Foreign Trade Division AES Compliance Seminar

Regulations, Outreach and Education Branch

Today’s Topics Legal Requirements Enhancements and Changes to the Foreign Trade Regulations (FTR) Filing Requirements for Electronic Export Information (EEI) Filing Timeframes Exemptions Confidentiality Penalty Provisions Compliance Strategies

Legal Requirements Census Bureau Bureau of Industry and Security (BIS) Foreign Trade Regulations (FTR) •15 CFR, Part 30 Section 30.1 - 30.74 Bureau of Industry and Security (BIS) Export Administration Regulations (EAR) •15 CFR, Parts 700 - 799

Legal Requirements (cont’d) State Department International Traffic in Arms Regulations (ITAR) •Title 22 CFR, Parts 120 – 130 Customs and Border Protection (CBP) Customs Regulations • Title 19 CFR, Parts 1 – 199

Impact On Trade Community • New compliance requirements may lead to shift in business practice • Meet filing time frames • Know who files, what is filed and when to file • Required filing citations to carriers Internal Transaction Number (ITN) Proof of Filing Citation Exemption Citation Postdeparture Citation Downtime Citation

Enhancements to the FTR Improved Clarifications Definitions and Appendices Filing Time Frames Electronic Letter of Intent Penalty Provisions Voluntary Self Disclosure

New Terminology and Changes Current FTSR New FTR Changes SED Electronic Export Information (EEI) FTSR FTR Option 2 Predeparture Option 4 Postdeparture Section 30.1-30.99 Section 30.1-30.74

Definitions and Appendices Enhancements Purpose and Definitions Section (30.1) Appendix A- Sample POA/Written Authorization Appendix B- Automated Export System (AES) Filing Codes Appendix C- Proof of Filing Citations and Exemption Legends

Definitions and Appendices Enhancements (cont’d) Appendix D- Exemptions and Exclusions Appendix E- FTSR to FTR Concordance Appendix F- FTR to FTSR Concordance

When is an EEI Record Required? Section (30.2) An EEI record must be filed for exports of physical goods when shipped as follows: From U.S. to foreign countries Between the U.S. and Puerto Rico From Puerto Rico to foreign countries From Puerto Rico to U.S. Virgin Islands From the U.S. to the U.S. Virgin Islands Licensable commodities

U.S. Principal Party In Interest Section (30.3) USPPI Can Be The: U.S. Seller: (Wholesaler or Distributor) U.S. Manufacturer U.S. Order Party Foreign Entity

What is a Shipment? Section (30.1) Merchandise shipped from one U.S. Principal Party in Interest (USPPI) to one consignee On the same flight/vessel To the same country On the same day Valued over $2,500 per Schedule B number or license required

Two Types of Transactions Section (30.3) Export Transaction (Standard): • USPPI files the EEI record or authorizes U. S. agent to file the EEI Routed Export Transaction: • Foreign Principal Party in Interest (FPPI) authorizes a U.S. agent or USPPI to file the EEI

Export Transaction Section (30.3(c)) USPPI Responsibilities: Prepare and file Electronic Export Information and provide proof of filing citation to carrier Authorize a U.S. agent to file EEI via POA or written authorization Provide agent with accurate and timely export information Assume responsibility for license determination under EAR If filing, respond to AES fatal errors or compliance alerts Retain documentation

Export Transaction Section (30.3(c)) U.S. Authorized Agents’ Responsibilities: Obtain written authorization or POA from USPPI Accurately prepare export information via AES, based on information provided by the USPPI and other parties If filing respond to AES fatal errors or compliance alerts Provide AES Internal Transaction Number (ITN) to carrier based on required filing timeframes (30.4) Provide USPPI with copy of information filed on its behalf

Export Transaction Section (30.3(c)) Carrier Responsibilities: Do not accept cargo without ITN Annotate Outbound Manifest (30.7) Present proof of filing citation or exemption legend to CBP Port Director

Routed Export Transaction Section (30.3(e)) FPPI Responsibilities: Authorize a U.S. agent or USPPI to file the EEI record Provide the POA or written authorization to U.S. agent or USPPI

Routed Export Transaction Section (30.3(e)) USPPI Responsibilities: Must provide FPPI’s agent with commodity data & licensing information May request copy of the authorized agent’s POA or written authorization from the FPPI If filing, obtain POA from FPPI to complete and file the EEI record Obtain a writing from the FPPI, if the FPPI assumes responsibility for licensing functions (See EAR 758.3) Retain documentation

Writing EAR (758.3) What is a “Writing”? · A writing designates the party that is responsible for export control functions When is writing required? · For Routed Export Transactions How much are penalties for violating Section 758.3 of the EAR? · $250,000

Routed Export Transaction Section (30.3(e)) U.S. Agent Responsibilities: Obtains a POA or written authorization from the FPPI Prepare and file EEI record Upon request, provide the USPPI with data elements filed on its behalf Upon request, provide the USPPI with a copy of the POA or written authorization from the FPPI Provide filing citation or exemption legend Retain documentation

Required Predeparture Filings Section (30.4(a)) U.S. Munitions List (USML)/Commerce Control List (CCL) shipments Drug Enforcement Agency (DEA) Permit Used self-propelled vehicles “Sensitive” by Executive Order Routed Exports Rough Diamonds

Postdeparture Filing Section (30.5(c)) 10 calendar days to file EEI after date of export Currently, only approved filers may file Postdeparture Moratorium placed on the acceptance of new applicants pending further review

ITAR Filing Time Frames Section (30.4(b)(1)) USML Shipments Air: 8 hours prior to scheduled departure time Truck: 8 hours prior to truck arriving at U.S. border Rail: 24 hours prior to train arriving at U.S. border Vessel: 24 hours prior to loading

Filing Time Frames Section (30.4(b)(2)) Non-USML Shipments Vessel: 24 hours prior to loading Truck: 1 hour prior to truck arriving at U.S. border Air: 2 hours prior to scheduled departure time Rail: 2 hours prior to train arriving at U.S. Border Mail: 2 hours prior to export

Exclusions From Filing EEI Section (30.2(d)) Goods transiting the U.S. under CBP bond from one foreign country to another Goods shipped from the U.S. territories to foreign countries and between the U.S. and these territories

Exclusions From Filing EEI Section (30.2(d)) (cont’d) Electronic transmissions and intangible transfers Goods shipped to Guantanamo Bay Naval Base from United States, Puerto Rico, or the U.S. Virgin Islands and from Guantanamo Bay to these areas

Shipments Exempt from Filing Sections (30.36 - 30.40) Country of ultimate destination is Canada (30.36) $2,500 or less per Schedule B number (30.37(a)) Tools of Trade: hand carried, personal or company use, not for sale, not shipped as cargo, returned within 1 year (30.37(b)) Intangible exports of software & technology (30.37(f)) Temporary Exports (e.g., Carnets) (30.37(q))

Exemptions Do Not Apply Commerce (BIS) licenses State Department licenses License shipments from other government agencies Shipments on Office of Foreign Assets Control Sanctions Program List

Data Elements Section (30.6) Mandatory · Must be reported for each transaction Conditional · Must be reported if they are required for, or apply to the specific shipment Optional · May be reported at the discretion of the USPPI or the authorized agent

Name & Address of USPPI Section (30.6(a)(ii)) Company, U.S. Citizen, Foreign Entity Name Identification Number No post office box number Address where goods begin journey For multiple origins, report address where the commodity with greatest value originates

Value Section (30.6(17)) Selling price including inland domestic freight and insurance, or Cost, if the goods are not sold Estimate freight insurance domestic, if not known Report value to nearest U.S. dollar

Value of Repair Items Section (30.29) Report the value of the repairs, including parts and labor Report Schedule B number 9801.10.0000 for the export of any article that was imported for repairs or alterations

Value of Warranty Items Section (30.29) Report the value of replacement part only If the value on the EEI record is different from the value on the bill of lading, invoice, etc., include a statement notating: “Product replaced under warranty, value for EEI record purposes”

Domestic/Foreign Indicator Section (30.6(11)) Indicates if the goods exported are of domestic or foreign origin. •Report foreign goods separately from goods of domestic production even if the commodity classification number is the same. •Domestic grown, produced, or manufactured in the United States. •Foreign grown, produced, or manufactured in foreign countries that entered the United States.

Port of Export Section (30.6(9)) Seaport or Airport where goods are loaded leaving U.S. Overland crosses border into foreign country Report where goods are loaded on last conveyance for multiple ports.

State of Origin Section (30.6(4)) 2 Character postal code State where goods begin journey Same address as state of USPPI

Ultimate Consignee Section (30.6(3)) The person, party, or designee located abroad and actually receives the export shipment. Ultimate Consignee as known at the time of export. Licensed shipments shall be the person designated on the export license or authorized to be the Ultimate Consignee.

Country of Ultimate Destination Section (30.6(5)) The country in which the goods are to be consumed or further processed or manufactured The country of ultimate destination code is issued by the ISO

Record Retention Section (30.10) Census: • Retain documents verifying the shipment for 5 years from the date of export Other Government Agencies: • Adhere to requirements of other agencies with export control

Confidentiality of the Data Section (30.60) Only Summary Statistics are published Disclosed to USPPI or the USPPI’s Agent National Interest Determination Yes – CBP, BIS, and State Department No – Internal Revenue Service, foreign governments and private attorneys

Informed Compliance Offer guidance and assistance in interpreting the FTR Education through seminar and trade shows in conjunction with the trade associations Offer individual company training Regulations telephone assistance 8:00 am – 6:00 pm 1-800-549-0595, option 3

Enforced Compliance Strategy Section (30.73) Delegation of Authority Department of Commerce Bureau of Industry and Security’s Office of Export Enforcement Department of Homeland Security Customs and Border Protection Bureau of Immigration and Customs Enforcement

Criminal Penalties Section (30.71(a)) USPPI or Authorized Agent who knowingly: Fails to file Files false and misleading information Continues to participate in illegal activities Fines: Up to $10,000 per violation Imprisonment for not more than five years Both

Civil Penalties Section (30.71(b)) USPPI, Authorized U. S. Agent or Carrier Unintentionally: Failure to File or Late Filings Up to $1,100 per each day delinquency or up to a maximum of $10,000 per violation Other Violations Up to $10,000 per violation Penalties may be mitigated

Remission and Mitigation Section (30.72(d)) Violation History Mitigating Factors Level of experience Voluntary disclosure Compliance training

Voluntary Self Disclosure Section (30.74) Submit letter on company letterhead and include the following information: Description of information unreported or reported incorrectly Number and value of shipments affected Steps taken to resolve problem Point of contact Retain documentation regarding all shipments involved in disclosure File data in AES as soon as possible

Corrections Section (30.9) Filer must submit corrections, cancellations, or amendments as soon as possible Use ITN to locate AES record Paper filed prior to implementation must be corrected and sent to Jeffersonville, IN Failure to correct EEI is a violation

Show What You Know What is the difference between a routed and standard export transaction? The USPPI provides the POA to the forwarder in a routed transaction. T or F? What is meant by dual use of the EEI record? Define the USPPI An FPPI purchases $2,500 in widgets from Vendor A and $3,000 in widgets from Vendor B. The FPPI authorizes an U.S. agent to file the EEI and move the cargo. Is the U.S. authorized agent the USPPI? Why or Why not?

Show What You Know A foreign visitor in the U.S. purchases from a local retail store 3 refrigerators worth $1,000 each for export. Who is the USPPI? A U.S. manufacturer sells goods to a person from India. The person from India is in the U.S. at the time goods are purchased or obtained for export. Who is the USPPI? What value should be reported for an item that has been repaired? You are sending some computers to Canada that require a license. Is an AES record required? Your Japanese customer is requesting a copy of the EEI record filed. Do you honor the request? Why or Why not?

Foreign Trade Division Regulations, Outreach, and Education Branch (ROEB) Phone: 1-800-549-0595 (Option 3) Fax: 301-763-4610 Secure Fax: 301-763-8835 Email: FTDRegs@census.gov Website: www.census.gov/trade Dale C. Kelly Jerome Greenwell Branch Chief Trade Ombudsman Dale.C.Kelly@census.gov Jerome.M.Greenwell@census.gov Phone: 301-763-6937 Phone: 301-763-6975