Export Compliance Update and Utilizing ACE to Manage Compliance MODERATOR: Paulette Kolba DSV Air & Sea Inc. NCBFAA Export Compliance Chair PANELISTS: Gerry Homer Omari Wooden Richard DiNucci Director, Office of Technology Evaluation, Bureau of Industry and Security Assistant Division Chief Trade Outreach & Regulations, International Trade Management Division, U.S. Census Executive Director, Cargo Conveyance and Security, Office of Field Operations, Customs and Border Protection

Omari Wooden Assistant Division Chief Economic Outreach and Trade Regulations International Trade Management Division Charles will do the introductions for presenters, then turn the presentation over to Jon Kent

Census Updates FTR Rewrite On hold with Regulatory Freeze Concurrence received Routed Export Transaction - Notice of inquiry Drafted, internal review Looking for feedback and recommendations Revamped ACE Compliance Seminar Added ACE Export Reports as a topic Considering inclusion and expansion for other agencies on the agenda

NOTE: Consider how goods were imported Census Updates Proper Reporting for Repairs Repair – exporting the original item USE: 9801.10.0000 and report value of repair, including parts and labor Proper Reporting for Replacements Replacement – exporting “another” item, replacing the original item USE: Actual Schedule B number and the value of the replacement product NOTE: Consider how goods were imported

Trade Outreach Branch 1-800-549-0595 option 5 exportreports@census.gov Census Updates Follow up from ACE Reports Missing data or problem with accessing ACE Export Reports Shipment information is incorrect Intermediate Consignee FTR 30.1 “The person or entity in the foreign country who acts as an agent for the principal party in interest with the purpose of effecting delivery of items to the ultimate consignee. The intermediate consignee may be a bank, forwarding agent, or other person who acts as an agent for a principal party in interest” General questions about the vetting process, export reports access and outreach activities Trade Outreach Branch 1-800-549-0595 option 5 exportreports@census.gov Technical questions about ACE Accounts and Reports CBP ACE Service Desk 1-866-530-4172, option 1, then option 2 ACE.Support@cbp.dhs.gov

Utilizing ACE to Manage Export Compliance Gerard Horner Director, Office of Technology Evaluation Bureau of Industry and Security U.S. Department of Commerce Opening Remarks

Discussion Topics Using ACE Data to Measure the Effectiveness of Export Controls Performance Measures Change of Export Policy Change of Country Trade Policy Exporters Compliance with the Export Administration Regulations Agenda Topics Provides a snap shot of what BIS does Informs Policy Decisions and studies/evaluates impacts of Policy Decisions Informs specific country policy decisions Indirect result of studying data is measuring compliance

Measure BIS mission Note the following: Decrease of ITAR agreements from 2013 to present Increase of License Exception Use Exceptions are eligible for many items that transitioned from the USML to CCL Increase of NLR exports covered by an ECCN NLR for exports to Canada of items that transitioned from the USML to the CCL Increase in licensed exports (not including oil) Many items the transitioned from the USML to the CCL are now licensed by BIS Reduction in licensed exports of Crude Oil In December 2015, the license requirement for Crude Oil was lifted.

14.3% of the $1.5 trillion in exports are covered by an ECCN – BIS controlled items exported. Another 3.3% are State DDTC controlled items and another 0.5 other government agencies controlled items. This makes controlled exports 18.1% of total trade or $271 billion.

Calendar Year Exports 2015-2016 In 2016, AES collected transactions on 29.9 million export shipments worth $1.5 trillion of which 2.7 million (9.0%) worth $208.0 billion (14.3%) were covered by an ECCN Using ACE data, we compare last year to this year. Why did licensed exports drop?

600-series and 9x515 Exports: CY16 Likely the increase of licensed items to exports is the high value of cat VIII stuff that transferred from USML to CCL. This shows to our outreach staff in our Munitions Control Division that a lot of exporters are not utilizing the eligible license exceptions, such as STA to ship the defense articles that were previously controlled under the USML of the ITAR.

BIS Licensing – CY 2012-2016 License applications: 31,398 processed (10.3% drop) Average Processing Time: 23 days (1 day increase) This shows the increase in license applications given the move of thousands of items from the USML to the CCL. If we dig deeper into this licensing data is also shows that overall license applications fell because of changes to the controls of microorganisms under 1C351, drops in rifle scopes exported to Russia, and the removal of license applications because of the removal of the Crude oil license requirement.

What’s driving the increase in license exceptions STA, RPL and GOV. Decontrol of certain items controlled for national security reasons from a license requirement to a license exception allowance for civil end uses shows in the increase of exports by value under license exception Civil End Use.

Country Trade Policy Changes CUBA

Source: U.S. Census Bureau

Source: U.S. Census Bureau

Measuring Exporters’ Compliance with the Export Administration Regulations Failing to address a License Requirement can cause: Delays in exporting Fatal errors on your compliance record Violations of the EAR and FTR, incurring administrative or criminal penalties

What’s Wrong with These Transactions?

AES EEI for Export under List Based License Exception $2600 2B351 C35 - LVS LVS Destined to Vietnam

AES EEI, License Valued at $50,000 $95000 3A001 C30 – BIS LICENSE D1017001 $95000

AES EEI for Export 3A001 C33 - NLR NLR Destined to China

AES EEI for Export Helicopter, military 8802110015 $1040500 C33 - NLR

AES EEI for Export $7500 3A001 C35 - LVS LVS Destined to Germany

Contact Information U.S. Department of Commerce Bureau of Industry and Security Office of Technology Evaluation 1401 Constitution Ave., NW Room 1093 Washington, DC 20230 202-482-4933 (office) 202-482-5361 (fax) ECR_AES@bis.doc.gov

Managing Export Compliance Data Driven Compliance

Analyzing AES Data U.S. Government Agencies are using AES data Our customers are running ACE reports to measure filer compliance Forwarders should be using their system reports and/or ACE reports to evaluate their own compliance

What can we measure? Late filings Mode of transportation compared to Port of Export Vessels do not sail from Port Huron, Detroit, Chicago, etc. Carrier vs. Port of Export Delta does not fly internationally from Dallas Activity to restricted and embargoed countries Licensed transactions Inconsistencies Why is a USPPI/Consignee showing sometimes as related and other times not related

Example – Customized Report

Example – Customized Report LATE FILING REPORT

Manager, Export Compliance Paulette Kolba Manager, Export Compliance paulette.kolba@us.dsv.com