BIS Proposes Rule to Clarify Transactions Involving Foreign Entities Exporting From U.S.
The Commerce Department’s Bureau of Industry and Security (BIS) is asking for comments on a proposed rule that seeks to clarify party responsibility in export transactions where a foreign principal party in interest (FPPI) is responsible for the export of an item subject to the Export Administration Regulations (EAR). The proposed rule changes terminology for such transactions to avoid confusion, and also sets new requirements for authorizing the FPPI to handle export and documentation requirements. Comments are due by April 7.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
The proposed rule amends the EAR to remove the term “routed export transaction” and replace it with the term “Foreign Principal Party Controlled Export Transaction." The replacement seeks to eliminate confusion among exporters, because the term “routed export transaction” currently has different definitions in the EAR and the Foreign Trade Regulations (FTR), said BIS. The term is used in the FTR when filing electronic export information in the Automated Export System.
New Authorization Requirements for FPPI Licensing
The proposed rule would continue to require that the U.S. principal party in interest (USPPI) serve as the exporter and the party responsible for applying to BIS for a license, when required, even if the FPPI is responsible for the export of the items out of the United States. The FPPI’s designated U.S. agent would be able to apply for an export license if it meets certain new requirements, as follows:
A written assumption of responsibility. The USPPI must provide the FPPI with written authorization, such as a contract or letter, assigning the FPPI responsibility for checking licensing requirements and getting licenses. The FPPI must then provide a written acknowledgment to the USPPI that it is undertaking those responsibilities and identify its U.S. agent.
Power of attorney. The FPPI would have to designate a U.S. agent to act on its behalf, and would have to provide a power of attorney or other written authorization to its U.S. agent.
Information sharing. If the FPPI is handling licensing requirements, then the USPPI would be required to provide the FPPI and its foreign agent with the ECCN or enough technical information to determine the ECCN, as well as any information the USPPI "knows" will affect licensing requirements. The FPPI would be required to provide to the USPPI information including the date of export, port of export, country of ultimate destination and destination port, method of transportation and specific carrier identification, and export authorization (such as the license number, license exemption, or NLR designation). BIS said this information will allow the USPPI to confirm the export was properly authorized.
BIS said this rule does not change the USPPI responsibilities as defined by the FTR. BIS says some exporters, freight forwarders, and foreign parties have misunderstood the current language to require the USPPI to allow the FPPI to assume responsibility for determining licensing requirements and obtaining license authority in all routed export transactions.
Those interesting in commenting, may submit comments to http://www.regulations.gov, rulemaking number BIS-2014-0004, email to publiccomments@bis.doc.gov, with RIN 0694-AF67 in the subject line, or mail a hard copy.
BIS contact: Robert Monjay, at (202) 482-2440 or Robert.Monjay@bis.doc.gov.
(Federal Register 2/6/14)