1. Live Webinar – February 16, 2011 1

2. Panel of Presenters 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. Program Moderator Samuel M. Gilston Editor & Publisher - The Export Practitioner 2

3. Panel of Presenters 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. Steven Brotherton Partner - Fragomen, Del Rey, Bernsen and Loewy, LLP Tel. (415) 263-8442 - sbrotherton@fragomen.comsbrotherton@fragomen.com www.fragomen.com/exportcontrols 3

4. Panel of Presenters 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. Michael D. Ferguson Export Control Manager - New Mexico State University 4

5. Program Agenda In-depth review of: 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: University compliance guidance: -- Contracting language -- Information security -- Key compliance program elements -- Tools to maintain compliancePLUS: Analysis on the impact of the verdict in the J. Reece Roth case on university research 5

6. 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

7. 7 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):

8. 8 New Export Control Certification Form I-129, Part 6

9. 9 Overview: Deemed Export Rule

10. 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

11. 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

12. 12 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

13. 13 How Can a “Deemed Export” Occur?  Providing drawings to a Foreign Person employee  Technical conversations/ collaboration with Foreign Persons  Telephone conversations  Technical training  Working with Foreign Person interns or consultants  Collaborations w/ U.S. customers’ Foreign Person employees  Access to database that contains controlled technology

14. 14 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.

15. 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

16. 16 Deemed Exports  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 I-129, Part 6

17. 17 EAR ITAR “Dual Use”/Commercial Controlled items appear on Commerce Control List A number of exceptions available Examples of EAR Controlled Items: semiconductors telecommunications high speed computers manufacturing equipment encryption many others Military/Space Controlled items appear on U.S. Munitions List License typically required for foreign person employees ITAR controlled items: Specifically, designed modified adapted configured …for military/space application

18. Typical EAR License Hierarchy (Dual Use/Commercial Technologies) “Terrorist Supporting Countries” 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.) Highest Controls Lowest Controls 18

19. 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

20. Exemptions 20

21. 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

22. Publicly Available/Public Domain Information  Published Information  Open Conference/Meeting  Educational Information  Patents  Fundamental Research 22

23. 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

24. 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

25. 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

26. 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

27. “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

28. 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

29. 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

30. 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

31. 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

32. Case Study 32

33. 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

34. 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

35. 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

36. Visas Mantis Program 36

37. 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

38. Technology Alert List (last published version)  Conventional Munitions  Nuclear Technology  Rocket Systems  Rocket System and Unmanned Air Vehicle Subsystems  Navigation, Avionics and Flight Control  Chemical, Biotechnology, and Biomedical Engineering  Urban Planning  Remote Sensing, Imaging and Reconnaissance  Advanced Computer/Microelectronic Technology  Materials Technology  Information Security  Laser and Directed Energy Systems  Sensors and Sensor Technology  Marine Technology  Robotics 38

39. 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

40. 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

41. Thank Your For Your Attendance 41