The China Question

www.worldecr.com 30 ThE ChInAquESTIOn David A. Ring (dring@wiggin.com ) is a partner at Wiggin and Dana where he represents US and non-US clients in matters relating to US export controls and sanctions. He has served as a US State Department-appointed monitor, and provides counsel and training to some of the world’s largest aerospace and defence companies. Tahlia Townsend (ttownsend@wiggin.com) is a partner and Co-chair of the International Trade Compliance practice at Wiggin and Dana. Tahlia advises companies on, and defends companies in enforcement actions involving, US financial sanctions, export controls, and US foreign investment regulations. these prosecutions, to date, have focused solely on individuals, they have had a clear impact on universities, which must adapt to the underlying evolution of grant agencies’ interpretations of their rules for disclosing Chinese affiliations, and which have been le to decide whether relying on grant applicants’ self-disclosure of conflicts is sufficient to protect against criminal prosecution. e change of US administrations in January 2021 has done little to dampen the enthusiasm for new laws and rules intended to prevent universities from sharing technology with China. Despite a petition from academia urging reconsideration, the Biden administration has indicated that it will retain President Trump’s National Security Presidential Memorandum-33 (‘NSPM-33’), which greatly expands disclosure requirements for parties applying for funding or participating in certain activities within ‘the federal research enterprise’, across all government agencies. Together with a report issued by the National Science and Technology Council’s Joint Committee on the Research Environment (‘the JCORE Report’), NSPM-33 provides a long list of required and ‘recommended’ disclosures and compliance practices for research institutions, intended to identify foreign influence over not only principal investigators but also ‘other senior/key personnel’ on federal grants, agency programme officers, peer reviewers, and advisory committee members. (Indeed, the JCORE Report goes even further, recommending collection of disclosure information even from postdocs and from visiting scholars and graduate students participating in relevant research activities.) e implication of these documents is clear: universities need to do more to police their own and to collaborate with US law enforcement. Moreover, additional changes may soon come from the Innovation and Competition Act of 2021 (‘the Act’), which was recently passed by the Senate with bi- partisan support. While the Act appears to walk back proposals to require certain foreign gis and contracts to undergo review by the Committee on Foreign Investment in the United States (‘CFIUS’), there are a number of other provisions relevant to university compliance. For instance, Section 2303 would outright prohibit federal grants to projects led or supported by researchers who participate in a Chinese (or Russian, North Korean, or Iranian) foreign government talent recruitment programme, such as the now- notorious ‘ousand Talents’ programme. Likewise, expanding on Department of Defense funding restrictions passed in 2019 as part of the National Defense Authorization Act, Section 2525 would prohibit National Science Foundation grants to, and Section 6122 would impose compliance conditions on receipt of most Higher Education Act funds by, universities that host or support Confucius Institutes. More significantly, Section 4494 would make it a crime for an individual to ‘knowingly prepare or submit’ a federal grant application that fails to disclose receipt of outside compensation, including foreign compensation (defined as ‘a title, monetary compensation, access to a laboratory or other resource, or other benefit received from – (A) a foreign government; (B) a foreign government institution; or (C) a foreign public enterprise’). is provision will make criminal enforcement of individuals substantially easier by alleviating the government’s current burden to show that failures to disclose such compensation were part of a scheme to defraud the government or university. Section 4497 would require J-1 ‘visiting scholar’ visa sponsors to certify: (i) that they comply with export regulations; (ii) that export licences are not required for technology that will be accessed by the visa applicant; (iii) that they will prevent access to controlled technology by the visa applicant; and (iv) that they will submit a technology control plan showing how they intend to comply. And Section 6124 would lower the reporting threshold under Section 117 of the Higher Education Act (‘HEA’) for gis and contracts from foreign sources from $250,000 to $50,000, and authorise fines for non-disclosure of between $250 and the value of the gi or contract (or up to $100,000 or twice the value of the gi or contract in the case of wilful failure to disclose for three consecutive years). Section 6124 would also add a new provision to the HEA requiring universities with more than $5 million in annual research expenditures to set up a searchable database of foreign gis and contracts received by research faculty and staff and to ‘maintain a plan to effectively identify and manage potential information gathering by foreign sources through espionage targeting faculty, professional staff, and other staff engaged in research and development … that may arise from gis received from, or contracts entered into with, a foreign source.’ All of these rules and proposals point to the likelihood that universities will be compelled to take a more proactive – if not outright investigatory – approach to China-related compliance obligations, including significant efforts to ensure that researchers and other personnel are not supported or influenced by China or its institutions. o INSIgHT These rules and proposals point to the likelihood that universities will be compelled to take a more proactive – if not outright investigatory – approach to China- related compliance obligations.