On March 14, 2013, the US Bureau of the Census (Census Bureau) published a lengthy notice in the Federal Register amending and updating the requirements for electronic export information (EEI) that must be reported in the Automated Export System (AES). These revisions impact the Foreign Trade Regulations (FTR) at Title 15 of the Code of Federal Regulations, Part 30, as published at 15 C.F.R. § 30.
The Final Rule is effective as of January 8, 2014, giving exporters almost 10months to review and implement the numerous revisions. Although many of the announced revisions are fairly minor, any one of them could be important for a particular exporter that happens to deal with the products or situations that are the subject of the revision. The summary list below is not exhaustive. The Final Rule is a lengthy list of changes, and we have not attempted to recount here every change addressed in it. Accordingly, over the next several months, each company that works to maintain export compliance should review the notice for any changes that apply to its particular business.
The notice details numerous revisions and corrections to the FTR that were considered, along with comments received, and identifies which revisions were rejected and which were accepted. As outlined below, the accepted changes include changes in how to report port of export, new exclusion statements, and new items on how to report value. Some of the revisions with the potential for broadest application include: (1) requiring exporters to file EEI for shipments of used self-propelled vehicles, regardless of value and destination, (2) requiring exporters to file EEI for temporary exports of goods or for goods that were temporarily exported (when valued over $2500 per Schedule B number or that require a license), and (3) confirming that the moratorium on new participants in the postdeparture filings program while the Census Bureau continues to work on a new postdeparture filing program for new participants. Because the Census Bureau works closely with US Customs and Border Protection (CBP) on AES and collection of EEI, several of the topics discussed involve the CBP regulations or issues that have been referred to CBP for further consideration.
Several of the key points in the notice are as follows:
- The notice adds a new conditional filing requirement for reporting license value. For shipments requiring an export license, the value on the license that corresponds to the commodity being exported must be reported.
- As requested by commenters, the notice confirms that certain shipments destined to Country Group E:1 (terrorist supporting countries) are exempt from AES filing per part 740 of the Export Administration Regulations. The Census Bureau has revised Sec. 30.2(a)(1)(iv) to clarify that filing requirements for certain shipments destined to Country Group E:1 are located in FTR Sec. 30.16.
- The notice adds a filing requirement for ultimate consignee type. The Census Bureau acknowledges that the ultimate consignee type may be unknown or an unlisted category and therefore will add “Other/Unknown” as reporting options for the ultimate consignee type. This is a new mandatory filing requirement and has been added as Sec. 30.6(a)(24).
- Where the country of ultimate destination is the United States, the notice confirms that such goods are outside the scope of the FTR. EEI need not be filed in the case of goods licensed by a US federal government agency, where the country of ultimate destination is the United States or similar circumstances.
- The notice confirms that goods that are transported in-bond through the United States do not trigger the EEI filing requirement. But the notice revises the FTR to make clear that this is not because such shipments are excepted, but because these shipments are outside the scope of the FTR and, therefore, are not subject to the regulations in the first place.
- The new Rule also removes the exemption from filing EEI in 30.37 for temporary goods or temporarily imported goods. Temporary shipments of goods valued at more than $2,500 or that require a license must be filed in AES.
The notice makes several points in connection with the postdeparture reporting program.
- Though several commenters were concerned about the limited commodities available for postdeparture reporting and requested additions, the proposed commodity-based postdeparture program will not be implemented.
- The Census Bureau and CBP have agreed to continue the moratorium on accepting new applications for postdeparture filing, pending the development of a new program that can collect advanced export information, facilitate trade and address national security concerns. Guidelines on the application process for this new program will be issued in the future.
- The notice confirms that there will be no change to the requirement to report postdeparture shipments no later than five (5) calendar days from the date of export. Despite concerns that this did not allow enough time, the Census Bureau reviewed the data and found that only a small percentage of approved postdeparture USPPIs reported their EEI after five (5) calendar days.
- The notice confirms that EEI must be filed for used self-propelled vehicles regardless of value and destination. No exemptions will be permitted.
- The Final Rule adds the Nuclear Regulatory Commission to the list of items for which EEI is required.
- The Final Rule adds a requirement to fax the Kimberley Process Certificate to the Census Bureau prior to export.
- Generally, shipments originating in the United States destined for Canada are exempt from EEI requirements. But there are exceptions to this exemption, and the Final Rule revised the text to clarify that those exceptions, listed in 30.36(b)(1-7), must be filed the same as all other exports.
- The notice confirms that the port of export for shipments by overland transportation is where the goods cross the US border into Canada or Mexico, including transshipments.
- The Census Bureau added language to Sec. 30.37 to clarify that EEI filing is not required for certain exports of technical data and defense service exemptions; Army, Diplomatic and Fleet Post Office; shipments exported under license exception baggage (BAG); certain shipments designated to Country Group E:1; and other reasons.
- The notice revises the split shipment definition to remove the burden of having to file for multiple shipments that have been split by the carrier and are departing from the same port within 24 hours of each other. The new definition will reflect that after the first part of the shipment has been exported, all the succeeding parts must be exported within 24 hours.
The notice also clarifies that several proposals previously discussed were not adopted. Companies also should review these “changes not made” in order to confirm procedures or resolve compliance questions. Several of the rejected changes are as follows:
- The President’s National Export Initiative (NEI) – Several commenters expressed concern that some of the proposed postdeparture changes would impede the NEI. The Census Bureau explained that it reviewed all comments and excluded several proposals to reduce the burden on the trade community in order to complement the NEI while still supporting enforcement objectives.
- Repairs and replacements – AES filing is required when repairs or replacements are valued over $2,500 per Schedule B number, or when a license or a Department of Defense Trade Controls exemption is required. The notice states that this requirement “has not changed.”
- Reporting Country of Origin – In response to concerns that a proposed requirement to report the country of origin would require expensive automated systems or excessive manual procedures, this proposed reporting requirement was rejected.
- Inclusion of the Equipment Number as a Conditional Data Element – The Census Bureau agreed with members of the trade community who feared that the unavailability of this information at time of export would create an undue burden on exporters and, instead, the equipment number will remain an optional field.
- Reporting the address of the license applicant – The Census Bureau acknowledged that this information is collected in the export control licensing system and rejected the proposal to require AES reporting of the license applicant.
- Proposed elimination of the requirement to report the exclusion legend – In response to concerns that the exclusion legend is necessary for carriers to be able to recognize if the shipment was annotated properly, and that such elimination would potentially lead to violations of the FTR which would ultimately result in penalties for all parties involved, the Census Bureau and CBP agreed with the commenters that this existing requirement should not be changed.
- Requirement to report the end user – Because capturing the end user is potentially costly and the information is not always available, and because the Census Bureau acknowledges that this information is collected in the export control licensing system, the Census Bureau eliminated the requirement to report the end user in the Final Rule.
For any of these issues that seem relevant to a particular exporter’s products or procedures, we recommend that the export compliance personnel review the new notice, together with the earlier Notice of Proposed Rulemaking containing the proposed changes, published in the Federal Register on January 21, 2011.
The Rule also notes a number of definitions which have been added, deleted, or modified. Export compliance personnel should pay close attention to changes in the definitions section as part of any review.