Omari Wooden Trade Ombudsman U.S. Census Bureau Foreign Trade Division

1. Omari WoodenTrade OmbudsmanU.S. Census Bureau Foreign Trade Division Foreign Trade Regulations & Automated Export System

2. Today’s Topics • Legal/Filing Requirements • Export regulations & requirements • U.S. Principal Party In Interest (USPPI) • Types of shipments and transactions • Automated Export System (AES) • Classification numbers

3. Legal Requirements Census Bureau Foreign Trade Regulations (FTR) • 15 CFR, Part 30 Bureau of Industry and Security (BIS) Export Administration Regulations (EAR) • 15 CFR, Parts 700 - 799 Customs and Border Protection (CBP) Customs Regulations • Title 19 CFR, Parts 1 – 199 State Department International Traffic in Arms Regulations (ITAR) • Title 22 CFR, Parts 120 – 130

4. Questions? Foreign Trade Regulations Automated Export System

5. Foreign Trade Regulations Questions? Seminars, workshops, and training FAQs for the Regulations

6. What is a Shipment?(FTR 30.1) 1 Tip: The ONE Rule • ONE USPPI shipping their merchandise, to • ONE Foreign consignee, on • ONE Carrier moving the product out of the U.S., on • ONE day, with • Valued over $2,500 per Schedule B number or license is required

7. When is an EEI Record Required? (FTR 30.2) U.S.  foreign countries U.S.  U.S. Virgin Islands Puerto Rico  foreign countries Puerto Rico  U.S. Virgin Islands U.S.  Puerto Rico • An EEI record must be filed for exports of physical goods when shipped:

8. Parties to an export transaction • U.S. Principal Party in Interest (USPPI) • Authorized U.S. Agent • Freight Forwarder / Forwarding Agent • Carrier

9. U.S. Principal Party in Interest (FTR 30.3) The U.S. Principal Party in Interest is the: • U.S. Person or Entity • Primary Benefactor (Monetary, or Otherwise) • Foreign Entity (if in the U.S. at time goods are purchased or obtained for export) Generally that Person can be the: • U.S. Seller: (Wholesaler or Distributor) • U.S. Manufacturer • U.S. Order Party

10. Two Types of Transactions(FTR 30.3) Export Transaction (Standard): • USPPI files the EEI or authorizes an agent to file the EEI Routed Export Transaction: • Foreign Principal Party in Interest (FPPI) authorizes a U.S. agent to facilitate the export of items from the United States and to prepare and file the EEI

11. Export Transaction(FTR 30.3(c)) USPPI 1. Order is placed FPPI U.S Authorized Agent or USPPI 2. EEI is filed and goods shipped. • If using U.S. Agent, USPPI provides Agent with written authorization or POA.

12. Export Transaction(FTR 30.3(c)) USPPI Responsibilities: • Prepare and file EEI and provide proof of filing citation • 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 • If filing, respond to AES fatal errors or compliance alerts • Retain documentation

13. Export Transaction (FTR 30.3(c)) U.S Authorized Agents’ Responsibilities: • Obtain written authorization or POA from USPPI • Accurately prepare EEI via the 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 • Upon request, provide USPPI with copy of information filed on its behalf

14. Routed Export Transaction (FTR 30.3(e)) USPPI 1. Order is placed 3. Data provided U.S. Authorized Agent 2. Contracts to ship goods FPPI 4. EEI is filed and goods shipped. • If using U.S. Agent, FPPI provides Agent with written authorization or POA.

15. Routed Export Transaction (FTR 30.3(e)) USPPI Responsibilities: • Must provide FPPI’s agent with commodity data and 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 • Maintain documentation

16. Routed Export Transaction (FTR 30.3(e)) U.S Agent Responsibilities: • Obtains a POA or written authorization from the FPPI • Prepare and file the EEI • 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 • Maintain documentation

17. Shipments Exempt from Filing (FTR 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))

18. Exemptions Do Not Apply (FTR 30.2(a)(iv)) • Commerce (BIS) licenses • Country Group E:1 (Supplement 1 to 15 CFR 740) • State Department licenses and ITAR controlled items • License shipments from other government agencies • Shipments on Office of Foreign Assets Control Sanctions Program List • Rough Diamonds

19. Port of Export (FTR 30.6(a)(9)) Seaport or airport where goods are loaded on the carrier leaving the U.S. Overland shipments where the goods cross the border leaving the U.S. Use Schedule D, Classification of CBP Districts and Ports

20. Parties Subject to Penalties • All parties involved in an export transaction are subject to penalties, including: • USPPI • Freight forwarder • Authorized agent • Carrier

21. Criminal Penalties(FTR 30.71(a)) • A party who knowingly: • Fails to file – 10 or more days late • Files false and misleading information • Continues to participate in illegal activities • Fines for each violation: • Up to $10,000 • Imprisonment for not more than five years • Both

22. Civil Penalties(FTR 30.71(b)) • Late Filings • Up to $1,100 per each day delinquency or up to a maximum of $10,000 per violation • Other Violations, including but not limited to: • Continued use of outdated citations and references to the FTSR • Incorrect value for shipment • Failure to site license code or number • Up to $10,000 per violation

23. Mitigating Factors • Including, but not limited to: • First-time USPPI or authorized agent, FPPI, carrier, etc. • Voluntary self-disclosure of the violation • Clear documentary evidence of remedial measures undertaken to prevent future violation • Exceptional cooperation with CBP, Census or BIS • Demonstration by party of having a systematic export compliance effort.

24. Aggravating Factors • Including, but not limited to: • Several violations in the same export transaction • Circumstances suggest the intentional nature of the violation • High number of violations in preceding 3 year period • Evidence of criminal conviction for related violation, i.e. BIS violation • The party exports as a regular part of its business, but lacks a systematic export compliance effort.

25. Automated Export System The Automated Export System is the electronic filing of: • Export Information AES Filers are: • U.S. Principal Parties in Interest • U.S. Authorized Agents

26. Automated Export System Uses • CBP uses AES to verify shipments directly at the port. • BIS uses AES to track export license transactions and to validate end users. • DDTC uses AES to track export license transactions and to automatically decrement values on some license types.

27. AES Process Flow

28. Registration Form User Guides Registration Help The AESDirect Homepage www.aesdirect.gov Support Center

29. Before Filing the EEI Gather/Review filing resources Foreign Trade Regulations (FTR) Export Flipper AESDirect Support Center FTD Blog at blogs.census/gov/globalreach

30. Before Filing the EEI • Decide who is filing the EEI • USPPI files • Authorized U.S. Agent files on USPPI’s behalf. To avoid duplicate EEI filings, only one party files the EEI.

31. Filing the EEI and Troubleshooting Misreported Codes: • Port of Export: Four digit number • Misclassification: • Ink cartridges vs. weapon cartridges • Rubber seals vs. live seals • Country of Destination:Two alpha characters • IE – Ireland IR – Iran IQ – Iraq • Carrier SCAC/IATA • Four character code for Vessel, Truck, and Rail • Two or three character code for Air • Schedule B:Ten digit number • Search engine available at: http://www.census.gov/foreign-trade/schedules/b/

32. AES Responses Verify Compliance Warning Informational Fatal Shipment Accepted ITN Issued Shipment Rejected No ITN IssuedorUpdate Rejected Invalid ITN

33. After Filing the EEI • Proof of Filing Citations • Reports from the U.S. Census Bureau • Fatal Error Report • Compliance Report

34. Proof of Filing Citations(FTR 30.7) • Predeparture Format: Example: • Postdeparture • If Authorized Agent files on behalf of USPPI Format: Example: • If USPPI files directly to the AES Format: Example:

35. Confidentiality of the Data(FTR 30.60) Only Summary Statistics are published - USPPI - USPPI’s agent - BIS, CBP, ICE, BEA, BLS - IRS - Foreign governments/entities - Private attorneys

36. Schedule B Manual • Statistical Classification of Domestic and Foreign Commodities Exported from the United States • Approximately 9,000 codes • Revised and/or produced annually

37. Harmonized System Structure: 2-digit Chapter 94 4-digit Heading 9401 6-digit Subheading 9401.30 8-digit Legal 9401.30.80 10-digit Statistical 9401.30.8010

39. http://www.census.gov/foreign-trade/aes/ documentlibrary/hts-not-for-aes.html

40. http://hts.usitc.gov/

41. www.census.gov/scheduleb

46. Implement Best Practices • Document!!! Document!!! Document!!! • Correct information as soon as possible • Maintain compliance • Education & cross training • Automation & Procedures • Attend Seminars & Workshops

47. Implement Best Practices • Perform Cross Training • Implement mentoring program • Know your US authorized or forwarding agent • Develop training manual • Perform yearly audits

48. For More Information • FTD Call Center: 800-549-0595 • Option 1 – AES Assistance • Option 2 – Commodity Classification Assistance • Option 3 – Regulations Assistance • Fax: 301-763-8835 • E-mail: ASKAES@census.gov • FTD Blog: blogs.census.gov/globalreach/

49. Questions?

50. U.S. Export laws, Regulatory Compliance & Export Management Brooks Ohlson, Director California Centers for International Trade Development – Northern California