The U.S. Census Bureau requires Routed Export Transactions to be accurately reported in the Electronic Export Information (“EEI”) that is filed for certain export shipments. This article provides an overview of the U.S. Census Bureau’s export filing requirements, an explanation of what a Routed Export Transaction is, an outline of the Census Bureau’s policies pertaining to Routed Export Transactions, specifically, and offers insight into what you should do to be proactive about your export compliance.
The U.S. Census Bureau’s mission is to serve as the nation’s leading provider of quality data about its people and economy. The Census Bureau’s Trade Regulations Branch in the Economic Management Division is chiefly responsible for enforcing the Foreign Trade Regulations. The Foreign Trade Regulations (15 CFR. Part 30) require certain exporters to file export information with the U.S. Census Bureau. They detail requirements for filing export information, explain filing procedures, and establish penalties for noncompliance. The regulations require export information to be filed on the Automated Export System (“AES”). The information submitted by exporters on to AES is known as EEI.
EEI filings are required for a wide variety of circumstances, including:
- Exports valued at more than $2,500 to any destination except Canada
- Exports that require an export license under the Export Administration Regulations (“EAR”)
- Exports on the EAR’s Commerce Control List (“CCL”) and destined for China, Russia, or Venezuela
- Exports subject to the EAR and destined for a country in Country Group E:1 or E:2 (currently, Cuba, Iran, North Korea, and Syria)
- Exports subject to the International Traffic in Arms Regulations (“ITAR”)
- Exports containing rough diamonds
Routed Export Transactions
Routed Export Transactions (“RETs”) are a particular kind of export transaction that must be reported in EEI filings. RETs are export transactions in which a Foreign Principal Party in Interest (“FPPI”) authorizes a U.S. agent to facilitate export of items from the United States on its behalf and prepare to file the EEI. In other words, if the foreign party who purchases the goods for export and has the primary foreign financial interest in the export transaction authorizes a U.S. agent to facilitate the export and file EEI, then the transaction would be a RET.
RETs differ from standard export arrangements in which the U.S. Principal Party in Interest (“USPPI”) (i.e., the U.S. person or entity that receives the primary benefit from the export transaction) arranges for export and EEI filings.
In a RET arrangement, the USPPI has unique responsibilities. The FPPI may authorize or agree to allow the USPPI to prepare and file the EEI. If the FPPI agrees to allow the USPPI to file the EEI, the FPPI must provide a written authorization to the USPPI assuming the responsibility for filing. The USPPI may then authorize an agent to file the EEI on its behalf. Alternatively, the FPPI can authorize an agent to prepare and file the EEI itself. A typical RET transaction in which the FPPI authorizes the USPPI to prepare and file the EEI via its agent is depicted in the Census graphic below.
According to 15 CFR 30.6, if an export transaction is a RET and an EEI filing is required, the EEI filing must include a Routed Export Transaction filing indicator that identifies that the shipment is a RET. An affirmative RET filing indicator comprises of a simple “Y” (yes) checkmark in the EEI filing. A failure to declare a RET can result in substantial penalties.
What Should You Do?
Exporters have significant responsibilities to ensure compliance, to avoid penalties and/or jail time (i.e., your compliance manager deserves a raise!). Proper adherence to Foreign Trade Regulations and other export control requirements ensures that your business contributes to safeguarding U.S. national security and avoiding costly penalties.
If you are exporting goods subject to filing requirements under the Foreign Trade Regulations, we propose you should:
- Develop an effective export compliance plan.
A key foundation of proactive and effective export compliance requires the development of an export compliance plan. An export compliance plan establishes a set of procedures for your organization to ensure that everyone is on the same page about how standard processes work, who is responsible for what, how to identify violations, what to do when violations occur, etc. An export compliance plan helps build consciousness in your organization that compliance is critical – both to avoid costly penalties and to protect national security. Diaz Trade Law helps exporters create export compliance manuals that help prove you have a process in place to classify your merchandise correctly, vet your customers and ensure you can prove you can take compliance seriously and implement all the important great weight mitigating factors. Diaz Trade Law has significant experience in developing and enhancing export compliance plans for organizations. Additionally, Diaz Trade Law can assist your business in auditing and improving your current plan so that it is in its best shape.
- Engage in regular export compliance training.
A foundation of a strong export compliance program is export compliance training. Training is important because it (1) ensures that all employees understand the export regulations and reinforces internal policies and procedures, (2) demonstrates to federal government agencies that your business is proactive about export compliance, and (3) avoids your business from being subject to costly penalties and even criminal liability. Fortunately, export compliance training can be highly tailored to meet your company’s needs. All your training events include assessments for comprehension, certificates for successful participation, and ample opportunities for Q&A. For your next export compliance training event, trust Diaz Trade Law to provide highly-effective, engaging training.
- Thoroughly vet your proposed export transactions
Unsure whether a proposed export transaction violates the Foreign Trade Regulations or other export control laws? Diaz Trade Law has significant experience vetting your potential transaction against U.S. export control laws and in assisting clients to properly file their EEI. Through research and due diligence, Diaz Trade Law ensures that your transaction won’t get you in trouble later down the road.
- Request authorization when necessary
BIS or DDTC export authorization is required for many export transactions of controlled goods. Diaz Trade Law has significant experience in vetting proposed transactions to determine whether BIS or DDTC authorization is required. Furthermore, Diaz Trade Law assists clients by filing export license applications on their behalf.
- Engage in mitigation and corrective actions.
If your business has violated U.S. export control laws, there is a lot you can do to mitigate penalties and prevent future violations. Diaz Trade Law has significant experience representing businesses in dealing with the U.S. Commerce Department’s Bureau of Industry & Security and the Census Bureau. Specifically, Diaz Trade Law has successfully assisted clients in (1) submitting voluntary self-disclosures to mitigate penalties, (2) negotiated agreements with BIS and Census, and (3) built corrective action systems to help ensure that your business does not make the same violation again.
Check out our Bloomberg article on Submitting a Voluntary Self-Disclosure to the U.S. Census Bureau.
Diaz Trade Law’s Upcoming Webinar: Building & Maintaining an Effective Export Compliance Plan
Diaz Trade Law has produced an on-demand webinar on Building & Maintaining an Effective Export Compliance Plan. This one-hour webinar will discuss the elements of an effective export compliance plan, best practices, how to train your employees, and an overview of both how to build and effectively maintain a robust export compliance plan.
In the webinar, you will learn:
- Why you Should Have an Export Compliance Plan in Place
- Elements of an Effective Export Compliance Plan
- How to Build and Effective Export Compliance Plan
- Common Risks Associated with the Export Process that Should be Addressed in Your Plan
- What to do When BIS/OFAC/Census/DDTC Come Knocking on Your Door
- How to Maintain an Effective Export Compliance Plan Through Training
- What to Do When All Goes Wrong
- What NOT to Do – Examples from “Don’t Let This Happen to You”
Diaz Trade Law has significant experience in a broad range of export compliance matters. To learn more about the services we offer, contact us at firstname.lastname@example.org or call us at 305-456-3830.