(adapted from the October 2008 edition of “Managing Exports & Imports,”
                  published by IOMA, the Institute of Management & Administration)

Sep. 30, 2008 is “D-Day” for enforcement of the Census Bureau’s final rule revising the Foreign Trade Regulations (FTR).  The “Final Rule on Mandatory Automated Export System Filing for All Shipments Requiring Shipper’s Export Declaration Information” was published on June 2, 2008 in the Federal Register (73 Fed. Reg. 31548) and took effect on July 2.  However, a three-month “grace period” was granted to allow time for trade professionals to become compliant before actual enforcement began.  The new regulations:

• mandate electronic filing of export data through the Automated Export System (AES) or through AESDirect;
• authorize significantly greater penalties for violations of the FTR (fines for non-compliance with the new AES rules have increased tenfold, to a maximum of $10,000 per incident for criminal violations and $10,000 in civil penalties);
• provide a process for voluntary self-disclosure of violations; and
• contain numerous modifications to the previous regulations that could have a substantial impact on exporters’ compliance procedures.

AES Filing Requirements

Every exporter currently required to file an SED is now required to file for all shipments (vessel, aircraft, truck, and rail) through either:

• Customs & Border Protection (CBP)’s AES (the agency redesigned its AES commodity module), or
• Census’ AESDirect free Internet-based system.

The former SED will now become the Electronic Export Information (EEI).  Agents filing AES data on the exporter’s behalf (e.g., freight forwarders, carriers, customs brokers) must have either a power of attorney or written authorization (the rule provides language and sample forms).  Exporters and their overseas buyers must retain records for five years from the time of export.

Confidentiality and Post-Departure

Two issues in dispute between CBP and Census held up mandatory AES for two years:

• Confidentiality of data: As CBP has demanded more data from other nations’ customs authorities prior to U.S.-bound shipment, the agency sought to reciprocally share Census data contained on SEDs.  Census opposed this, citing the proprietary nature of data filed in the SED.  While CBP will seek a legislative solution to the issue, the Final Rule reaffirms the confidential nature of data submitted through AES.
• Option 4 (post-departure filing): Option 4, which allows approved exporters to file through AES post-departure, has accepted no new filers since August 2003 because CBP believes it contains too many security flaws.  Census has agreed to review Option 4 and continue the moratorium on new members.  Mandatory AES, however, won’t be held up for those changes.  Exporters already approved for Option 4 can continue to file post-departure.  However, once the Census review is completed, even current Option 4 exporters may have to reapply to continue participation.

For Additional Information, Please . . .