International Trade Law News

Published by Jacobson Burton Kelley PLLC

By Douglas N. Jacobson

The Census Bureau's Foreign Trade Division recently sent "Dear Filer" letters to a number of exporters advising them that they "failed to successfully report Electronic Export Information (EEI) through the Automated Export System (AES) in a timely manner." The letters, which were directed at both Option 2 (pre-departure) and Option 4 (post-departure) filers, were intended to remind exporters that Census monitors AES filings for "data quality, timeliness and accuracy" and that the Foreign Trade Statistics Regulations require complete export information to be submitted in a timely manner. The letter also informed exporters that the late filing of export data results in shipments not being published in the proper statistical month.

The Census Bureau's "Dear Filer" letters serve as an important reminder that all exporters should ensure that they are filing their export data in an accurate and timely manner. While the mandatory filing of export data via AES for items included on the U.S. Munitions List (USML) and Commerce Control List (CCL) has been required since October 2003, Census will soon be issuing the long-anticipated regulation implementing the Security Assistance Act of 2002 (Public Law 107-228, 116 Stat. 1350). The new regulation will require export declarations for ALL shipments to be filed electronically and will significantly increase the fines and penalties for late filings. This regulation, which was published in proposed form by the Census Bureau in February 2005 (70 Fed. Reg. 8,200 (Feb. 17, 2005)) and is now being finalized by Census, will be published in the very near future. Census plans to give exporters a 90-day period to phase-out the filing of all paper Shippers Export Declarations (SEDs) (Form 7525-V).

In addition to requiring the mandatory filing of export-related data via AES, the forthcoming Census regulation will implement several major changes to the nomenclature commonly used by exporters. Not only will the FTSR be renamed the Foreign Trade Regulations (FTR), the term SED will be replaced by the term EEI (Electronic Export Information). The regulation will also rename filing options 2 and 4 as "Pre Departure" filing and "Post Departure" filing, respectively. Current Option 4 filers will be grandfathered into the new system. The mandatory AES rule will also provide specific time and place-of-filing requirements for filing export data.

The Census Bureau's forthcoming regulation will also enhance the penalty provisions associated with the late filing of export data. Because export declaration data is now commonly used by the law enforcement community as an export control tool, exporters will be faced with moving from the current system of virtually no enforcement activity to a system where significant penalties can and will be imposed for late or unfiled export data. Once the new system takes effect, civil penalties will increase from $100 per day to $1,100 per day of delinquency, with a maximum of $10,000 per violation. The civil penalties for the late filing of EEI can be imposed on all of the parties in the transaction, including the U.S. Principal Party in Interest (USPPI), the USPPI's agent (i.e., freight forwarder) and the carrier. These penalty provisions will be enforced by the Bureau of Industry and Security's Office of Export Enforcement (OEE) and by U.S. Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE) at the Department of Homeland Security.

While a high percentage of export declarations are now being filed electronically (96%, according to the Census Bureau), many exporters have not yet completed their migration to the electronic system of filing export declarations. Exporters are encouraged to review their export documentation procedures to ensure that they are filing their export declarations electronically and are doing so in a timely manner. There are several ways for companies to comply with mandatory electronic filing requirements. Although carriers and freight forwarders can submit export declarations to Census electronically on an exporter's behalf, exporters can also file their own export declarations via AES using AES Direct, the Census Bureau's free, internet-based system. Census also offers free PcLink software that allows companies to manage their AES filings from their own computers. Many vendors of international trade documentation software also offer their customers the ability to submit AES data to Census electronically.

While the final migration to mandatory AES for the filing of all export data presents a number of technical and practical issues for shippers, the increased penalties for the inaccurate or untimely filing of export information should be of even greater concern to exporters, forwarders and carriers alike.