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Compliance with New Foreign Trade Regulations to be Enforced Starting Oct. 3

Monday, September 29, 2014
Sandler, Travis & Rosenberg Trade Report

Oct. 2 marks the end of a six-month grace period for compliance with the revised Foreign Trade Regulations that took effect April 5. As a result, beginning Oct. 3 U.S. Customs and Border Protection may begin issuing penalties for failure to comply with any new requirements found in the March 2013 rule, which include the following.

Post-departure filing. The post-departure filing timeframe has changed from 10 calendar days to five, but the moratorium on accepting new applications for post-departure filing is still in place.

Household goods. This term now refers to usual and reasonable kinds and quantities of personal property necessary and appropriate for use by the U.S. principal party in interest in the USPPI’s dwelling in a foreign country that are shipped under a bill of lading or an air waybill and are not intended for sale. As such, the household goods export code can only be used for shipments in which the USPPI is the ultimate consignee.

Vehicles. Exports of used self-propelled vehicles must be filed in the Automated Export System 72 hours prior to export regardless of value or country of destination.

Port of export. The port of export for shipments by overland transportation is where the goods cross the U.S. border into Canada or Mexico, including transshipments through Canada or Mexico to other countries.

Split shipment. This term now refers to a shipment booked for export that is divided by the carrier into more than one conveyance and sent on two or more conveyances of the same carrier from the same port within 24 hours. This provision now applies to all modes of transportation, not just air.

Exclusions. AES filing is not required for licensed goods where the country of ultimate destination is the U.S. or for goods destined to international waters where the person(s) or entity assuming control of the item(s) is a U.S. citizen or permanent resident alien of the United States. The exclusion legend is required to be reported on the bill of lading, air waybill, export shipping instructions or other commercial loading documents.

Exemptions. The following exemptions have been added: (a) exports of technical data and defense service exemptions as defined in 22 CFR 123.22 (b)(3)(iii) are exempt from the electronic export information filing requirements, (b) reporting vessels, aircraft, cargo vans, and other carriers and containers when shipping as tools of international trade, (c) shipments to Army Post Office, Diplomatic Post Office or Fleet Post Office, (d) shipments exported under license exception BAG, and (e) specific types of shipments destined for a country deemed to support acts of international terrorism (i.e., Cuba, Iran, North Korea, Sudan and Syria).

The following exemptions have been removed: (a) temporary shipments of goods valued over $2,500 per Schedule B number or that fall under 30.2(a)(1)(iv) (when reporting temporary exports the appropriate export information code for temporary goods, such as “TE” export intended for return and “TP” domestic merchandise, should be reported); and (b) in-bond (in-transit) shipments, which are covered under the current exclusion (30.2(d)(1)).

International waters. This term now refers to waters located outside the U.S. territorial sea, which extends 12 nautical miles measured from the baselines of the United States, and outside the territory of any foreign country, including the territorial water thereof. Vessels, platforms, buoys, undersea systems and other similar structures that are located in international waters but are attached permanently or temporarily to a country’s continental shelf are considered to be within the territory of that country.

For licensed shipments to international waters, the person designated on the export license must be reported as the ultimate consignee.

For Bureau of Industry and Security license exceptions and non-licensed shipments to international waters, the filer will be required to report the nationality of the person(s) or entity assuming control of the item(s) subject to the EAR.

Data elements. Two data elements have been added: (a) license value (report the value indicated on the license), and (b) ultimate consignee (four types: direct consumer, government entity, reseller and other/unknown). Beginning Oct. 3, AESDirect will begin issuing fatal errors related to these new data elements.

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