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November 02, 2007 

BIS Update 2007, Day 2, Breakout Session: Automated Export System Compliance Review Program

Jerome Greenwell, the Trade Ombudsman of The Census Bureau's Foreign Trade Division, kicked-off the breakout session on the Automated Export System (AES) Compliance Review Program by noting that the program provides a unique opportunity for review of the automated data systems used by exporters in the U.S. Although the compliance review program has been availablesince 1979, Census has not previously used the program to review AES filers.

The purposed of the AES Compliance Review Program is to identify best business practices, seek out glitches that cause reporting problems and educate Census's Foreign Trade Division staff. In return, the program has been educational for foreign trade staff in coming to terms with the various companies’ concerns.

Mr. Greenwell identified the following 3 goals set forth in the AES Compliance Review Program:

  • Identify and develop best practices
  • Offer assistance and guidance to exporters with AES filings
  • Help exporters avoid costly encounters with government enforcement agencies.

To determine which companies to visit, Census first divided companies into compliant and non-compliant companies. Non-compliant companies are deemed to be those with numerous unresolved fatal errors, or companies that submit late filings on a regular basis. Non-compliant Option 4 (post-departure) filers are also targeted.

The compliance review began in March 2007 with pre-testing. The non-compliant visits began in June 2007. To date, Census has visited 46 companies throughout the country. These visits seem to be working, as Census has seen a decrease in the number of late AES filings since this program began, dropping from 2.9% in January 2007 to 1.6% in August 2007.

The Compliance Review Process begins first with a notification letter sent to the company. Next, the Census Compliance Team visits the company to meet with the company’s managers, compliance officers, forwarders and other staff with AES responsibilities.

Through this process, Census was able to produce a list of “Best Practices” for filing AES records which includes the following points:

  • Obtain good software
  • Generate an export checklist of each operation that has to be fulfilled prior to exportation
  • Verify commodity classification
  • Use/Update references
  • Attend seminars/workshops
  • Develop a mentoring program for new employees
  • Provide cross-training
  • Develop a training manual
  • When in doubt, ask somebody

Next, Gerald J. Horner from BIS's Office of Technology Evaluation focused on the use of AES to improve compliance and reduce reporting burdens. He noted that BIS primarily uses AES for statistical compliance purposes. BIS can review the data for compliance purposes by looking at the elements. His office relies on AES to assist in obtaining vital data to determine current trends, such as the impact that VEU program is having on exports. AES data also helps licensing officers make decisions.

BIS uses the “BIS Effectiveness Metric of Compliance” to determine how exporters are complying with the laws. This review includes the following key components:

  • Shipping tolerances: in order to ensure that licensees are staying within limits of value, country destination, etc.
  • License exception uses: to ensure that these are exceptions are properly utilized.
  • ECCN Validation: to ensure that exporters are using the ECCN in proper format.
  • Outreach Identification: isolates trouble spots as further outreach targets.

Mr. Horner also identified the following AES Data Elements as areas of primary concern to BIS:

  • License type: i.e., NLR, exception, or license number
  • License Number
  • ECCN
  • Country
  • Quantity and Value
  • Exporter
  • Consignee

The AES data may also be assessed to determine whether the data fields are properly filed, by comparing AES to license applications. License exceptions are also reviewed. This protocol often results in contact with exporters, and improving AES functionality.

As a result of the license exception review, BIS found over 50,000 missing ECCNs. This reflected a need to bolster awareness on license exceptions. BIS is also looking to improve AES functionality, so that the system will force compliance of exporters. For example, BIS recommends mandatory ECCNS for most license exceptions and a limit on the use of EAR99 for license exceptions. These can be programmed into the system. BIS will provide a 90 day notice prior to any changes as well as countrywide training and seminars.

In response to an audience question, BIS noted that companies cannot break down shipments to avoid executing an SED/AES by lowering the value below the $2500 per HTS threshold. The only exception is where domestic shipments are separated from foreign shipments, because these are naturally in separate warehouses prior to exportation.

Also in response to an audience question, the agency indicated that low value shipments must still be reported under exports made under the VEU program.




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