Guest Author Posted by Guest Author on 15th April, 2019

Universities, Export Controls and Sanctions

What is the risk of your institution breaching export controls or sanctions laws? It may be greater than you think. Richard Tauwhare, Senior Director at Dechert LLP explains some of the misunderstandings around how these regulations apply to academic research and commercial collaborations.

Samuel Johnson observed that “When a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully”.

Though his penalty was 4 years, a University of Tennessee professor, John Roth, was jailed for giving two graduate students, nationals of China and Iran, access to sensitive information while they researched a plasma-guidance system for an unmanned aircraft.

While no UK academics have yet suffered a similar fate, the increasing risks of breaching export controls or sanctions laws ought to be concentrating minds. But there seems to be a widespread assumption that these laws don’t apply to academics based on two key misunderstandings.

One is the assumption that the laws only concern commercial exports of physical goods, typically weapons. But in fact they apply to any transfers, not only of goods but also of technology or ‘know how’, and not only of military but also ‘dual-use’ items, with potential military or security applications. These can be found in a range of disciplines including nuclear physics, biological sciences, chemistry, mechanical engineering, electronics, computing and aerospace.

For example, sending research work on one of these subjects to someone outside the UK by email, or carrying them on a laptop or on paper, could be breaking the law. Export controls on items of US origin even prohibit making them accessible to foreign or dual nationals in the UK without a licence.

Secondly, most university research is basic science, which is exempt from export controls. But work with a commercial sponsor, directed towards a specific practical aim or objective, is not exempt. As an increasing proportion of university research falls into this category and entails work with overseas sponsors, campuses or academic collaborators, their exposure to export controls grows.

Added to these factors is an increasingly important risk related to China. Recent manifestations of this include the concerns over the security of Chinese equipment in critical infrastructure, for example Huawei’s involvement in 5G telecommunications systems.

Many countries including the UK are taking steps to enhance their scrutiny of foreign investment, particularly from China. In a White Paper last July, the government set out plans for legislation this year which will include powers to scrutinise the foreign acquisition of intellectual property rights when this might raise national security concerns, potentially leading to such acquisitions being blocked in some cases.

These sensitivities reinforce the need for universities to ensure that any transfers of controlled items or technology – to any overseas partners, not only Chinese – are correctly identified and licensed. Practical steps start with auditing the effectiveness of the university’s Export Controls and Sanctions Policy.  Responsibility for this needs to be taken at a senior level on the Executive Board. Engineering and science faculties should add export controls to their Risk Registers and review the issues regularly at Heads of Department meetings.

All engineering and science research staff need basic awareness training and guidance material. Heads of Department need training to understand what to look out for and where to turn to for advice.

Central administrative staff should be assigned roles and given appropriate training. Specifically, the Finance team should incorporate routine checks on sanctions risks into their due diligence on potential new partners. Teams responsible for research contracts, integrity and IP licensing may be best-placed to act as checkpoints, to screen proposed activities to identify any subject to export controls and, if necessary, to ensure that export licences are obtained and used correctly.

Particular risks lie with activities that for any reason are not routinely captured by the routine screening processes, for example returning equipment loaned by overseas collaborators or provided for demonstrations, exchanges of data with former students, pre-contract collaborative work, private consultancy by individual researchers, and staff or students travelling with controlled technology saved on their laptops. Heads of Department may be best placed to spot these risks, supported by a general awareness-raising campaign.

Finally, while the risk of a transfer of controlled technology to foreign post-graduate students is already managed by the Government’s Academic Technology Approval Scheme (ATAS), there is no equivalent vetting of university staff or prospective partner institutions. Due diligence checks should be established on a routine basis; if any concerns are identified, advice on individuals can be sought from the ATAS team (ATAS@fco.gov.uk) and on institutions from the Department for International Trade (exportcontrolhelp@trade.gov.uk).

Regulatory compliance is never a popular subject, not least with research staff who put a high value on their academic freedom. But these measures are important to protect individual staff and the university. In addition to legal penalties, a violation could lead to media and political pressure on the university concerned, and on the UK research community more widely, to curtail their overseas links, with potentially serious consequences for their industrial partnerships, funding, and overseas students.

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