Going Digital: New Requirements Under the Foreign Trade Regulations

By Hillel M. Tuchman

On June 2, 2008, the United States Census Bureau published its newly revised Foreign Trade Regulations under 15 C.F.R. Part 30 in the Federal Register. The revision makes mandatory the filing of Electronic Export Information (EEI) through the Automated Export System (AES) or through AESDirect for all shipments where a Shipper’s Export Declaration (SED) is required. Filing of a paper SED through Commerce Form 7525-V will no longer be accepted. Although these regulations are effective as of July 2, 2008, enforcement of the new provisions will only begin on September 30, 2008, thus allowing the trade community an opportunity to comply with the rule.

The Bureau has found that during its 12 years of operation, AES has demonstrated a high level of reliability in performance; the system has been available to users 99% of the time. The Bureau has further reported that electronic filing through AES strengthens the U.S. government’s ability to prevent the export of certain items to unauthorized destinations and/or end users because AES aids in targeting, identifying, and when necessary, confiscating suspicious or illegal shipments prior to exportation.

EEI filing is required for all export shipments where the value of the goods, shipped from one exporter to one consignee on a single exporting carrier, is over $2,500. As in the past, goods must be identified by commodity numbers listed in either the Harmonized Tariff Schedule of the United States or Schedule B. Schedule B numbers are the 10-digit commodity classification numbers administered by the Census Bureau that cover everything from live animals and food products to computers and airplanes. The value threshold applies only to individual commodity numbers meeting the specified value and not to shipments whose aggregate value meets the value threshold. However, where a shipment contains multiple items of the same commodity code, a report is required if their sum value is over $2,500. Further, in instances in which shipments contain a mixture of individual commodity numbers valued over $2,500 and individual commodity numbers valued under $2,500, only those commodity numbers over $2,500 need to be reported.

Certain shipments will always require EEI filing, their value notwithstanding. These include all shipments requiring licenses from:

• the Department of Commerce, Bureau of Industry and Security (BIS);
• the Department of State, Directorate of Defense Trade Controls (DDTC), under the International Traffic in Arms Regulations (ITAR);
• the Department of Justice, Drug Enforcement Administration (DEA); or
• another federal government agency.

In addition, shipments destined to Cuba, Iran, North Korea, Sudan, and Syria, and those containing rough diamonds, require EEI filing regardless of their value.

U.S. principal parties in interest (USPPI) are the persons or legal entities in the United States that receive the primary benefit, monetary or otherwise, from the export transaction. Generally, those persons or entities are U.S. sellers, manufacturers, or order parties, or foreign entities while in the United States when purchasing or obtaining the goods for export. A USPPI has four means of filing EEI: use AESDirect; develop AES software using AESTIR; purchase software developed by certified vendors using AESTIR; or use an authorized agent. Foreign principal parties in interest (FPPI), in contrast, are the parties shown on the transportation document to whom final delivery or end-use of the goods will be made. These parties may be the ultimate consignee. An FPPI can only use an authorized agent in a routed export transaction. Currently, there are no known plans to impose a user or processing fee for using AES.

Most EEI filing must be complete at some point before the departure of the shipment. Depending on the means and type of shipment, EEI filing deadline will vary anywhere between 24 hours and 1 hour prior to departure. Shipments of merchandise found on the United States Munitions List (USML) require earlier filing than non-USML shipments:

	USML Shipment	Non-USML Shipment
Vessel Cargo	The export information must be electronically filed at least 24 hours prior to departure.	24 hours prior to loading cargo on the vessel at the U.S. port where the cargo is laden
Air Cargo	The export information must be electronically filed at least 8 hours prior to departure.	No later than 2 hours prior to the scheduled departure time of the aircraft
Truck	The export information must be electronically filed at least 8 hours prior to departure.	No later than 1 hour prior to the arrival of the truck at the U.S. border to go foreign
Rail	The export information must be electronically filed at least 24 hours prior to departure.	No later than 2 hours prior to the arrival of the train at the U.S. border to go foreign
Mail (not pipeline)		No later than 2 hours prior to exportation
All others		No later than 2 hours prior to exportation

If the participant’s AES is unavailable, the filer must delay the export or find an alternative method. On the other hand, if AES or AESDirect is unavailable, the goods may be exported, but the filer must provide a downtime filing citation and report the EEI at the first opportunity AES is available.

Post-departure filing is only available for approved USPPIs and provides for the electronic filing of the data elements no later than 10 calendar days from the date of exportation.

Failure to comply with these regulations carries both civil and criminal penalties. On the civil side, a failure to file or a delayed filing results in a maximum penalty of $1,100 per day of delinquency, not to exceed $10,000 per violation. Filing false or misleading information results in a maximum $10,000 civil penalty per violation. Criminal sanctions for such activity or inactivity result in a fine not to exceed $10,000 and/or 5 years imprisonment. In addition, any property involved in a violation may be forfeited to the government.