Southern Border Conference Export Compliance August 23 2018

Southern Border Conference Export Compliance August 23, 2018 Joe A. Cortez International Trade Advisors Export Regulations Simplified

Today’s Topics • • AES Reporting Concerns Routed Exports Routed Advance Notice of Proposed Rule Making (ANPRM) Status Best Practices Joe A. Cortez 202. 821. 2730 Zetreoctrade@gmail. com 2

Preparing to File Your EEI Gather & Review filing resources:

U. S. Authorized Agent’s Responsibilities ◦ ◦ Obtain POA or written authorization Prepare and file EEI Provide filing citation or exemption legend Upon request, provide the USPPI with: �A copy of the POA or written authorization (routed) �Data elements supplied by the USSPI �Internal Transaction Number �Filer Name �Date of Export ◦ Retain documentation

USPPI Identification � FTR 30. 6 (a)(1)(iii) - USPPI identification number. Report the EIN or DUNS number of the USPPI. If the USPPI has only one EIN, report that EIN. � AESTIR Part II, Section 1 (a) – July 2017 - US Principal Party in Interest. …. ”Census requires that the EIN number be reported for a non-foreign USPPI. When establishing or correcting a USPPI using a DUNS number, include the EIN in the N 03 record” Joe A. Cortez 202. 821. 2730 Zetreoctrade@gmail. com 5

DSP-5 - License Applicant vs Seller Who is the USPPI � Block 5 – applicant � Block 16 Seller Joe A. Cortez 202. 821. 2730 Zetreoctrade@gmail. com 6

Value � The selling price (or the cost if the goods are not sold) in U. S. dollars, � Plus inland or domestic freight, insurance, and other charges to the U. S. seaport, airport, or land border port of export. � Cost of goods is the sum of expenses incurred in the USPPI’s acquisition or production of the goods. Joe A Cortez Zetroc. Trade@gmail. com 202. 821. 2730. 7

Schedule B Number - Repairs � FTR section 30. 29 (a) (1) states "The return of non- USML goods temporarily imported for repair and alteration and declared as such on importation shall have Schedule B number 9801. 10. 0000. The value reported shall only include parts and labor…" � FTR section 30. 29 (a)(2) says …" In the value field, report the value of the parts and labor, …. " Note, the word only is omitted in 30. 29(a)(2). Joe A. Cortez 202. 821. 2730 Zetreoctrade@gmail. com 8

Commodity Description FTR 30. 6(a)(13) - Report the description of the goods shipped in English in sufficient detail to permit verification of the Schedule B or HTSUSA number. Joe A Cortez Zetroctrade@gmail. com 202. 821. 2730 9

Potential Reporting Errors $ 40, 000 Ink cartridges IE = Ireland Export Information Code = OS (General Exports) $ 4, 000 Ammunition cartridges IR = Iran EIC = MS (Military Shipments)

Routed Export Transactions Export Administration Regulations EAR-§ 758. 3 (b) Foreign Trade Regulations-FTR § 30. 3(e) � The USPPI is the exporter and must determine licensing authority, obtain the appropriate license or other authorization, � A transaction in which the FPPI authorizes a U. S. agent to facilitate the export of items from the United States and to prepare and file EEI. � Unless the USPPI obtains from the FPPI a writing from the FPPI assuming the responsibility for determining licensing requirements � � The FPPI’s U. S. agent becomes the exporter for EAR purposes � The FPPI’s forwarding or other agent must obtain a power of attorney or other written authorization from the FPPI to act on its behalf. If an authorized agent is preparing and filing the EEI on behalf of the FPPI, the authorized agent must obtain a power of attorney or written authorization from the FPPI and prepare and file the EEI based on information obtained from the USPPI or other parties involved in the transaction 12

Letter from a USPPI � To Whom It Concerns: � � This letter notifies Chem. USA, Inc. that Company ABC in MX assumes responsibility to determine any U. S. export authorizations, to report export statistics as required by U. S. laws and regulations, and/or to comply with applicable U. S. Customs regulations related to the export from the United States of the items purchased from Chem. USA. Company ABC in MX will perform these actions in cooperation with the U. S. agent, Zetroc Forwarding, who is located in the United States and is acting as the U. S. exporter. Joe A. Cortez 202. 821. 2730 Zetreoctrade@gmail. com 13

Advance Notice of Proposed Rulemaking (ANPRM) Status • Published in the Federal Register on October 6, 2017 • Public comment period ended on December 5, 2017 • Drafting Notice of Proposed Rulemaking with feedback from comments • NPRM Expected Late 2018 or Early 2019 • Ninety Days for Comments

ANPRM Comments Total of 53 Comments Received � 210 individual comments Common Themes: � � � Party responsibilities Definition of Routed Data Elements BIS related Power of Attorney Incoterms

Comments-Party Responsibilities � Confusion is heightened by the fact that several aspects of the Export Administration regulations ("EAR") are not identical or do not necessarily comport with definitions and responsibilities that arise under the Census AES regulations. � Large majority of FPPls are not as knowledgeable … even whether they must provide authorization to their forwarding or other agents in order for them to be able to file the relevant Electronic Export Information ("EEl"). Joe A. Cortez 202. 821. 2730 Zetreoctrade@gmail. com 16

Comments-Party Responsibilities � For example, the term "Routed Export Transaction" could be changed to "Foreign Party Export Filing Transaction. " � Additional data element should be added to 15 CFR § 30. 3(e)(1) to include a transaction reference number, such as the invoice number issued by the U. S. customer to the FPPI, which can be used to link the original sale to the ITN in the EEI report. � The FTR and EAR each refer to different responsibilities in an export transaction. The EAR refers to licensing and the FTR refers to EEI filings. Joe A. Cortez 202. 821. 2730 Zetreoctrade@gmail. com 17

Next Steps � Collaborate with the Bureau of Industry and Security and Trade Associations to discuss revisions � Draft the NPRM � Obtain concurrence from CBP and the State Department � Respond � Publish to formal comments the NPRM

Implement Best Practices Document!!! Correct information as soon as possible Maintain compliance § Education & cross training § Automation & Procedures § Perform regular audits Attend Seminars & Workshops

AES TIPS FOR AVOIDING FINES AND PENALTIES � REPORT THE CORRECT PORT OF EXPORT � DESCRIBE THE COMMODITY – DON’T JUST USE THE SCHEDULE B DESCRIPTION � VALUE SHOWN ON AES IS SIMILAR TO INVOICE VALUE � KNOW AND REPORT THE ULTIMATE CONSIGNEE TYPE � ENTER CORRECT COUNTRY OF ULTIMATE DESTINATION Joe A Cortez Zetroctrade@gmail. com 202. 821. 2730. 20

Correct Port of Export Joe A Cortez Zetroc. Trade@gmail. com 202. 821. 2730. 21

Correct Port of Export Joe A Cortez Zetroc. Trade@gmail. com 202. 821. 2730. 22

ULTIMATE CONSIGNEE TYPE Provide the business function of the ultimate consignee that most often applies: 1. Direct Consumer 2. Government Entity 3. Reseller 4. Other/Unknown Joe A Cortez Zetroc. Trade@gmail. com 202. 821. 2730 23

AES Compliance Reports • Issued monthly to the Account Owner • Ensure contact information is current on ACE • Unresolved fatal errors & compliance alerts impact your compliance rate 24

Fatal Error Reports • Issued if there are Unresolved Fatal Errors remaining from AES Compliance Report • Issued Two Weeks after AES Compliance Report • Resolve Fatal Errors - Appendix A • For shipments that cannot be corrected: • Send an email to DCB’s Fatal Error Team at ftd. aes. fatal. reports@census. gov • Include: ITN for the shipment that replaced the Fatal Error and the SRN of the shipment that generated the error. 25

Document!!! �Correct information as soon as possible �Maintain compliance § Education & cross training § Automation & Procedures § Perform regular audits �Attend Seminars & Workshops Joe A Cortez Zetroc. Trade@gmail. com 202. 821. 2730 26

Questions? Joe A. Cortez, President International Trade Advisors Zetroc. Trade@gmail. com 202. 821. 2730