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Does your company export goods valued at more than $2,500 to anywhere other than Canada? If so, you’re probably no stranger to the U.S. Foreign Trade Regulations (FTR) that require you to file your export information electronically through AES, the Automated Export System. Most exporters need a thorough understanding of AES because the consequences of filing incorrectly can be costly.
If the process of filing through AES seems a bit convoluted, or if you could use a refresher in AES terms, read on.
The Automated Export System (AES)
AES is the system U.S. exporters use to electronically declare their international exports, known as Electronic Export Information (EEI), to the Census Bureau to help compile U.S. export and trade statistics. It is also used by other government agencies for trade enforcement purposes.
As a general rule, if your company exports goods valued at more than $2,500 per Schedule B number to anywhere other than Canada or goods that require an export license, the FTR require that you or your agent (typically a freight forwarder) file through AES. Watch the U.S. Census Bureau video for a more complete description of when you must file.
Before AES, exporters could report export information to the Census Bureau on a paper Shipper’s Export Declaration (SED) form. (You may remember the signature yellow form.) The Census Bureau used SED forms to report trade statistics. However, in 2008, changes to the FTR eliminated this option, because more than half of all SEDs submitted had incorrect data.
To improve accuracy and ease of data collection, the bureau created AES. At first, filing through AES was voluntary, but since September 2008, it’s been mandatory.
In addition, the new regulations increased the civil and criminal penalties for failing to file through AES or for filing incorrect information up to a maximum of $10,000 per violation—a 10-fold increase over previous penalties.
In 2014, an Executive Order required a single portal be used for receiving data required for both the release of imported cargo and the clearance of cargo for export; in early 2016, AES filings moved from the legacy AES Direct platform to CBP's Automated Commercial Environment (ACE), which you can learn more about in this article.
Electronic Export Information (EEI)
EEI is the data that must be submitted to the Census Bureau through AES when a filing is required. The U.S. Foreign Trade Regulations require an AES filing for exports to anywhere other than Canada if the value of the exported goods grouped by Schedule B number is more than $2,500, or if the goods require an export license.
In a standard export transaction, it is the responsibility of the U.S. Principal Party in Interest (USPPI) to submit the EEI through AESDirect. However, the USPPI can give their freight forwarder (or some other third party) a power of attorney (POA) or written statement authorizing them to prepare and file the EEI on their behalf. (In most cases, the USPPI is the same as the exporter.) In a routed export transaction, the Foreign Principal Party in Interest (FPPI) must provide a POA or other written authorization to submit the EEI to either the USPPI or a U.S. Authorized Agent.
Foreign Trade Regulations (FTR)
The FTR are administered by the International Trade Management Division (formerly known as the Foreign Trade Division) of the U.S. Census Bureau. The FTR have a dual purpose—they allow for the collection of statistical trade data, and they provide the tactical information required by the Bureau of Industry and Security (BIS) and Customs and Border Protection (CBP) to perform their export oversight roles.
The Foreign Trade Regulations list dozens of specific pieces of information about that must be included in your AESDirect filings. It includes the exporter’s name, address and identification number, as well as detailed information concerning the exported products, including their proper classification and licensing requirements.
Several more conditional fields that may be required. You’ll find these required data fields—as well as your other responsibilities in a routed export transaction, in my blog post, What the Heck Is a Routed Export Transaction?
You can read more about the FTR’s role as one of The Three R's in Export Compliance: FTR, EAR and ITAR. The census bureau also provides a quick guide to FTR, or, if you’re looking for some light reading, you'll find the current version of the FTR at the Government Publishing Office website.
Automated Commercial Environment (ACE)
Exporters or their representatives who are filing through AES need to log into the CBP's server called the Automated Commercial Environment (ACE). ACE replaced the Census Bureau's legacy AESDirect platform in 2016.
In order to file through AESDirect on the ACE platform, you must first create an account. If your company already has an ACE account for your imports, you will need to add the export option to your existing account.
Once you've created an account on ACE, you can log in and enter the required export information on the various AESDirect screens. If you are using an export software program like Shipping Solutions to create your export forms, you can eliminate redundant data entry by filing through AESDirect on the ACE platform with just a click of a button. Watch this four-minute video to see how easy it is to do.
The ACE platform also allows you to run reports of the EEI that has been filed through AESDirect using your company's Employer Identification Number (EIN). These reports are particularly important if you are relying on a third party to file on your behalf or if you regularly ship under a routed export transaction and the FPPI's forwarder or agent is doing the filing. Read Discover AESDirect Reports on ACE for more information about setting up the report option.
United States Principal Party in Interest (USPPI)
The USPPI is the person in the U.S. who receives the primary benefit—monetary or otherwise—of an export transaction. According to the Census Bureau, that person can be a:
·U.S. seller (wholesaler/distributor) of the merchandise for export.
·U.S. manufacturer if selling the merchandise for export.
·U.S. order party who directly negotiated between the U.S. seller and foreign buyer and received the order for the export of the merchandise.
·Foreign entity if in the U.S. when items are purchased or obtained for export.
Who cannot be the U.S. Principal Party in Interest (USPPI)?
The forwarding agent or the consolidator cannot be listed as the USPPI on the AES record with one very specific exception. A freight forwarder who acted as a customs broker and arranged import clearance of goods can be listed as the USPPI if the goods are subsequently exported without change or enhancement.
We’ve written extensively on the USPPI. Cathy Petersen’s three-part series explains more about the USPPI, along with several case studies for added clarification.
Foreign Principal Party in Interest (FPPI)
The FPPI is the party who purchases the goods for export or to whom final delivery or end-use of the goods will be made. This party may be the ultimate consignee.
In a routed export transaction, the FPPI is responsible for :
·Controlling the movement of the goods out of the U.S.
·Designating and hiring a forwarder (also known as a U.S. agent) to facilitate the movement of the cargo and file the AES.
·Providing the Power of Attorney or written authorization to the forwarder or the USPPI in order to file through AES.
You can read more about this designation and others in our article, What The Heck Is A Routed Export Transaction?
Schedule B Code and Commodity Description
The Schedule B is the 10-digit export classification system of the United States. The first six digits of the Schedule B match the corresponding Harmonized System (HS) code. Schedule B codes are administered by the U.S. Census Bureau and used to collect and publish export statistics.
Under the U.S. FTR, exporters are required in almost all circumstances to identify and report the correct Schedule B Code of their goods through AES. The proper classification number for goods are provided in the Schedule B codes or Harmonized Tariff Schedule of the U.S. (HTSUS).
You'll find the complete list of current Schedule B codes at the Census Bureau website. In addition to including the correct code, your AES filing should include a description of the goods that can be used to verify the proper Schedule B or HTSUS number as well as the export license if one is required.
Portions of the Schedule B codes are updated annually with occasional updates mid-year.
Unit of Measure
When I talk to people who are having a difficult time filing through AES, the most common problem they have is reporting the correct unit of measure for their goods. That's because the unit of measure they use on their invoices may be different than the unit of measure required based on the Schedule B classification of their items.
A look at Chapter 10 of the Schedule B codes reveals that they not only list the 10-digit code and the item description, they also include the correct unit of measure that must be reported. Duram wheat seeds (1001.11.0000), for example, must be reported in kilograms. For a small number of goods, two units of measure are required. The quantity and value of the goods should be calculated using the correct unit of measure.
You can learn more in our article Understanding Units of Measure for the Automated Export System (AES) versus Export Invoices.
Origin
When we refer to origin in the realm of AES, we’re talking about something specific. While certificates of origin may require that you list the country of origin for each item in your shipment, AES is simply wants to know if the goods originated in the U.S. or in a foreign country: D for domestic; F for foreign.
According to the Census Bureau, domestic goods include commodities that are grown, produced or manufactured in the United States, including goods exported from U.S. Foreign Trade Zones (FTZs), Puerto Rico, or the U.S. Virgin Islands. Census says shipments of goods of foreign origin that were previously imported and are further manufactured or processed in the United States, or have been enhanced in value or changed from its original form, should be reported as domestic goods.
Foreign goods include commodities that are grown, produced, or manufactured in foreign countries and have not undergone changes in form or condition or enhancement in value by further manufacturing in the United States, in U.S. FTZs, in Puerto Rico, or in the U.S. Virgin Islands. This includes merchandise that has entered the United States and is being re-exported in the same condition as when imported.
Export Control Classification Number (ECCN)
The ECCN is an alphanumeric, five-digit classification found in the Commerce Control List of the Export Administration Regulations to identify dual-use items for export control purposes. An ECCN is different from HS, HTSUS or Schedule B numbers. The ECCN number is used to determine whether or not your goods require an Export License (see below).
ECCNs are listed in the Commerce Control List (CCL), which is divided into 10 categories. Each category is subdivided into five product groups. The first character of the ECCN identifies the broader category to which it belongs and the second character identifies the product group (BIS).
There are three ways to classify your products for export controls: You can self-classify your products, submit a commodity classification request through the Simplified Network Application Process - Redesign (SNAP-R) online, or rely on the product vendor. We talk more about these processes in our article 3 Ways to Classify Your Products for Export Controls.
Export Information Code
This code identifies the type of export shipment or conditions of the exported items (i.e. goods donated for relief or charity, impelled shipments, shipments under the Foreign Military Sales program, household goods, all other shipments). The Census Bureau tells us that the overwhelming majority of exports use the code: OS - All Other Exports.
You can find a list of all of the AES filing codes in the Federal Register.
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