MA. EXPORT CENTER Routed Exports

1. MA. EXPORT CENTER Routed Exports Presented by : Paul Divecchio –DiVecchio & Associates Phone: (617) 513-3230, Fax: (508) 393-3645 Email: pauldivec@earthlink.net

2. “ROUTED FREIGHT” - CURRENT CLIMATE IT’S A MESS! BUT IT’S CHANGING

3. FTR TODAY – COMPLIANCE • AMBIGUITY of Interpretation • ROUTED – FPPI HAS TOO MUCH AUTHORITY • Enforcement Oversight - INCONSISTENT

4. Today’s Reality Comply to current FTR - Risk Enforcement Issues: * DETENTIONS * SEIZURES * INVESTIGATIONS TAKE CONTROL: “NEVER Allow the FPPI Export Compliance Control”

5. U.S. Customs • Major Discrepancies: - Failure to file AES - No notification on Bill of Lading when AES not required - No generic product description on AES - Mishandling of State Dept. shipments by the Freight Forwarder - “old” or invalid licensing information - No licensing information - Values on AES “UNDERVALUED” - Suspicious transaction! Rerouted freight-USPPI not Aware

6. FTR REGS. – PROPOSED A GOOD START!!!: • FPPI name change - FPPCET • USPPI MUST Provide Export Control Info: • * Licensing Jurisdiction – State vs, Commerce • * Licensing Classification • * License Requirements • Addition – Must Identify Ultimate Consignee Type of Business • Option #4 “Post Departure Filing – 10 Days to 5 Days

7. COMPLIANCERESPONSIBILITIESEXPORTER & FORWARDER

8. KEY COMPLIANCE RISKS BOTH USPPI & FORWARDER • NO POA FOR EXPORT TRANSACTIONS! • CLASSIFYING PRODUCTS FOR CUSTOMERS • NO RESTRICTED PARTY REVIEWS • CHANGING USPPI’S INFO • SLOPPY AES ENTRIES • EMBARGOES – DIVERSIONS • ANTIBOYCOTT COMPLIANCE

9. FREIGHT FORWARDER’S ROLE • First source of information for new exporters • Last line of defense - documentation & prohibitions • Attitude and knowledge of forwarding staff - can be a marketing advantage or liability CREDIBILITY !

10. Exporter’s Responsibility • Issue a proper POA (Power-of-Attorney) • Provide the Forwarder with: • COMPLETE AND ACCURATE INFORMATION • - Description of Product(s) - License Information - Correct Values < Coordinate and Cooperate >

11. Forwarder’s Responsibility • When in Doubt - Check it Out! NOT • When in Doubt - ship it out! - Hold the Shipment -

12. Export Regulatory Compliance Forwarder - Shipper Relationship • What is the Forwarder’s main focus with regard to Export Compliance? • Looking out for forwarder best interest • Looking out for forwarder best interest = looking out for the Exporter’s best interest • When the forwarder knows what they are doing, they know what to do to protect the best interest of the exporter.

13. How does a good Forwarder approach Export Compliance? • Know your Compliance Responsibility …and to make sure that there is a consistent understanding and message throughout the Company. • Training and compliance reviews • Following the exporter’s instructions but asking questions • Looking for “Red Flags” • Offering guidance to exporters

14. Focus on Customer Implementation • During the implementation process: • Connect the Forwarder and Exporter Compliance People • Are the products on the Commerce Control List, or ITAR • Who will be filing data into AES? • When and how will the USPPI required information be provided to the forwarder? • What information will the exporter need back. When, how often?

15. Exporter - Forwarder Relationship • The Exporter must hold the freight forwarder accountable. • Memo to all forwarders (including those nominated by the overseas buyer “routed”) insisting on the following: - No changes/document substitution without prior authority - Forwarder to review export documents for: - Completeness and accuracy (HOLD) - Affirmation that a copy of the “completed” SED (or AES print-out if requested) will be returned • Forwarder to acknowledge receipt and affirm compliance & Indemnify exporter, if at fault !

16. EVERYONE'S ACCOUNTABLE