International Trade Law News

Published by Jacobson Burton Kelley PLLC

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