Automated Export System
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 merchandise is subject to the International Traffic in Arms Regulations, regardless of value.
- 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)
Our firm offers assistance with filing such information and maintaining compliance.
Seizures
U.S. Customs and Border Protection (“CBP”) have the authority to seize goods for violations of the Customs laws (e.g., the absence or late filing of the Electronic Export Information in the Automated Export System (AES) or late filing of AES commodity data) or other laws enforced by CBP on export. If Customs find a violation, they will seize it and transfer it from the Centralized Examination Station to a bonded warehouse. Throughout this process the exporter is charged storage fees, which may need to be paid if Customs agrees to release the goods. Seizures are handled by a department in CBP known as Fines, Penalties, and Forfeitures (FP&F). An FP&F paralegal reviews the case and issues a seizure notice to the alleged violator. The seizure notice will give information regarding the identity of the merchandise, the location of the seizure, and citations to legal authorities. Generally, the alleged violator is given options 1) file a petition with customs within 30 days of the issuance date on seizure notice; 2) file an offer in compromise 3) abandon the property; 4) take the matter directly for court action (you need to fill out the seized asset claim form and post a cost bond equal to 10% of the value of the seized merchandise, or $5,000, whichever is lower); or 5) Begin administrative proceedings to forfeit the property.
Our firm assists exporters in the filing of administrative petitions if the property is seized and obtaining the release of their property from Customs custody.
Penalties and Liquidated Damages
Penalties are assessed by United States Customs and Border Protection (“CBP”) for a variety of export violations including but not limited to 19 U.S.C. § 1592 (civil penalties for negligence, gross negligence, and fraud with regarding lost revenue or duties where required documentation is false or incomplete or the transaction between parties is false), 19 U.S.C. § 1526(f) (intellectual property violations).
Liquidated Damages are predetermined civil penalties assessed against exporters who have breached the terms of their Customs Bond. These liquidated damages claims arise when an exporter fails to adhere to the Customs regulations and/or requests made by CBP on behalf of other government agencies.
Petitions for mitigation from penalties and/or liquidated damages must be filed within sixty (60) days from the date of mailing to the bond principal, the notice of claim for liquidated damages, or penalty secured by a bond. The degree at which CBP will grant mitigation is dependent on CBP’s mitigation guidelines and the facts and circumstances of the case.
Our firm frequently files petitions for mitigation and is successfully in substantially reducing penalties and/or liquidated damages claims.
Department of Commerce
To engage in certain types of exports the Export Administration Regulations (“EAR”) must be complied with prior to exportation from the United States. Generally, to export these items a license must be obtained from the Department of Commerce Bureau of Industry and Security (“BIS”). In order to determine whether an export license is needed from you need to identify whether your product has a specific Export Control Classification Number (“ECCN”). The ECCN is an alpha-numeric code, that describes the item and indicates licensing requirements. All ECCNs are listed in the Commerce Control List (“CCL”). The CCL is divided into ten broad categories, and each category is further subdivided into five product groups.
Department of State
The Department State Directorate of Defense Trade Controls (“DDTC”) has jurisdiction over the export of defense articles and services. The DDTC overseas the implementation of the International Traffic in Arms Regulations (“ITAR”) which are regulations intended as national security measures and for the promotion of foreign policy objectives. Within the ITAR is the United States Munitions List (“USML”) which describes what a defense article or service means. Under ITAR, a license is generally required before an export can take place. Our firm assists in submitting preparing license applications, DSP-5 authorizations, and complying with export regulatory requirements.
Commodity Jurisdiction Requests
When you are presented with the question of whether a good or service falls under the Commerce Control List (“CCL”) or the United States Munitions List (“USML”) you may proceed for a commodity jurisdiction request (“CJR”). The U.S. government applies different licensing procedures and policies depending on above jurisdiction.
The Bureau of Industry and Security (“BIS”) is the licensing agency for exports subject to the Export Administration Regulations (“EAR”) containing the CCL. The Department of State Directorate of Defense Trade Controls (“DDTC”) is the licensing agency for exports subject to the Arms Export Control Act (“AECA”) and the International Traffic in Arms Regulations (“ITAR”); the ITAR contains the USML.
Once a CJ is submitted the DDTC will make a determination as to its licensing authority. This determination is not a license or approval to export an item or perform a service; one must still gain the appropriate approval from BIS or DDTC prior to export. The timetable for the processing of a CJ varies depending on the complexity of the request and the recommendations of the reviewing agencies. However, the DDTC estimates that requests should be answered within 60 days.
Our firm assists with the filing of a CJR to determine how your product will be regulated for export licensing purposes.
Department of Treasury
The Department of Treasury’s Office of Foreign Asset Controls (“OFAC”) oversees economic and trade sanctions against specific countries or individuals to which U.S. foreign policy and national security goals are of concern by the government. Thus, a U.S. person or company cannot engage in business activity with an entity listed under OFAC without a license.
There are two types of OFAC licenses; a general license and a specific license. A general license authorizes a type of transaction for a class of persons and/or goods without the need to apply for a license. However, you must strictly adhere to the limitations of the general license as listed in the regulations. A specific license is a document issued by OFAC to an entity authorizing a specific transaction. You may need a combination of a general and specific license or more than type license to conduct a particular transaction.
Failure to comply can result in civil and criminal penalties. Our firm assists in compliance with OFAC laws, preparing and submitting license applications, voluntary disclosures, and filing petitions when OFAC violations are alleged.
