Shipping Solutions Newsletter

By David Noah email

If you haven’t yet made plans to file your Shipper’s Export Declarations (SEDs) electronically, you better start soon. Newly published export regulations and statements made by U.S. Census Bureau officials at recent public events make it clear that the paper SED will be abolished at some point in 2004.

Instead of filing the paper SED, U.S. exporters will be required to file the information electronically through the Automated Export System (AES). Some U.S. companies are required to use AES even sooner.

According to a final rule published in the July 17, 2003, Federal Register, companies that export items on the Commerce Department’s Commerce Control List (CCL) or the State Department’s U.S. Munitions List (USML) must begin filing through AES by October 18, 2003.

This change from paper SEDs to the electronic AES shouldn’t come as a surprise to most U.S. exporters. On November 1, 2000, the Census Bureau and U.S. Customs (as it was known then) agreed to allow ocean carriers to charge $100 for every paper SED that shippers filed. About that same time, the Commerce Department issued a report recommending that shippers and forwarders be required to file SEDs electronically through AES by 2005.

Census published the first notice that exporters of items on the CCL and USMC would be required to use AES rather than paper SEDs in October 2002.

Companies that fail to follow these new rules will face civil fines of $10,000 per violation. In addition, company officials who knowingly fail to file through AES or file fraudulent information will face criminal penalties of $10,000, five years in jail, or both.

When is an SED/AES Required?

The Census Bureau uses the information on the SED and AES for collecting trade data for statistical purposes. The monthly news stories reporting the United States’ “alarming” trade deficit, for example, come in part from these statistics.

The Bureau of Customs and Border Protection (CBP), formerly known as U.S. Customs, also uses SEDs and AES to monitor export compliance. In particular, CBP wants to ensure that certain critical technologies and commodities aren’t exported to unauthorized destinations or end users.

Under current U.S. export rules and regulations, a paper SED or electronic AES filing is required for most exports of merchandise valued at more than $2,500 from the United States, Puerto Rico and the U.S. Virgin Islands to foreign countries or between the U.S. Virgin Islands, Puerto Rico and the United States. The SED or AES filing is also required for all exports under the Bureau of Industry and Security (BIS) or State Department export license or license exemption regardless of the value.

Exports from the U.S. to Canada do not require an SED or AES filing regardless of the value of the merchandise unless an export license or license exemption is required.

The Advantages of AES

According to the Census Bureau, electronic filing of the SED improves the government’s ability to monitor and prevent exports of critical goods and technologies and significantly improves the quality and timeliness of export statistics. For example, the error rate for export transactions filed through AES is approximately six percent compared to an error rate of about 50 percent on paper SEDs.

AES offers advantages for exporters, as well.

Because the export data is submitted real-time to Census, AES provides immediate feedback to the filer when data is omitted or incorrect. The filer can correct this data immediately, ensuring compliance with export reporting requirements and reducing the chances that the shipment will be delayed by Customs.

When an exporter utilizes AES as part of an export documentation software such as Shipping Solutions, the company can eliminate redundant data entry that reduces mistakes and provides a substantial cost savings. Some Shipping Solutions customers have said they have recouped their investment in the software in less than 10 export shipments.

In addition, by utilizing an AESDirect-certified software program, export companies eliminate the need to create their own direct interface with AES, which involves an application and on-site approval process. It also allows them to keep the AES filing in-house since a company is responsible for the accuracy of the data regardless of who they have file it.

Registering for AESDirect is an easy five-step process:

Go to www.aesdirect.gov.
Click on the “Registration Form” link and complete the online form. If you will be using Shipping Solutions export documentation software to file, skip the section entitled “EDI Upload.” When you are finished, click the “Submit AESDirect Registration” button.
You will receive a User ID and Password from AESDirect by email. Enter your User ID and Password to log on to AESDirect.
Click on the “Tutorial Option. (You must complete the tutorial to begin filing through AES.) The Census Bureau will set up your AES account once you have successfully completed the tutorial.
You will be notified by email when your AESDirect account is fully activated for filing.

If you are a Shipping Solutions user, you can then enter your export information into the software, click on the AES button, and Shipping Solutions will upload your data to AES. When you have successfully completed uploading the data, AES will provide you with an External Transaction Number (XTN) that you can copy and store in the software as a record that you have filed your export information electronically.

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The U.S. Bureau of Industry and Security (BIS) recently announced fines levied against three companies for violating U.S. export regulations. In addition to the fines, one of the cases included a denial of future export privileges.

Bushnell Corporation was fined $650,000 and placed on five years corporate probation after pleading guilty to illegally exporting night vision equipment to Japan and 14 other countries between September 1995 and December 1997 without the required export licenses. Civil penalties are still pending.
Industrial Scientific Corporation was fined $30,000 to settle charges that they exported gas monitors to the United Arab Emirates with knowledge that they would be re-exported to Iran.
Serfilco Ltd. agreed to $65,000 in administrative penalties and denial of export privileges to specified countries for allegedly violating a 1996 export denial order that prohibited Serfilco from participating in any transaction involving an export or negotiating a sale for export to 11 countries for a one-year period. The 1996 denial order was imposed after Serfilco violated the Antiboycott Provisions of the Export Administration Regulations by providing information about its business relationship with Israel when it responded to a boycott questionnaire from an Iraqi distributor and for failing to report its receipt of boycott-related requests to BIS.

The U.S. government is stepping up enforcement of export rules and regulations through changes in export requirements such as replacing the paper Shipper's Export Declaration with the Automated Export System (see the article above). Exporters should visit the BIS website for a summary of the export enforcement program.

In addition, programs like the new Shipping Solutions Professional export documentation and compliance software can greatly enhance exporters' ability to ensure compliance by checking the various restricted parties lists and export license requirements.

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By Susan Senger email | bio

Canada, Mexico and the United States agreed to establish a uniform Certificate of Origin to certify that goods imported into their territories qualify for preferential tariff treatment accorded by NAFTA. Only importers who possess a valid Certificate of Origin can claim this preferential tariff treatment.

Since the NAFTA Certificate of Origin summarizes their claims that goods qualify as originating, exporters and producers must retain their records for a minimum of five years after they sign a Certificate. These records include all documentation that they use to help determine that their goods meet the NAFTA Rules of Origin.

In order to verify that these claims for preferential treatment are valid, the NAFTA authorizes the customs administration in the importing country to audit an exporter or producer that executes a Certificate of Origin. These audits can be performed by written questionnaire, telephone, fax, on-site visits or other means.

Typically, a customs audit will begin with a written questionnaire. If an exporter or producer doesn’t provide sufficient information on the questionnaire to make a determination of origin, a customs officer may obtain additional information by undertaking a customs verification visit.

Prior to conducting a verification visit, the customs authority in the importing country must provide written notification of its intention to conduct the visit to the exporter or producer whose premises are to be visited, as well as to the customs administration and the embassy of the NAFTA country in whose territory the visit will occur. Before the visit can be conducted, the exporter or producer whose goods are the subject of a verification visit must grant written consent. It also has the right to designate two observers to be present during the visit.

If an exporter or producer does not consent to the verification visit within 30 days of receiving notification of the proposed visit, the importing country may withdraw preferential NAFTA tariff treatment from the exporter’s or producer’s goods. The exporter or producer still maintains the right to appeal this determination.

Whether an importing country’s customs authority makes a determination by questionnaire, on-site visit or other means, it must issue a written ruling to the exporter or producer. The exporter or producer can review and appeal this determination in the importing country.

Any confidential business information that is collected during an audit may only be disclosed to authorities that are responsible for the administration and enforcement of determinations of origin and of customs and revenue matters.

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