United States Customs and Border Protection(“CBP”) published the Trade Act regulations in the Federal Register on December 5, 2003. The rule requires advance transmission of electronic cargo information to CBP for both arriving and departing cargo. In the Federal Register notice, CBP identified the AES as the system for transmission of advance electronic export data for all modes of transportation.
On June 2, 2008, the U.S. Census Bureau published amendments to Title 15, Code of Federal Regulations, Part 30, Foreign Trade Regulations, mandating the filing of export information by the U.S. Principal Party in Interest (“USPPI”) or its authorized agent through the AES or AESDirect for all shipments where a Shipper’s Export Declaration (“SED”) was previously required. SED information filed to AES became known as Electronic Export Information (“EEI”).
When do you need to prepare the EEI formerly SED to be filed with CBP?
- Shipment of merchandise under the same Schedule B commodity number is valued at more than US$2,500 and is sent from the same exporter to the same recipient on the same day. (Note: Shipments to Canada from the U.S. are exempt from this requirement.)
The shipment contains merchandise, regardless of value, that requires an export license or permit. - The shipment, regardless of value, is being sent to Cuba, Iran, North Korea, Sudan or Syria.
- The shipment contains rough diamonds, regardless of value (HTS 7102.10, 7102.21 and 7102.31)
- The merchandise is subject to the International Traffic in Arms Regulations, regardless of value.
Our firm offers assistance with filing such information and maintaining compliance.
What is Export Compliance?
Export compliance refers to the laws, regulations, policies, and procedures that govern the export of goods, software, and technology from one country to another. It aims to prevent the transfer of restricted goods and technologies that could pose a threat to national security or have other negative impacts. By complying with export regulations, a company can avoid legal and financial penalties.
Regulations You Need to Follow
The primary regulators of export compliance are the US Department of Commerce, the US Department of Treasury, and the US Department of State. These agencies enforce several regulations, including International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR). Companies must also calculate their export potential against the 36 countries listed as sanctioned by the US government.
The Importance of Classification
Many items need to be classified according to export control regulations to ensure they are exported legally. At the core of classification is determining whether an item qualifies as a controlled good, software, or technology and understanding the requirements to export it. Software may contain restricted source code, and goods can contain restricted technology, so it’s essential to classify your items accurately.
Managing Your Export Compliance Program
To ensure compliance with export regulations, a company must establish a well-defined and documented export compliance program. This plan includes policies and procedures for managing and classifying items, determining the need for licenses, selecting business partners, managing training, and maintaining accurate records.
Penalties for Non-Compliance
Penalties for non-compliance with export regulations can range from financial fines to criminal charges, with fines potentially reaching millions of dollars. Companies importing or exporting controlled items must carefully monitor their export compliance program to avoid penalties.