AES Compliance Best Practices: Appendices

APPENDIX A:  Sample Training Manual

Introduction to AES

The Automated Export System (AES) is a joint venture between the U.S. Customs and Border Protection (CBP), the Foreign Trade Division (FTD) of the U.S. Census Bureau, other Federal partnership agencies, and the U. S. export trade community.  The AES provides an alternative to filing paper Shippers’ Export Declarations (SEDs) by collecting export information electronically, applying a series of edits, and responding back to the filer so that errors are detected and corrected at the time of filing.

The AES is a nationwide system operational at all ports and for all modes of transportation, designed to ensure compliance with the enforcement of export laws.  The collection of export data electronically improves trade statistics and ensures timely and accurate filings along with reducing filers reporting burden to multiple agencies.

The Bureau of Industry and Security (BIS), the State Department’s Directorate Defense Trade Controls (DDTC) and other Federal agencies have identified data fields in the AES that are critical to their agency’s mission.  The AES serves as the central point for multiple Federal government agencies in capturing export shipment data electronically.

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Benefits of AES

Ensure Export Compliance.

The AES, with its editing system and your subsequent corrections, ensures a company’s compliance with current U.S. export reporting requirements.  The system returns an Internal Transaction Number (ITN) as confirmation that you have successfully filed your export documentation.

Sample ITN:    X20070620581949

The ITN always begins with an X, followed by the four-digit year, two-digit month, two-digit day and six-digit random identifier generated by AES.  Although the ITN is linked to your filer ID and shipment number, these are not printed or shown in the message to protect your privacy and data security.

Correct Errors as They Occur.

The AES provides immediate feedback to the filer when data are omitted or incorrect.  The AES allows you to correct errors early in the process, before your goods are subject to delay or penalties.

Decrease Your Costs.

Eliminate the cost of corrections with up-front data edits.  Save money by replacing the costly delays of paper handling with free web-based electronic reporting.  Avoid duplicate reporting by creating a simple, straightforward reporting procedure.

Eliminate Paper Review of Licenses Against Shipments.

The interface with the Department of Commerce’s BIS, DDTC electronically validates data on export shipments against previously approved licenses and transmits the transaction to the appropriate Partnership Agency.  All shipments of goods on either the Commerce Control List (CCL) or the United States Munitions List (USML) must be reported electronically through the AES.  Paper SEDs are not valid for these shipments.

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Response messages from AES

Below are the AES Response Code Identifiers and the requirement for each.  These response code identifiers are returned to the AES filer in the AES output record, along with the specific Response Code and message.

• F = Fatal Error
  
  
  • Shipments with a Fatal Error message have not been accepted by AES.  The AES output record will display the Response Code “F” and the Response Code Message.  Shipments with Fatal Error message(s) must be corrected prior to the cargo leaving the U.S. or prior to the tenth day after exportation if the U.S. Principal Party in Interest (USPPI) is approved for postdeparture (Option 4) filing.
    
    
• W = Warning
  
  
  • Shipments with a Warning message must be corrected within 4 days from the date of transmission.
    
    
• C = Compliance Alert
  
  
  • Shipments with a Compliance Alert message were filed late and/or a postdeparture change was made to certain elements in the shipment.  Receiving a compliance alert means that your shipment is in violation of the export reporting requirements.  You cannot correct a compliance alert message.  If a filer consistently receives compliance alerts, then the filer must identify and correct certain business practices that lead to these alerts.  Otherwise, the filer may be subject to delays, fines and/or penalties.
    
    
• V = Verify
  
  
  • Shipments with a Verify message receive an ITN, but some information in question must be verified as correct.  No further action is required if the information reported is verified. If not correct, please make the necessary correction and resubmit.
    
    
• I = Informational
  
  
  • Shipments with an Informational message require no action.  This is a non-critical response.  The information noted is for your records only.

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When is the AES information required?

An AES record must be filed for exports of physical goods valued at more than $2,500 per commodity classification code, when shipped as follows:

• From U.S. to foreign countries,
• Between the U.S. and Puerto Rico,
• From Puerto Rico to foreign countries,
• From Puerto Rico to U.S. Virgin Islands,
• From the U.S. to the U.S. Virgin Islands, and
• Licensable commodities (regardless of value).

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What is an Export Shipment?

An export shipment is defined as merchandise shipped from one USPPI to one consignee, on the same flight/vessel, to the same country, on the same day, valued over $2,500 per Schedule B/ Harmonized Tariff Schedule of the United States Annotated (HTSUSA) number or (any value) where a license is required.

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Types of Transactions

Standard Export Transaction

In a standard export transaction the USPPI files the AES record or authorizes a U.S. forwarder or other agent to facilitate export of items out of the United States and/or to file the information with CBP.  In the standard export transaction, the USPPI controls the movement of the cargo.

Responsibilities in a Standard Export Transaction

Routed Export Transaction

In a routed export transaction the foreign principal party in interest (FPPI) authorizes a U.S. forwarder, USPPI or other agent to facilitate the export of items out of the United States.  In the routed export transaction, the FPPI controls the movement of the cargo.

Responsibilities in a Routed Export Transaction

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Correcting Export Shipments

Based on FTSR 30.64, the USPPI or their authorized agent is responsible for transmitting corrections, cancellations, or amendments to export shipment information previously transmitted using the AES.  Corrections, cancellations, or amendments must be made as soon as possible, whether before or after exportation.

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Correcting Fatal Errors

When you receive notice of a fatal error from the AES, this means that your export shipment was rejected and you have not actually filed; therefore, your shipment report was not added to the CBP database and cannot be viewed by the CBP inspectors.  Your cargo may be subject to delay, seizure, fines or penalties.  Immediate attention to correcting such errors is therefore in your company’s best interests.

All error messages, including causes and corrective measures, can be found in Appendix A of the Automated Export System Trade Interface Requirements (AESTIR).  The link to the AESTIR is at the following Web site address http://www.cbp.gov/xp/cgov/export/aes/tech_docs/

Use this section to list errors common to your company.  Below are examples of some of the most frequent errors reported to the Census Bureau:

Fatal Error 256: USPPI Postal Code Not Valid for State

This error occurs frequently in Routed Transaction shipments, when a Foreign Country Postal Code is reported instead of a U.S. Postal Code.  The Postal Code must be the Postal Code for the USPPI address (reflecting a U.S. Postal Code).  It must be reported as either five numeric digits followed by four spaces or nine numeric digits.  The state code must match the state associated to the postal code. 

Fatal Error 649: “Quantity 1” Cannot Exceed Shipping Weight

This error occurs, for example, when the “Unit of Measure 1” requires KG (kilograms) and the net quantity exceeds the shipping weight.  The Shipping Weight must always be expressed in kilograms and equal the net kilograms plus the weight of the packing materials.  Shipping weight cannot be less than net weight when the unit of measure is expressed in kilograms.

Fatal Error 643: “Quantity 2” Must Be Greater Than Zero

This error occurs when the Schedule B/HTSUSA Number requires “Quantity 2” to be reported and “Quantity 2” is missing or has been reported as zero.  Quantity 2 must be reported when required by the Schedule B/HTSUSA Manual.

Fatal Error 128: “Port Of Export” Unknown

This error occurs when the filer reports an invalid “Port Code.”  You cannot use the port name, but must use the four-digit Schedule D port code.  The Schedule D codes may be found in the appendices of the AESTIR or on the Census Bureau website.

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Export Commodity Classification Codes

The 2007 edition of Schedule B supersedes all previous editions as the official schedule of commodity classifications to be used by shippers in reporting export shipments from the United States, and in compiling the official statistics on exports of merchandise from the United States.  This edition became effective in January 2007. 

The correct commodity number shown in the current edition of Schedule B must be reported on the AES record.  A description of the merchandise, in sufficient detail to permit the verification of the Schedule B number, must also be furnished on the export declaration, as well as other statistical data, in accordance with the Foreign Trade Statistics Regulations (FTSR).  Import classification codes, found in the HTSUSA may be substituted for export codes, with a short list of exceptions noted on the Census Bureau website at http://www.census.gov/trade. 

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Organization of the Schedule B Classification

Schedule B, based on the Harmonized System (HS), consists of 22 sections divided into 97 chapters.  Chapters 1 through 97 correspond with the International System of Numbering, with chapter 77 being blank.  An additional chapter, 98, is used for special classification provisions that apply only to U.S. exports.  The 10-digit Harmonized System-Based Schedule B codes (commodity numbers) comprise these chapters.  There are approximately 9,000 of these 10-digit classification codes in the 2007 edition of Schedule B.  The definitions for these codes are as follows:

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Locating the Correct Schedule B Number

The table of contents of the Schedule B manual lists all of the sections and chapters with their descriptions.  This will serve as a guide to the general area in which a commodity may be classified.  The Schedule B manual also contains an alphabetical index that indicates the first six digits or six-digit range of the 10-digit Schedule B numbers for the listed item.  Although only the first six digits of the Schedule B number are given in the index, the complete 10-digit code must be used in reporting export shipments.  The only purpose of the index is to assist in locating the part of the document in which a particular classification can be found.  Failure to find the item in the index does not relieve the shipper of the responsibility for locating the correct Schedule B number for the item being reported. 

After locating the description and six-digit code for an item in the alphabetical index, the USPPI then searches for that numerical sequence in the body of the Schedule B.  After reading all pertinent section, chapter, and statistical notes, the USPPI should assign the appropriate 10-digit Schedule B number.

In cases where the USPPI is unable to locate an item in the alphabetical index, one of two methods of assigning a Schedule B number may be chosen.  If the HTSUSA number is known, in most cases it may be reported in lieu of the Schedule B number.  The item also may be located in the Schedule B numeric sequence by referring to the table of contents in the front of the Schedule B and locating the appropriate chapter, and subsequently, the correct Schedule B number.  The General and U.S. Rules of Interpretation and Definitions, as well as the notes appearing in the sections and chapters of Schedule B, should be reviewed before attempting to locate the correct commodity number.

If you need assistance with classification call 1-800-549-0595 and select option 2.

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Reporting Requirements

Not Elsewhere Specified or Included (n.e.s.o.i.). 

If a Schedule B number has been located that seems to apply to the commodity being classified, but the description for the number carries the limitation n.e.s.o.i., the commodity number should not be used until a check has been made to determine whether there is a classification elsewhere into which the item will fit more specifically.  Other classifications under the same general heading should be examined.

Double Units of Quantity. 

When two units of quantity are specified in the “Unit of Quantity” column for a Schedule B classification, unless there are blocks specifically provided and labeled, the first, or primary, unit should be reported on the AES record, on the same line with the Schedule B number and the value.  Report the second, or secondary, unit of quantity directly below the first unit of quantity.

Shipping Containers. 

When shipping containers are exported as merchandise for sale or transfer of ownership abroad, they must be reported on export declarations under the appropriate Schedule B commodity number for the particular type of container.  However, in accordance with the FTSR, shipping containers are not considered to be exported when they are moving, either loaded or empty, strictly in their capacity as carriers of merchandise, i.e., as instruments of international traffic, not for sale or transfer from U.S. ownership or title to foreign ownership or title.  Therefore, containers leaving the United States strictly as instruments of international traffic do not have to be reported on the AES record.  If for any reason a USPPI wishes to report the movements of such containers on export declarations, they may be reported under Schedule B number 9801.20.0000. This classification is not to be used to report the contents of the containers.  Contents of such containers are to be reported under the appropriate classification(s) for the merchandise.

Commodities Donated for Relief or Charity by Individuals or Private Agencies. 

Chapter 98 provides for exports of certain commodities donated for relief or charity by individuals or private agencies.  In general, except for bulk grain, such classifications are provided for those commodities that are known to be, or are likely to be, exported for relief or charity in fairly sizable amounts.  In addition to chapter notes for chapter 98, please read the chapter notes for chapters 1 through 16, 21, 30, and 63, to ensure that relief or charity shipments are correctly classified.

Reporting the Value of Repairs and Alterations. 

USPPIs and authorized agents must report, under Schedule B number 9801.10.0000, the value of repairs and alterations made on articles previously imported for such purposes.  These articles must be reported as domestic merchandise, and the value to be reported must represent the total value of repairs and alterations made in the United States.  Even if the customer pays no fees or charges, you must report the actual or estimated cost of repairs to the USPPI.  The original or current value of the article that was imported to be repaired or altered must NOT be reported and therefore should not be included in the value reported for commodity number 9801.10.0000.

Export of Articles Previously Imported for Processing. 

Articles exported after having been imported temporarily under bond for processing (HTS 9813.00.0520) must be reported as domestic merchandise.  The Schedule B number assigned must be selected from chapters 1 through 97, according to the exported article.  The Value reported must be the total value of the article.

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Instructions for Submitting a Voluntary Self-Disclosure (VSD)

The Census Bureau strongly encourages companies, without prompting from Federal agencies, to discover, disclose, and correct potential violations of the FTSR.  Identifying possible causes of incidents or practices will address noncompliance issues and encourage you to pursue compliance with due diligence.  A VSD must be made when information was not reported or when incorrect information was provided (whether deliberate or unintentional).

A VSD cannot be used to report a correction to a shipment.  Shipments must be filed based on the information known at the time of export.  If that information changes after the export, corrections/amendments must be made to the transaction information in the AES/SED.  See Sections 30.64 of the FTSR for instructions on making corrections.  Furthermore, shipments must be corrected as soon as possible, whether prior to or after submission of the VSD

Follow these steps to submit a VSD: 

1. Initial notification.  The disclosure must be made promptly after knowledge of the noncompliance.  The individual making the disclosure must do so with full knowledge and authorization of the firm’s senior management.  The initial notification must be in writing and be sent to the address in­ (4) below.  The notification must include the name of the person making the disclosure and a brief description of the suspected violations.  The notification must describe the general nature and extent of the violations.
   
   Note: Also, disclosure must be made of suspected violations that involve export of items controlled, licensed, or otherwise subject to the jurisdiction by a department or agency of the Federal Government.  These disclosures must be made to the appropriate Federal department or agency, in addition to the VSD required by the Census Bureau.
   
   
2. Narrative account.   The narrative account must in­clude:
   1. The kind of violation involved, for example, failure to file, failure to correct fatal errors, failure to file timely corrections,
   2. Describe all FTSR-mandated information that was either unreported or reported incorrectly;
   3. An explanation of when and how the violations occurred,
   4. The complete identities and addresses of all individuals and organizations, whether foreign or domestic, involved in the activities giving rise to the violations,
   5. Describe corrective measures applied to resolve violations that occurred, and
   6. A description of any mitigating circumstances.
      
      
3. AES Information.  Report all data required under the FTSR that was not previously reported or was reported incorrectly.      
   
   
4. Where to make a VSD.  The information constituting or pertaining to VSD may be submitted to:
   
   Chief, Foreign Trade Division
   U.S. Census Bureau
   4600 Silver Hill Road, Room 6K032
   Washington, D.C.  20233-6700

Suggested Appendices

• Common Terms and Acronyms
• Helpful Websites/Links
• Company Policies & Procedures

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APPENDIX B:  Common Terms and Acronyms

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APPENDIX C: Helpful Websites

Government Agencies

• U.S. Census Bureau, Foreign Trade Division
  • www.census.gov/trade
    
    
• U.S. Bureau of Industry and Security
  • www.bis.doc.gov
    
    
• U.S. International Trade Commission
  • www.usitc.gov
    
    
• U.S. Department of State, Directorate of Defense Trade Controls,
  • www.pmddtc.state.gov
    
    
• U.S. Army Corps of Engineers
  • www.iwr.usace.army.mil
    
    
• U.S. Customs and Border Protection
  • www.cbp.gov
    
    
• U.S. Department Treasury, Office of Foreign Assets Control
  • http://www.treas.gov/offices/enforcement/ofac/index.shtml
    
    
• USDA - Importing Regulations and Policies
  • http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?navid=IMPORTING_GOODS&parentnav=MARKETING_TRADE&navtype=RT
    
    
• USDA - Exporting Regulations and Policies
  • http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?navid=EXPORTING_GOODS&parentnav=MARKETING_TRADE&navtype=RT
    
    
• USDA  - Foreign Agricultural Service
  • http://www.fas.usda.gov/
    
    
• NOAA's National Marine Fisheries Service - Authorization to import/export pre-Act Marine Mammal Parts/Products
  • http://www.nmfs.noaa.gov/pr/permits/parts_instructions.htm

Export Regulations

• Foreign Trade Statistics Regulations
  • http://www.census.gov/foreign-trade/regulations/regs/index.html
    
    
• Export Administration Regulations
  • http://www.access.gpo.gov/bis/ear/ear_data.html
    
    
• International Traffic in Arms Regulations
  • http://www.pmddtc.state.gov/itar_index.htm

Useful References

• Schedule B
  • http://www.census.gov/foreign-trade/schedules/b/index.html
    
    
• Harmonized Tariff Schedule of the United States Annotated
  • http://www.usitc.gov/tata/hts/bychapter/index.htm
    
    
• AES Data Elements Reference Table
  • http://www.census.gov/foreign-trade/regulations/forms/sedreftable.pdf
    
    
• Commodity Filing Response Messages Appendix A (AES Error Messages)
  • http://www.customs.gov/linkhandler/cgov/export/aes/tech_docs/aestir/june04_intro/appendices/apndx_a.ctt/apndx_a.doc
    
• Routed Export Procedures
  • Section 30.4: http://www.census.gov/foreign-trade/regulations/regs062004.pdf
    
    
• Export Compliance Quick Link to Field Questions on CCL/USML (Brief overview)
  • http://www.bis.doc.gov/licensing/exportingbasics.htm
    
    
• Instructions for Resolving Fatal Errors
  • http://www.census.gov/foreign-trade/aes/documentlibrary/fatals.html
    
    
• Lists to Check
  • http://www.bis.doc.gov/ComplianceAndEnforcement/ListsToCheck.htm
    
    
• Trade Restrictions & Sanctions
  • http://www.treas.gov/offices/enforcement/ofac/

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