Five Keys to Letter-Perfect U.S. Export Compliance

Transcription

1 Five Keys to Letter-Perfect U.S. Export Compliance A White Paper

2 Introduction For many global importers and U.S. exporters especially those engaged in publishing industry shipping the nuances of complying with U.S. export regulations and forms can present a head-scratching challenge. Complexity notwithstanding, buyers of goods bear the responsibility for complying with the rules, regulations and forms. Failure to complete the process appropriately can lead to costly fines, delays, frustration and lost revenue. When a compliance issue delays shipment of a J.K. Rowling novel or a math textbook at the point of entry, this can be costly. Something avoidable, like a neglected or improperly documented form, can result in these items gathering dust on the warehouse floor rather than arriving for a critical book launch or the first day of school. A looming question is how do buyers risk proof their U.S. air exports to avoid costly penalties and delays? A reputable freight forwarder can eliminate vulnerability and risk for US publishers and overseas buyers. A fundamental thing to understand about U.S. Export Compliance is that it involves satisfying a minimum of five gatekeepers: Transportation Security Administration (TSA) U.S. Census Bureau U.S. & Border Protection (CBP) Bureau of Industry and Security (BIS) U.S. Department of Transportation (DOT). Each has a different role and different requirements. And each must be satisfied if commerce is to flow unimpeded. 2

3 Here s a closer look at the gatekeepers. Transportation Security Administration The TSA s mission is to protect people and property in the U.S. while ensuring freedom of movement for citizens and commerce. It oversees security for air, rail, highway, mass transit, ports and pipeline transportation systems in the U.S. Substantial TSA process, which continually evolves as required, is focused on aviation security at some 450 U.S. airports. U.S. Census Bureau The Census Bureau is part of the U.S. Department of Commerce and serves as the leading source of data not only about the nation s people, but also about its economy. The Census Bureau collects data on trading patterns used by the U.S. DOT. Some of that information helps identify the patterns of trade flowing into and out of the country. The U.S. Census Bureau (Census) requires mandatory filing of export information through the Automated Export System (AES) or through AESDirect for all shipments previously requiring a Shipper s Export Declaration. U.S. and Border Protection U.S. and Border Protection (CBP) is part of the U.S. Department of Homeland Security. CBP S priority mission is to keep terrorists and their weapons out of the U.S. It also has a responsibility for securing and facilitating trade and travel while enforcing hundreds of U.S. regulations, including immigration and drug laws. CBP has been delegated authority to enforce penalty provisions in the regulations that potentially impact multiple parties in the export process. Bureau of Industry and Security The Bureau of Industry and Security is part of the Department of Commerce and is charged with the development, implementation and interpretation of U.S. export control policy for dual-use commodities, software, and technology. In addition to the U.S. export control policy for dual-use items, the Bureau of Industry and Security is also charged with the development, implementation and interpretation of the antiboycott provisions of the Export Administration Act. U.S. Department of Transportation The U.S. DOT s mission is to ensure a fast, efficient, accessible and convenient transportation system that meets national interests. The DOT also assembles information to determine the product value of exports to assess transportation systems-related taxes. 3

4 The Five Keys to Sure-fire Compliance With an understanding of the gatekeepers and their roles, compliance can be thought of as a five-step, sequential process. Imagine this process as a path with five consecutive doors to pass through, which requires five keys to open those doors. Shipment Readiness Process If shipment is valued at less than $2,500, and no export license is required, proceed to Door #5 Shipments valued above $2,500, or requiring an export license, must have electronic Export Information (EEI) submitted to the Automated Export System (AES) 4

5 KEY #1 The first key is the TSA Consent to Screen form, or CTS. This form is mandated for all shipments tendered for export on passenger and cargo aircraft. The CTS must include the company name and physical address(es) of locations where products originate. The document must be signed by a company representative, and it must be in the freight forwarder s possession before product can be exported. A CTS only needs to be completed once per product origin facility address. Product cannot be moved without a completed CTS form. KEY #2 A completed CTS advances a shipment to the next door. Two optional keys can unlock it, depending on whether the shipment is consignee-routed or not: If the shipment is consignee-routed, a Foreign Principal Party in Interest (FPPI) form or a Foreign Power of Attorney (FPOA) form must be completed and signed by the primary overseas benefactor. The completed form must also be on file with the freight forwarder before the shipment can depart. If the shipment is not consignee-routed, then a U.S. Principal Party in Interest form (USPPI), or a Power of Attorney (POA) form must be completed by the shipper and provided to the freight forwarder. 5

6 KEY #3 The third door is the tax assessment stop. The key to this door is your Employer Identification Number (EIN) and the value of the shipment. Your freight forwarder must be fully aware of the shipment s value and have your Employer Identification Number (EIN) on file. These details should be submitted on either a commercial or pro forma invoice and the USPPI, or a Routed Transaction Data Form. Your freight forwarder uses this information for the next door. KEY #4 The fourth door also involves value. If the shipment s value is under $2,500, and it does not require an export license, it can pass on to the next doorway. If it is over $2,500, or if it does require an export license, Electronic Export Information (EEI) must be submitted to the Automated Export System (AES) as per U.S. foreign trade regulations. The value comes from the commercial or pro forma invoice, or the Routed Transaction Data Form submitted as Key #3. A freight forwarder can submit the EEI on a shipper s behalf; the documents completed in step two (FPPI, FPOA, USPPI, or POA) grant the freight forwarder permission to do so. 6

7 KEY #5 The final door to be unlocked involves determining the shipper s status as known or unknown, a TSA requirement. The exact details of this determination are sensitive information and not available to the general public. But the status identification determines the shipment s ability to travel on passenger or freighter aircraft. When this final key is turned, the shipment is considered to have adhered to export compliance regulations and is ready for the security procedures. These are the five essential, sequential doorways and the respective keys that open the doors to smooth export journeys. Successfully managing compliance necessitates expertise in understanding the requirements and attention to detail in navigating them. In this regard, your freight forwarder is a valuable resource. A disciplined freight forwarder has the knowledge, experience and processes in place to work with U.S. exporters, foreign importers and the five key gatekeepers to ensure letter-perfect export compliance. 6

8 Conclusion About OHL Customers who want to learn more about compliance specifics can visit OHL s website: customs-brokerage/compliance Based in Brentwood, TN, OHL is one of the largest 3PLs in the world, providing integrated global supply chain management solutions including transportation, warehousing, customs brokerage, freight forwarding and import and export consulting services. OHL operates more than 130 value-added distribution centers, offers comprehensive transportation management services, employs nearly 7,000 people and has offices worldwide. OHL has expertise in directto-consumer fulfillment, serves a wide range of business sectors from publishing and specialty retail to manufacturing and specializes in the apparel, electronics, printing, food and beverage and consumer packaged goods industries. Road Warehousing + Fulfillment + Ocean Brokerage Road Warehousing + Fulfillment + Ocean Brokerage Road Warehousing + Fulfillment + Ocean Brokerage Road Warehousing + Fulfillment + Ocean Brokerage 7101 Executive Center Drive Suite 333 Brentwood, TN ohlinfo@ohl.com OHL and the OHL logo are registered trademarks of Ozburn-Hessey Logistics, LLC and/or its affiliates in the United States and/or certain other countries Ozburn-Hessey Road Logistics, Warehousing LLC + Fulfillment + Ocean Brokerage