Foreign Trade Division AES Compliance Seminar

1. Foreign Trade DivisionAES Compliance Seminar

2. Regulations, Outreach and Education Branch

3. 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

4. Legal Requirements Census Bureau 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

5. 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

6. 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

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

8. New Terminology and Changes Current FTSRNew 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

9. Definitions andAppendices 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

10. Definitions andAppendices Enhancements (cont’d) • Appendix D- Exemptions and Exclusions • Appendix E- FTSR to FTR Concordance • Appendix F- FTR to FTSR Concordance

11. 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

12. 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

13. 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

14. Two Types of TransactionsSection (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

15. Export TransactionSection (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

16. Export TransactionSection (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

17. Export TransactionSection (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

18. Routed Export TransactionSection (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

19. Routed Export TransactionSection (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

20. 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

21. Routed Export TransactionSection (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

22. Required Predeparture FilingsSection (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

23. Postdeparture FilingSection (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

24. 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

25. 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

26. 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

27. 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

28. 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))

29. 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

30. 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

31. 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

32. ValueSection (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

33. Value of Repair ItemsSection (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

34. Value of Warranty ItemsSection (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”

35. Domestic/Foreign IndicatorSection (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. •Foreigngrown, produced, or manufactured in foreign countries that entered the United States.

36. Port of ExportSection (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.

37. State of OriginSection (30.6(4)) • 2 Character postal code • State where goods begin journey • Same address as state of USPPI

38. 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.

39. Country of Ultimate DestinationSection (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

40. Record RetentionSection (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

41. Confidentiality of the DataSection (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

42. 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

43. Enforced Compliance StrategySection (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

44. Criminal PenaltiesSection (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

45. Civil PenaltiesSection (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

46. Remission and MitigationSection (30.72(d)) • Violation History • Mitigating Factors • Level of experience • Voluntary disclosure • Compliance training

47. Voluntary Self DisclosureSection (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

48. 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

49. 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?

50. 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?