International Trade Law News

The National Council on International Trade Development (www.ncitd.org) has announced that its next monthly international trade compliance meeting on May 8, 2008 in Washington, DC will feature the following speakers:

Ms. Hillary Hess
Director, Regulatory Policy Division
Bureau of Industry and Security, U.S. Department of Commerce

Ms. Randy Pratt
Director, Information Technology Controls Division
Bureau of Industry and Security, U.S. Department of Commerce

Ms. Lauren Airey
Legislative Assistant to Rep. Don Manzullo (IL-16)
Speaking on H.R. 5828, the Securing Exports Through Coordination and Technology Act of 2008

For information on how to join NCITD or to attend the meeting, see www.ncitd.org or contact the NCITD Secretariat at 202-872-9280.

Also, it is not too late to sign up for the NCITD's "Free Trade Agreements for U.S. Businesses: A Practical Seminar on how U.S. Free Trade Agreements Work" program on May 7, 2008. Click here for more information.

Labels: AES, BIS

Representatives Don Manzullo (R-IL) and Adam Smith (D-WA) recently introduced H.R. 5828, the Securing Exports Through Coordination and Technology Act of 2008. According to the press release issued in connection with the introduction of this bill, H.R. 5828 is intended to "clarify a confusing U.S. export system that often punishes inadvertent mistakes with costly fines" and would "strengthen the government’s ability to crack down on deliberate violators." The bill "would require the federal government to modernize its computerized Automated Export System (AES) to prevent freight forwarders (who facilitated 78 percent of the $1.62 trillion in U.S. exports for 2007) and others from inadvertently making illegal exports to restricted parties or embargoed countries."

The centerpiece of the bill, as contained in section 304, is the authorization of a program that would require companies and users of AES to obtain a license to file AES records. Among other things, the bill authorizes the Census Bureau to conduct examinations and background checks and collect users fees to defray the costs of an AES licensing program. The Census Bureau previously considered establishing an AES Filer Licensing and Permit Program. However, in a 2003 Federal Register notice issued in connection with the advance notice of proposed rulemaking associated with the mandatory AES program Census indicated that it "decided not to move forward with the development and implementation of an AES filer licensing program concurrently with requiring full mandatory electronic filing of export information through the AES. However, the Census Bureau will continue to explore the need for an AES filer licensing program."

The bill would also require AES to provide certain export compliance information, fatal error messages and alerts to AES filers. For example, section 305 of he bill requires AES to provide the following notifications to filers:

(1) Codes entered into the Automated Export System to identify an export, whether by classification under the Harmonized Tariff Schedule or otherwise, will alert the exporter of potential export license requirements under the Export Administration Regulations or the International Traffic in Arms Regulations (ITAR).

(2) Automated Export System will issue a Fatal Error notice when data entered for an export contain any of the following:

(A) The name or address of an individual or legal entity that has been described on any restricted party list and the data are not accompanied by the necessary export authorization.

(B) The intermediate or ultimate country of destination is subject to trade sanctions imposed by the United States and the data are not accompanied by the necessary export authorization.

(C) In the case of defense articles and defense services, the country of the intermediate or ultimate consignee is subject to an arms embargo or prohibition imposed by the United State and the data are not accompanied by the necessary export license.

(3) Automated Export System will issue compliance alerts or other warnings to the filer when data for an export are entered containing any of the following errors or omissions:

(A) The Harmonized Tariff System code is inconsistent with the Export Control Classification Number or the U.S. Munitions List Category.

(B) In the case of a dual use item, the license exception is not available to the country of the ultimate consignee or to the intermediate or ultimate consignee.

(C) In the case of defense articles and defense services, the U.S. Munitions List Category is identified but no license number, exemption, or exception is correctly identified.

(4) Fatal Error notices, compliance alerts, or other warnings are accompanied by references to the applicable regulations and licensing authorities.

Labels: AES, Congress

Reprinted from Strasburger & Price's February 22, 2008 Transportation/Logistics Newsletter:

U.S. Census Bureau is Close to Issuing Final Rule On Mandatory AES Filings and Penalties

Exporters, freight forwarders, carriers and other parties involved in exportation of goods from the United States should be aware that the long-awaited regulation mandating electronic filing of Shipper’s Export Declarations (SEDs) through the Automated Export System (AES), and increasing penalties for inaccurate export filings, is now being finalized. Reliable sources indicate that the Census Bureau, after more than two years of reviewing public comments and consulting with U.S. Customs and Border Protection (CBP), the Bureau of Industry and Security (BIS) and other government agencies on various points of inter-agency disagreement, expects to publish its final rule in the Federal Register during the coming weeks.

The final rule, like the proposed rule published in the Federal Register on February 17, 2005 (70 Fed. Reg. 8200), will completely phase out the paper version of the SED (Form 7525-V) and will refer to the data filed through AES as Electronic Export Information or EEI. As a result, U.S. exporters and freight forwarders should automate their export operations and procedures, if they have not done so already, to prepare for AES filing.

The new rule also will raise penalties for inaccurate or late filed EEI to $1,000 to $10,000 per violation. The increased penalties, coupled with the universal requirement for electronic filing, complete the evolution of U.S. export reporting requirements from primarily a statistical tool to a mechanism for enforcement of export controls.

Both exporters and freight forwarders can be held liable for inaccurately filed EEI. Exporters are encouraged to audit entities that have been filing SED/AES data on their behalf, and forwarders may need to increase their due diligence regarding information supplied by customers for AES purposes.

The final rule will also affect carriers. Under current regulations, carriers must attach SEDs to the manifest. As a result of the final rule, carriers will be required to show proof of filing (i.e., a citation to an Internal Transaction Number or ITN assigned in the AES filing process) and/or an exemption legend. The ITN or legend will have to appear on the bill of lading, air waybill, or other shipping document attached to the manifest.

The following is a summary of additional major provisions of the proposed rule that we expect to see in the final rule:

• The name of the Foreign Trade Statistics Regulations at 15 CFR Part 30 will be changed to the Foreign Trade Regulations (FTR). The new name will more accurately reflect the scope of the revised regulations, such as the inclusion of Department of State requirements and the advanced filing requirements previously implemented by CBP.
• The rule will allow four optional means for the required electronic filing of EEI: (1) Using AESDirect (a free service offered by Census); (2) purchasing AES filing software from certified vendors; (3) developing software using the Automated Export System Trade Interface Requirements (AESTIR); or (4) using an authorized agent (such as a freight forwarder -- many of whom charge a fee for filing AES data on an exporter’s behalf).
• The final regulation will include the current language specifying that in "routed" transactions (where a foreign party authorizes a U.S. agent to facilitate exports on its behalf), the U.S. principal party in interest (USPPI) must compile and transmit export information on behalf of the foreign principal party in interest (FPPI) when it receives written authorization from the FPPI to do so.
• The rule will specify when and where EEI must be filed. With some exceptions, EEI with the appropriate ITN citations and/or exemption legends will have to be transmitted to the exporting carrier within specified time frames depending on the mode of transportation used. For example, transmissions for vessel cargo will need to be provided to the exporting carrier no later than 24 hours prior to departure of the vessel from the U.S. port where the cargo is laden. Currently, the required export information need only be presented to the exporting carrier prior to exportation.
• A procedure will be set forth for reporting the value of goods through AES when inland freight and insurance charges are not known at the time of exportation.
• The rule will indicate that EEI is used for statistical and export control purposes, and will warn that “[a]ll parties to an export transaction must comply with all relevant export control regulations, including the requirements of the statistical regulations of this part.” The rule also will require the retention of documents or records pertaining to a shipment for five years from the date of export, and in the format required by the regulations of the controlling agency.
• The limited exemptions available for the filing of EEI will remain largely unchanged from current law. For example, exports of commodities with a value of $2500 or less per Schedule B line item will be exempt from the EEI filing requirements.
• The rule will provide that penalties may be remitted or mitigated if they were incurred without willful negligence or fraud, or if other circumstances exist that justify a remission or mitigation.

The new regulation will provide for enforcement of FTR penalty provisions by three agencies: CBP; U.S. Immigration and Customs Enforcement (a sister agency of CBP within the Department of Homeland Security), and the Office of Export Enforcement within BIS at the Department of Commerce.

We expect that once the final rule is published, there will be a ninety-day transitional period before the penalty and other aspects of mandatory AES filing will take effect. Thus, now is the time for all affected parties to review and assess their compliance with AES filing and recordkeeping requirements.

Labels: AES

The Bureau of Industry and Security (BIS) has announced a new Automated Export System (AES) reporting requirement for exporters using certain license exceptions. Effective April 28, 2008, it will be mandatory to report the Export Control Classification Number (ECCN) on the AES record when using license exceptions TSR, RPL, GOV, GFT, TSU, BAG, AVS, APR, KMI, TAPS and ENC to export goods, technology or software from the United States.

While section 740.1(d) of the EAR currently requires the use of the ECCN "for all shipments of items exported under a License Exception", AES has required the ECCN to be included in the AES record when using license exceptions APP, AGR, CIV, GBS and LVS only.

The complete list of AES license exception codes is as follows:

C35 LVS
C36 GBS
C37 CIV
C38 TSR
C39 CTP
C40 TMPC
C41 RPL
C42 GOV
C43 GFT
C44 TSU
C45 BAG
C46 AVS
C47 APR
C48 KMI
C49 TAPS
C50 ENC
C51 AGR
C53 APP

Failure to include the ECCN when using these codes will result in a "fatal error" message from AES.

The following is the complete list of the BIS, DDTC, OFAC and NRC license exception/exemption codes from CBP's Automated Export System Trade Interface Requirements (AESTIR):


AES License Exception Codes - Get more free documents

Labels: AES, BIS

The deadlock between the Census Bureau and U.S. Customs and Border Protection regarding certain aspects of the Mandatory Automated Export System (AES) regulation has apparently been resolved. As a result, the Census Bureau should be soon publishing the final rule requiring all Shipper's Export Declarations (SEDs) to be filed electronically through AES and increasing penalties for inaccurate or delinquent filings.

The long delay in issuing the mandatory AES rule has centered on two aspects of the proposed mandatory AES rule that was published by Census in the Federal Register on February 17, 2005. The first issue related to the availability and eligibility criteria for the post-departure filing of export information (currently known as "Option 4"). The second issue involved the sharing of export information provided by AES filers with foreign governments.

A summary of the proposed mandatory AES rule that was published by Census on February 17, 2005 can be found here. The public comments that were submitted to Census on the proposed rule can be found here.

Labels: AES

The National Council on International Trade Development (www.ncitd.org) has announced an excellent group of speakers at its next monthly trade compliance meeting. NCITD's April 12, 2007 meeting in Washington, DC will feature the following speakers:

• Susan M. Clark, Director of the Office of Defense Trade Controls Licensing, U.S. Department of State;
• Wendy Peebles, Chief of Automated Export System, Foreign Trade Division, U.S. Census Bureau; and
• Matthew S. Borman, Deputy Assistant Secretary for Export Administration, Bureau of Industry and Security, U.S. Department of Commerce
  

For information on how to join NCITD or to attend the meeting, see www.ncitd.org or contact the NCITD Secretariat at 202-872-9280.

Labels: AES, BIS, DDTC

The publication of the Census Bureau's final Mandatory AES regulation has been delayed yet again. Census now expects to distribute the draft of the final regulation to the other interested agencies (BIS, CBP, State) in a few weeks and hopes to publish the final regulation in the Federal Register in March. Given the final rule's 90 day implementation period, all SEDs (to be called Electronic Export Information) will have to be submitted to Census electronically via AES by mid-2006.

Labels: AES

Breaking News: As a result of unexpected delays encountered in drafting the final rule, the Census Bureau does not expect the final rule requiring all Shipper's Export Declarations (SEDs) to be filed electronically through the Automated Export System (AES) and increasing penalties for inaccurate or delinquent filings to be issued until the first quarter of 2006. Since the final rule will provide a 90 day implementation period, paper SEDs will still be permitted to be submitted to Census until mid-2006. Nevertheless, all exporters that are still filing paper SEDs are encouraged to begin the transition to AES as quickly as possible.

A summary of the proposed mandatory AES rule that was published by Census on February 17, 2005 can be found here. The public comments that were submitted to Census on the proposed rule can be found here.

Labels: AES

The following is the latest information on the status of the Census Bureau's final rule requiring all Shipper's Export Declarations (SEDs) to be filed electronically through the Automated Export System (AES) and increasing penalties for inaccurate or delinquent filings:

Census now expects to publish the final rule in the Federal Register by the end of November or beginning of December 2005. As expected, the final rule will provide for a 90 day implementation period. Thus, Census will expect all export data to be filed electronically by the end of February or beginning of March 2006. Overall, the final rule will be very similar to the proposed rule issued in February 2005, although certain language in the proposed rule has been modified in response to comments submitted by the public and additional inter-agency consultations. One of the main changes to the final rule will involve the provisions relating to penalties for providing inaccurate or late export information. For example, the final rule will provide that all voluntary self disclosures (VSDs) relating to inaccurate filings will be sent to Census. Census will examine the information contained in the exporter's VSD and make a decision whether to send it to BIS or CBP for enforcement. The final rule will provide a mitigation process for all civil penalties.

A summary of the proposed mandatory AES rule that was published by Census on February 17, 2005 can be found here. The public comments that were submitted to Cenus on the proposed rule can be found here.

Labels: AES

The Bureau of the Census expects to publish in the next two or three weeks the final rule requiring all Shipper's Export Declarations (SEDs) to be filed electronically through the Automated Export System (AES) and increasing penalties for delinquent SED filings.

A summary of Census' proposed rule that was published on February 17, 2005 can be found at the following link: www.djacobsonlaw.com/2005/02/census-publishes-proposed-rule-on.html.
The public comments that were submitted on the proposed rule can be found at the following link:
www.census.gov/foreign-trade/regulations/nprresponse/.

Labels: AES

The Census Bureau today announced the following change to AESDirect, the Internet based system for filing Shipper's Export Declaration (SED) information to the Automated Export System (AES):

Effective Tuesday, June 21st, the AESDirect Shipment Print capability will be changed as follows:

1. The existing PDF (SED look alike) format will be changed to a text style listing.
2. Additionally, in AESPcLink the print function will also be changed to allow only shipments that are retrieved from AESDirect to be printed.

These changes are being made to allow AESDirect to better support the pending mandatory AES filing regulations. Users of the AESDirect Web application will see no change except the format change. In AESPcLink the Print function is moved from the Edit Shipment function to Retrieve Shipment function.

New versions of AESPcLink Standard and Network Editions incorporating these changes will also be made available for download on Tuesday, June 21st. AESPcLink users are recommended to upgrade their AESPcLink installation to the latest version.

Labels: AES

*IMPORTANT NOTICE FOR ALL U.S. EXPORTERS*

Today the Bureau of the Census (Census) published in the Federal Register the long-awaited Notice of Proposed Rulemaking (NPRM) requiring all Shipper's Export Declarations (SEDs) to be filed electronically through the Automated Export System (AES) and increasing penalties for delinquent SED filings. 70 Fed. Reg. 8,200 (Feb. 17, 2005).

The NPRM provides the public with a 60 day comment period and written comments must be submitted to Census by April 18, 2005. After reviewing and analyzing the comments, Census expects the final rule to be published in late 2005. Although not specified in the NPRM, we have been advised that Census plans to give exporters an additional 90-day period to phase-out the filing of all paper SEDs. Census expects to phase-out completely the paper version of the SED (Form 7525-V) by early 2006.

Because the policy and procedure changes outlined in this NPRM represents a significant policy and procedural change related to the exporting process, U.S. exporters should begin examining their export operations and procedures to ensure that they will be ready to file all export data electronically by the time this regulation is implemented (many companies are doing so already. In addition, we recommend that U.S. companies obtain from Census a report of their company’s prior SED filings to determine which entities and parties have been filing SED data on your behalf. Exporters can receive one year's worth of SED data from Census at no cost. We have developed a sample request letter and it can be obtained by sending an e-mail to info@djacobsonlaw.com with "SED Letter" in the subject line).

The following is a summary of the major provisions of the NPRM:

1. Renames the Foreign Trade Statistics Regulations (FTSR) (15 CFR Part 30 from) to Foreign Trade Regulations (FTR) to more accurately reflect the scope of the revised regulations implementing full mandatory AES filing, such as the inclusion of Department of State requirements and the advanced filing requirement implemented by Customs and Border Protection.

2. Because export data will be filed electronically, the term SED will be replaced by the term Electronic Export Information (EEI).

3. Removes requirements for filing a paper SED (Form 7525-V), so that AES will be the only means of filing export information currently required by the SED.

4. Allows for four optional means for filing EEI: (1) Using AESDirect (a free service offered by Census); (2) purchasing AES filing software from certified vendors; (3) developing software using the Automated Export System Trade Interface Requirements (AESTIR); or (4) using an authorized agent (such as a freight forwarder -- most of whom will charge a fee for filing AES data on their behalf).

5. Specifies the procedures for permitting U.S. principal parties in interest (USPPI) and their authorized agents to file EEI information via AES and requires all agents to have on file a power of attorney and written authorization from the USPPI. (Appendix B to the NPRM contains the sample format for the power of attorney and written authorization).

6. Includes language specifying that in "routed" transactions (where a foreign party authorizes a U.S. agent to facilitate exports on its behalf), the USPPI must compile and transmit export information on behalf of the foreign principal party in interest (FPPI) when it receives written authorization from the FPPI to do so.

7. Requires all EEI to be filed prior to exportation unless the USPPI has been authorized to submit export data on a postdeparture basis (see below). Shipments requiring an export license or license exemption may be filed postdeparture only when the licensing agency has granted specific authorization to do so.

8. Revises the postdeparture (formerly Option 4) approval procedures for postdeparture filing of EEI. Applications submitted by USPPIs for postdeparture filing will be subjected to closer scrutiny by the Census Bureau and other federal government partnership agencies participating in the AES postdeparture filing review process. Under the proposed revised postdeparture filing requirements: (1) authorized agents may no longer apply for postdeparture filing status on behalf of individual USPPIs. Only USPPIs may apply; (2) USPPIs must demonstrate the ability to meet AES predeparture filing requirements by filing EEI to the AES before applying for approval for postdeparture filing; (3) USPPIs must meet a minimum number of shipments requirement before being authorized to file postdeparture; and (4) partnership agencies of the U.S. Government shall determine whether or not a USPPI poses a significant threat to U.S. national security before granting the applicant postdeparture filing status. (Although not specified in the NPRM, we have been advised that current Option 4 filers will retain their postdeparture filing privileges.)

9. The NPRM specifies the time and place-of-filing requirements for presenting proof of filing citations, postdeparture filing citations, and/or exemption legends. With the exception of State Department USML shipments under the control of the International Traffic in Arms Regulations and shipments approved for postdeparture filing, EEI with the appropriate proof of filing citations and/or exemption legends is required to be transmitted to the exporting carrier within specified time frames depending on the mode of transportation used. For example, transmissions for vessel cargo shall be provided to the exporting carrier no later than 24 hours prior to departure of the vessel from the U.S. port where cargo is laden. Time and place-of-filing requirements for other modes of transportation are specified in Section 30.4 of the NPRM. Currently, export information, with appropriate proof of filing citations and/or exemption legends, is only required to be presented to the exporting carrier prior to exportation.

10. Specifies how to file EEI and acquire an Internal Transaction Number (ITN) when AES, AESDirect or the participant's AES is unavailable for filing.

11. Adds language specifying the specific procedure for reporting the value of goods to the AES when inland freight and insurance charges are not known at the time of exportation. Section 30.6 of the NPRM specifies that when goods are sold at a point other than the port of export, freight, insurance, and other charges required to move the goods from their U.S. point of origin to the carrier at the port of export must be added to the selling price (or cost, if not sold) of the goods. Where the actual amount of freight, insurance, and other domestic charges are not available, an estimate of the domestic cost must be made and added to the cost or selling price of the goods to obtain the value to be reported to the AES.

12. Removes requirements for the Date of Arrival and the Waiver of Prior Notice Indicator from the list of data elements required to be reported to the AES. These data elements were previously required to overcome disparities in reporting requirements for certain export shipments sent between the United States and Puerto Rico. With mandatory AES reporting, the Date of Arrival and Waiver of Prior Notice Indicator are no longer required, since shipments sent between the
United States and Puerto Rico will no longer be reported differently than other export shipments.

13. Subpart B of the NPRM specifically states that EEI will be used for statistical and export control purposes. This section states that “all parties to an export transaction must comply with all relevant export control regulations, including the requirements of the statistical regulations of this part. In addition, the NPRM requires the retention of documents or records pertaining to a shipment for five years from the date of export in the in the format required by the controlling agency's regulations.

14. Subpart C of the NPRM revises the language that describes the proper manner for reporting cost of repairs and/or alterations to goods, and the reporting of the value of replacement parts exported. The previous version of the FTSR did not specifically describe the manner in which these export transactions would be reported. Goods previously imported for repair and alteration only, and reexported, shall only include the value for parts and labor. Goods exported as replacement parts shall only include the value of the replacement part.

15. Subpart D of the NPRM describes the limited exemptions available for the filing of EEI. Most of these exemptions remain unchanged from current law. For example, most exports to Canada will remain exempt from the EEI filing requirements (except for defense articles and services requiring a State Department license and a few other cases). In addition, exports of commodities with a total value of $2500 or less will be exempt from the EEI filing requirements.

16. Subpart E contains general carrier and manifest requirements. For example, the requirement that SEDs being attached to the manifest are replaced with requirements for proof of filing citations and/or exemption legends to be shown on the bill of lading, air waybill, or other commercial loading documents attached to the manifest.

17. Subpart F describes the requirements for the electronic filing of statistical data for shipments imported into FTZs. Currently, requirements for electronically reporting FTZ admissions are included in the Census Bureau's “Automated Foreign Trade Zone Reporting Program” manual. In addition, added to subpart F are instructions to import filers on where to obtain information on reporting import data.

18. Subpart G of the NPRM reiterates that the EEI contained in the AES is confidential, will be used only for official purposes authorized by the Secretary of Commerce and will not be disclosed to foreign governments (this has been a major issue during the past year). In addition, this provision states that any Federal Government official or agent breaching the confidentiality provisions will be subject to penalties.

19. One of the most significant changes in the NPRM is contained in Subpart H of the NPRM. The language in Subpart H significantly increases the penalty provisions associated with the filing of EEI. Because of the current emphasis on the EEI as an export control enforcement tool, Census will move from the current system of virtually no enforcement activity to a system where significant penalties can and will be imposed for late and unfilled export information. The NPRM’s penalty provisions will dramatically increase the penalties imposed for violations from $100 to $1,000 per each day of delinquency, to a maximum from $1,000 to $10,000 per violation. In addition, the penalty provisions provide for situations when the filer knowingly fails to file, files false and/or misleading information and other violations of the FTR where a civil penalty shall not exceed $10,000 per violation and a criminal penalty shall not exceed $10,000 or imprisonment for not more than five years, or both, per violation. The NPRM provides for enforcement of these penalty provisions by the Bureau of Industry and Security's Office of Export Enforcement (OEE) and the Department of Homeland Security's CBP, Immigration and Customs Enforcement (ICE). The provision specifies that the penalties may be remitted or mitigated if they were incurred without willful negligence or fraud or other circumstances exist that justify a remission or mitigation. (While not specified in the NPRM, we have been advised that Census intends for the civil penalties for the late filing of SEDs/EEIs to be imposed on the U.S. Principal Party in Interest (USPPI), the USPPI's agent (i.e., freight forwarder) AND the carrier).

The PDF version of the NPRM can be found at the following link: www.djacobsonlaw.com/documents/2.17.05CensusRule.pdf.

Labels: AES

The Bureau of the Census is expected to publish in the Federal Register later this week or early next week the long-awaited proposed rule making major changes to the Foreign Trade Statistics Regulations and requiring mandatory filing of Shipper's Export Declarations via the Automated Export System (AES). An article describing these changes can be found found in the latest issue of Global Watch - The Newsletter of the International Import-Export Institute at the following link: www.djacobsonlaw.com/documents/IIEINewsletter(Jan-Feb2005).pdf.

Companies interested in performing an internal audit of their prior SED filings can request one year’s worth of SED data from the Bureau of the Census at no charge. Anyone interested in receiving an example of the format for requesting SED data from Census can send their request to info@djacobsonlaw.com. Please indicate "SED Letter" in the subject line of your request.

Labels: AES

The long-delayed regulation implementing the Security Assistance Act of 2002 (Public Law 107-228, 116 STAT. 1350), which requires all Shipper's Export Declarations (SEDs) to be filed electronically through the Automated Export System (AES) and increases penalties for delinquent SED filings, has been finalized by the Bureau of the Census (Census) and is being circulated to other agencies for review. Census expects the Notice of Proposed Rule Making (NPRM) to be published in the Federal Register in early 2005. The NPRM will provide the public with a 60 day comment period. Census expects the final rule to be published in late 2005. Census plans to give exporters an additional 90-day period to phase-out the filing of all paper SEDs. Census expects to phase out the paper version of the SED (Form 7525-V) in early 2006.

In addition to requiring the mandatory filing of export-related data via AES, the NPRM will also implement several major changes to the Foreign Trade Statistics Regulations (FTSR) (15 CFR Part 30) that are required by law. First, the FTSR will be renamed the Foreign Trade Regulations (FTR). Second, because export data will be filed electronically, the term SED will be replaced by the term EEI (Electronic Export Information). Third, current SED filing options 2 and 4 will be renamed, Pre Departure filing and Post Departure filing, respectively. Current Option 4 filers will be grandfathered into the new system (a list of current AES Option 4 filers can be found at www.census.gov/foreign-trade/aes/approved-aes-opt4.html#W). There will be a number of changes to the current system for companies that are not, but would like to become, Post Departure filers.

One of the most significant changes that was required by the Security Assistance Act of 2002 and will be implemented by the new Census regulation is a significant increase in the penalty provisions associated with the filing of SEDs/EEIs. Because of the current emphasis on the SED/EEI as an export control document, Census will move from the current system of virtually no enforcement activity to a system where significant penalties can and will be imposed for late or inaccurate filings. Census has indicated that it is reasserting its authority over the enforcement of the FTRs and will have the authority to refer violations of the FTRs to the Bureau of Industry and Security's Office of Export Enforcement. CBP and Immigration and Customs Enforcement will have jurisdiction over violations discovered in the field. Under the new Census regulation, civil penalties for the late filing of SEDs/EEIs can be imposed on the U.S. Principal Party in Interest (USPPI), the USPPI's agent (i.e., freight forwarder) AND the carrier. Monetary penalties up to $1000 per each day for late filings can be imposed on exporters/forwarders/carriers, up to a maximum of $10,000 per violation. The Census regulation will set forth a number of mitigation and remission considerations.

Even though the mandatory filing of export data via AES for USML and CCL items went into effect in October 2003, some ports are still requiring exporters to provide a paper copy of the SED for exports of military and other controlled products. Census expects this practice to cease in the near future since Census and the State Department's Directorate of Defense Trade Controls (DDTC) have recently signed a Memorandum of Understanding whereby Census will supply export data directly to DDTC.

In anticipation of the forthcoming move towards mandatory AES and increased enforcement activity on export data, companies interested in performing an internal audit of their prior SED filings can request one year's worth of SED data from Census at no cost. Census will charge exporters $125 for each additional month's worth of data.

Labels: AES