, the institutions responsible for program implementation and the individual project participants have assumed the responsibility for finding ways to overcome barriers. Most difficulties hindering bioengagement also permeate cooperation in other fields of science. In particular, government agencies in the two countries have often singled out proposed “science” exchanges for special visa and other types of reviews, resulting in delays and complications. A common reason for such reviews of applications from participants in science programs is the pos- sible linkage of proposed activities with export-control regulations or with other security concerns. 91

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92 U.S.-RUSSIAN RELATIONSHIP IN BIOLOGICAL SCIENCE AND BIOTECHNOLOGY Generally, however, working together in science has broad appeal in both countries. Joint scientific efforts, and of course joint successes, frequently engen- der strong support from the general public as well as the governments. Devel- opment and implementation of science programs are usually less controversial politically than exchanges in some other areas. Also, programs that provide for large financial transactions across international borders are usually scrutinized carefully by authorities in the two countries. Difficulties that arise during implementation of cooperative science projects depend in large measure on the extent and depth of the preparatory steps to carry out different types of activities. Such advanced planning is particularly important if the activities involve collaborators at institutions that have little experience in receiving foreign visitors. Also, arranging visits to geographical areas that are not on traditional itineraries of foreign visitors may be difficult for inexperienced hosts. Usually, activities explicitly endorsed in documents issued by appropriate government agencies in the two countries before they begin encounter fewer administrative delays than activities that are arranged without such official sup- port. But sometimes difficulties even arise in carrying out projects that are consid- ered “priority” efforts by the sponsoring government agencies. Nongovernmental programs involving access to sensitive information or facilities that are not com- pletely open are particularly susceptible to unanticipated disruptions by local officials who are unaware of itineraries approved in Moscow or Washington. For many years, the two governments have relied on one or more intergov- ernmental working groups to encourage removal of unwarranted impediments to cooperation. The working group that addresses most of the “routine” problems inhibiting cooperation in the life sciences works within the framework of the Agreement on Science and Technology Cooperation. The focus has been pri- marily on impediments that delay government-sponsored activities. However, at times the working group has considered issues that have significant effects on the interests of the private sector as well, with the exception of trade relations, which are usually handled in other forums. This chapter highlights several issues that have been of interest to the inter- governmental working group. These issues are (a) delays in issuing visas along with travel and time limitations associated with Russian visas, (b) customs duties levied on imports of scientific equipment, (c) tax status of international and foreign research organizations operating in Russia, and (d) delays in obtaining authorization for marine scientific research. While the working group has been an important focal point for addressing these topics, the issues are also discussed in other venues, such as meetings between embassy representatives and officials of the Department of State (in Washington) or the Foreign Ministry (in Moscow). The chapter also considers (a) ownership of intellectual property (IP) that is developed through cooperative activities, and protection of existing IP that is exposed during collaboration; (b) access by participants in joint projects from one

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IMPEDIMENTS IN APPROVED AND FUNDED COLLABORATIVE PROJECTS 93 country to sensitive facilities in the other country; and (c) exchanges of biological material, including strains of pathogens. Before addressing the foregoing issues, the importance of having access to reliable funding for carrying out both planning activities and implementation activities should be underlined. Without funding for cooperative activities, there is little motivation to be concerned about impediments that seem abstract. VISAS Delays in issuing visas and the short lengths of stay that are often permit- ted by visas have for many years been barriers to more extensive U.S.-Russian cooperation in scientific research and in other science-oriented activities. In July 2012, agreement was reached on a new bilateral visa agreement between the two countries that then entered into effect in September 2012. The agreement provides for multiple-entry visas with a validity of 36 months for most business and tour- ist visitors. Official visitors are to have 1-year multiple-entry visas. If long-term visas are issued for cooperative science programs, they should resolve a number of the visa problems associated with bioengagement. Of course, visa officials may decide that 3-year visas are not appropriate for certain activities, and there undoubtedly will be continuing issues surrounding the issuance of visas. One visa-related factor that the governments consider is the linkage of biology to terrorism and proliferation concerns. According to reports in 2012 from Russian scientists who applied for American visas, visa applications that include the words “molecular biology,” “virology,” or “immunology” may be subjected to special security screening in Washington, with attendant delays. If true, U.S. authorities have taken unnecessarily extreme measures that inhibit bioengagement. Until 2012, the limited time allowed in Russia to a visitor who was conduct- ing research (a maximum of 90 days during a single 180-day period) hindered efforts of some researchers in completing their activities on schedule. Also, clarification of procedures for American scientists to obtain permission to conduct research near international borders, particularly in outlying regions of Russia that have different access requirements from region to region, would have helped foster exchanges when travel to certain geographic landscapes was important. It is too early to know whether the new visa regime will significantly reduce such problems. As to U.S. policies and practices, delays in issuance of visas have at times prevented Russian researchers arriving on schedule for international conferences and other events. By 2012, the time required for issuing U.S. visas to Russian scientists had been reduced, on average, to about 3 weeks. But in some cases, the delays were unacceptably long. The process is often burdensome for Russian sci- entists who do not live in Moscow, St. Petersburg, Yekaterinburg, or Vladivostok,

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94 U.S.-RUSSIAN RELATIONSHIP IN BIOLOGICAL SCIENCE AND BIOTECHNOLOGY where U.S. visas are issued. The travel from Russian towns to far-away U.S. consulates to apply for or to pick up visas may be difficult and expensive, and last-minute arrangements to pick up visas sometimes are not possible. Also, reli- able and expedited delivery services are not available in many towns of Russia. As is well known, each visa applicant must take personal responsibility for allowing sufficient lead time for issuance of the visa, in accordance with require- ments set forth by each government. While both governments continue efforts to expedite issuance of visas, they should also give attention to ensuring that poten- tial visa applicants are adequately informed as to the time needed for processing visa applications and as to the status of applications. There have been frequent changes in procedures in recent years, and at any given time, applicants may not be aware of the latest requirements. CUSTOMS DUTIES LEVIED ON SCIENTIFIC EQUIPMENT At present, each side is obligated to “facilitate” imports of equipment to be used in many agreed bilateral science projects. But “facilitate” apparently does not mean that the customs duties must be waived. In short, the payment of cus- toms duties has been and remains a difficult issue in carrying out projects within the framework of the Agreement on Science and Technology Cooperation. For many years, the International Science and Technology Center (ISTC) has facilitated the entry into Russia of scientific equipment associated with ISTC projects, with the customs fees waived. At times, there have been misunderstand- ings at the Russian port of entry concerning the extent of the authority granted to the ISTC. But in general, ISTC facilitative services have been quite effective. However, the ISTC has retained the titles to the imported equipment that has been financed by ISTC parties and partners. Now, as the ISTC prepares to cease operations in Russia in 2015, tax-free transfers of the titles that the ISTC currently holds to the Russian research centers where the items are located has become a significant issue. Also, since the late 1990s, the Civilian Research and Development Founda- tion (CRDF) has offered a service to expedite imports of scientific equipment into Russia. Customs charges have been a continuing issue. At present these charges cannot be avoided. Also, CRDF charges a modest fee for its facilitative services. It is not surprising that many U.S. and Russian collaborators have relied on the ISTC and CRDF to help with the transfers of scientific equipment. However, with the withdrawal of Russia from the ISTC and uncertainty as to the long-term status of CRDF in Russia, transfer of equipment will undoubtedly be an issue of concern. But if the two countries move toward a new model for cooperation that provides for each side to support its own scientists, transfers of money for equipment, salaries, and other purposes should be less frequent. During the early 2000s, the availability of foreign scientific equipment for sale by Russian importers increased significantly. For foreign-made equipment,

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IMPEDIMENTS IN APPROVED AND FUNDED COLLABORATIVE PROJECTS 95 customs duties are included in the sales prices. The availability of foreign equip- ment in the sales departments of many large Russian companies, together with the maintenance service provided by Russian-based technical representatives of the manufacturers of the equipment, has reduced the need for Russian institutions to arrange their own imports of equipment. They can now buy equipment at sales outlets in Russia. Of course, the prices may be significantly higher than equip- ment imported through the good offices of the ISTC or CRDF. Some advanced technology items are not available in Russia. Often, special imports must be arranged at considerable cost; and as previously noted there is not agreement that obligations to “facilitate” items through customs, means duty-free entry. As a specific example, several scientists associated with the U.S. Fish and Wildlife Service terminated their cooperation with Russian colleagues because it became too time-consuming to obtain permission to work effectively across international borders. A significant problem involved imports of global positioning system devices and satellite tags used in animal migration studies. Some marine mammals and birds of interest that migrate between Alaska and Chukhotka have the potential to spread different types of diseases, such as avian influenza, that could then be transmitted to human populations. TAX STATUS OF U.S. RESEARCH ORGANIZATIONS OPERATING IN RUSSIA In 2009, the Russian government removed all but 12 international and for- eign organizations from the list of organizations entitled to provide tax-free grants to Russian recipients. Most of these 12 (now 13) organizations are U.N. and European regional organizations. The Russian Ministry of Finance was to develop procedures for reinstating many of the other organizations and adding still others to the tax-exempt list on a regular basis, but this has not occurred. The Duma has been considering legislation that would grant additional foreign and international organizations tax-exempt status. This issue affects the activities of U.S. government agencies, such as the Department of Energy, and nongovernmental organizations, such as CRDF, which have been on and off various lists. The intergovernmental working group is attempting to have the Ministry of Finance include on the list a number of U.S. organizations involved in cooperative programs that would receive favorable tax treatment, similar to that accorded to Russian-European scientific cooperation. In summary, tax aspects, along with customs requirements, clearly deserve special attention, including appropriate budgeting for expenditures to meet legal requirements. Legal issues often require expert opinions that should be obtained prior to undertaking joint efforts, so that surprises during implementation are avoided. The governments can play helpful roles in these areas.

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96 U.S.-RUSSIAN RELATIONSHIP IN BIOLOGICAL SCIENCE AND BIOTECHNOLOGY MARINE SCIENTIFIC RESEARCH Both the United States and Russia have research vessels with long-distance cruising capabilities. The United States has consistently been slow in granting permission for Russian vessels to operate close to the U.S. shoreline. At the same time, delayed Russian authorizations can cost the United States up to $40,000 per day of delay in carrying out fisheries-related research near Russian borders. An example provided by the Department of State of the problems with per- mission to enter waters close to Russia is as follows: In 2011, scientists associated with the Russian-U.S. Long-term Census of the Arctic research program on board the Russian-flagged vessel Khromov were pre- vented by the Russian navy from entering Russian territorial waters to retrieve three oceanographic moorings. These moorings had limited battery time. Some of the data will never be retrieved. It is clear that this administrative problem could have been avoided through better communications, and it harmed the car- rying out of a costly Arctic research program that has significant biology-related components. The situation apparently improved in 2012. LEGAL BASIS FOR ACTIVITIES Appropriate documents signed by authorized government officials or institu- tional leaders in both countries are often needed to conduct cooperative scientific activities abroad. These documents may be intergovernmental agreements, mem- oranda of understanding, or simply exchanges of letters. Whatever the format, they are important. And they must have the correct stamps and signatures. Even the best-designed joint activities can be disrupted through lack of appropriate and readily available documentation. INTELLECTUAL PROPERTY RIGHTS Financial benefits to be derived from protecting IP and the procedures for obtaining patent or copyright protection are often poorly understood by inven- tors of technological innovations. Occasionally, IP rights have been a contentious issue in setting the stage for a cooperative activity. At times, patent protection may be critical for successful marketing of products. However, the significance of patent protection may be exaggerated. In Rus- sia, in particular, an inventor may be more interested in having a patent certificate to hang on the wall than using a patent as an incentive for a paying customer to adopt a new discovery. The inventor may have witnessed too many colleagues waste their time searching for customers, although at the same time the inventor would like personal recognition for his or her technical achievement. Nevertheless, the lack of agreement on such protection can inhibit sharing

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IMPEDIMENTS IN APPROVED AND FUNDED COLLABORATIVE PROJECTS 97 of information. Also, such a situation can deny an inventor of a fair share of the income that is received from unconstrained use of information, which should belong to the inventor. This is particularly important when newly developed advanced technologies are integral to the successful completion of collabora- tive projects. Further complicating the situation is distinguishing new techno- logical approaches—approaches that presumably are governed by contractual arrangements—and utilization of old technological discoveries, which presum- ably belong to the institution that had developed the technologies before entering into a contract. More than a decade ago, the U.S. government decided to incorporate a standard IP clause in each relevant agreement signed by the two governments. The idea was to be sure that all parties agreed in advance as to how successful endeavors were to be handled. But the approach throughout the U.S. government is not completely standardized. Agencies have the flexibility to determine in negotiations with foreign partners the ownership aspects of discoveries resulting from a grant or contract that they are prepared to award. Also highlighting differences in approaches, the U.S. Agency for Interna- tional Development (USAID) has used the common foreign assistance practice of granting to recipients of assistance all IP rights for using results of activities that are carried out through joint efforts. This practice reflects the very purpose of USAID. It was established to be an assistance agency, not a promoter of U.S. commercial interests in the first instance. The ISTC has had a different approach. Russian recipients of ISTC funds provided by the United States obtains exclusive IP rights within Russia for technologies that are developed. A U.S. collaborating organization has exclusive IP rights within the United States. The rights in other countries are divided on a case-by-case basis. However, the ISTC also has an exception clause, which permits the donor and recipient to decide for themselves how the rights are to be divided. This exception has often resulted in most, if not all, of the rights for products resulting from U.S. government investments going to collaborating U.S. institutions identified by the U.S. government. Also of importance is the protection of IP belonging to U.S. organizations that is exposed during collaborative activities. The only enforcement mechanism in preventing the unauthorized use of IP belonging to U.S. organizations is the Russian court system, which in principle can resolve complaints of owners of IP who contend that others have used their IP without appropriate compensation. But the courts have little experience in this area, and demonstrating for perhaps the first time that a partner has unfairly used previously patented innovations may not be simple.

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98 U.S.-RUSSIAN RELATIONSHIP IN BIOLOGICAL SCIENCE AND BIOTECHNOLOGY INTERNATIONAL TRANSFER OF FUNDS The international transfer of funds—in the past primarily from the United States to Russia—to support project activities has sometimes been complicated. There may be tax issues, delivery issues, and privacy issues. Of course, the best situation is for each side to cover its own expenses, avoiding the necessity of international fund transfers. However, there may be financial, programmatic, or other reasons for not following this general rule. As previously noted, the ISTC has been an important mechanism in avoiding problems with fund transfers to Russia. CRDF has also been important in this regard. However, some organizations have not used these services—relying on commercial channels or other approaches. They have at times encountered dif- ficulties ranging from (a) lack of preparedness of Russian institutions to accept such transfers in an acceptable manner to (b) misuse of funds due to lack of financial transparency and inadequate accountability. Looking forward, collaborating institutions are increasingly arranging for fund transfers, when necessary, through normal banking channels. This approach will surely help develop U.S.-Russian relationships that are consistent with inter- national practice. SECRECY, CLOSED FACILITIES, AND SENSITIVE INFORMATION In the 1990s, the launching of bilateral programs, particularly those moti- vated by concerns over proliferation of sensitive expertise or dangerous materi- als, often encountered difficulties with attempts to (a) open closed facilities to foreign visitors to discuss joint projects and (b) discuss details of projects linked to security issues. These problems gradually declined, although they never com- pletely disappeared. Indeed, for security reasons, some facilities in both countries remain closed to outside visitors. And some topics are simply off limits for seri- ous discussion. The situation in the field of biology and biotechnology was particularly difficult during the 1990s, given the history of mistrust during early efforts (the trilateral visits involving Russia, the United States, and England designed to resolve concerns over compliance with the Biological and Toxin Weapons Con- vention) to verify that prohibited activities had come to an end. Then as facilities began to open, mutual trust slowly evolved, although access was often denied to certain areas of facilities that had been heralded as open to international visi- tors. Nevertheless, the degree of openness is quite extraordinary in view of the contentious history of the relationship in this field. The cooperative projects set forth in Appendixes C.2, C.3, and C.4 are impressive evidence of the international transparency that has developed at sensitive Russian research centers working with U.S. centers. Also, dissemination of information concerning specific project activities has

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IMPEDIMENTS IN APPROVED AND FUNDED COLLABORATIVE PROJECTS 99 often raised issues. Of particular concern have been information exchanges that could be viewed as impinging on (a) state secrets, (b) protection of IP, or (c) rights of individual researchers to claim credit in publications for their scientific findings. At other times, uneasiness has arisen over the possible embarrassment of managers if outsiders visited deteriorated facilities that had not been refur- bished due to lack of financial resources. Generally, these problems are now of less importance than in years past, as collaborating scientists have become accustomed to a new style of openness. EXCHANGES OF BIOLOGICAL MATERIALS Difficulty may arise when researchers attempt to send biological materials or chemicals used in biological experiments into countries where collaborators reside and to receive materials from these collaborators under exchange commit- ments. Each country has limitations on shipments of certain types of material, with these limitations often linked to international export control obligations. In addition, individual ministries and departments may have their own restrictions. But at times, there is some flexibility in administering these limitations. Details are important, particularly when dealing with dangerous pathogens. Institutions that send or receive materials may have even more stringent require- ments than formally required and complicated approval processes. Shipping companies may be constrained in their activities, by national laws and by their own internal procedures. There may be requirements as to shipping containers. A particularly contentious issue during the early 2000s was the insistence of the Department of Defense (DOD) on shipment of strains of sensitive biological pathogens from Russian research centers to the United States as a condition of providing support for U.S.-financed activities in Russia. The Russian side con- tended that its export controls had been imposed in response to pressure from the United States to limit the shipping of strains abroad. Also, DOD was not prepared to send other strains of interest to Russia in exchange. This issue was never ade- quately resolved, and the discussions delayed implementation of several projects. Finally, it is important to note that not all difficulties with exchanges of bio- logical materials have involved sensitive strains. For example, the U.S. National Park Service has encountered difficulties in transferring biological samples involving marine mammals and Beringian flora and fauna to the United States. Also, scientists supported by the National Science Foundation have had difficul- ties obtaining botanical samples from the Tiksi research station in the northern area of Russia. CONTINUING EMPHASIS ON REDUCING IMPEDIMENTS Against this panorama of technical barriers to cooperation, the impediment to bioengagement that is most commonly cited by program participants is the

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100 U.S.-RUSSIAN RELATIONSHIP IN BIOLOGICAL SCIENCE AND BIOTECHNOLOGY delay in issuing visas. Other concerns also deserve attention. Thus, the committee underscores the following four conclusions: 1. Reducing the time and difficulties associated with the issuance of visas for participants in cooperative activities is very important for effective bioengagement. 2. The working group on impediments (now referred to as working group on enhancing cooperation) under the Agreement on Science and Technology Cooperation has played an important role in efforts to reduce obstacles that inhibit the implementation of bioengagement activities. 3. During development of new or expanded cooperative programs and proj- ects, the possibility of impediments limiting activities deserves careful attention. 4. Careful documentation of the experience of the ISTC in addressing impediments can be very helpful to government agencies and other institutions interested in future collaboration. This report is a step in this direction.