Elimination of 'No License Required' Code Among Coming Updates to ACE for Exports

BIS on March 31 will remove the “C32” code from AES, which is used for export controls “other than” or “in addition to” anti-terrorism controls, BIS Office of Technology Evaluation Director Gerard Horner said during the conference. After that date, “C33” will be the only AES code usable to designate “No License Required” shipments, he said. Once effective, the Export Control Classification Number (ECCN) filing requirement for “C32” exports now will be necessary for “C33” exports that are controlled for reasons other than or in addition to anti-terrorism reasons, Horner said. “C33” filings currently do not need an ECCN. Filers, however, won’t have to provide ECCNs for products that are strictly controlled for anti-terrorism reasons. “My best practice and guidance to you is always give the ECCN,” including for “EAR99” shipments, Horner said. “Don’t let the government try to guess on what you’re trying to do here.”

After full implementation of ACE for imports and exports, the State Department Directorate of Defense Trade Controls (DDTC) hopes to include in partner government agency message sets the amount that should be incremented or decremented, depending on whether it’s an import or export, respectively, DDTC Chief Information Officer Karen Wrege said during the conference. CBP will perform the decrementing, she said. “What we’re trying to do is take all existing licenses that were manually decremented, and trying to have a process where you present one last time,” she said. “So if you present one last time, and then we put in the value…. And then you can start decrementing from there.”

CBP and BIS implemented a decrementing function in AES in August (see 1608100027). Filers who exceed the tolerance of their license values will receive a "verify" message, rather than a "fatal error" rejection, because BIS is still evaluating the effectiveness of AES in ACE, and didn't want to issue negative messages for actions not described in BIS' requirements, Horner said. In addition to the "verify" message, BIS is providing filers with the AES internal transaction number (ITN), and telling them when they met their license value tolerance, he said. Because certain AES functions, including decrementation, are difficult to monitor, filers should let BIS know about any issues they're having, Horner said.

Under Export Administration Regulation 750.11, BIS allows up to a 10 percent overage on the license value for a single transaction. Since BIS and CBP stood up their decrementing function in AES, filers have asked about receiving "verify" messages, indicating noncompliance, for exports that cut into the 10 percent ceiling. For instance, one company reported an inability to engage in a $5,000 transaction after exhausting its $100,000 license. The company hit the full license amount in the initial sale, which closed out the license. Therefore, the single-transaction allowed overage value didn't apply, Horner said. Another company exhausted its $100,000 license and any allowable overage when it made a shipment for $102,000, and a subsequent $5,000 shipment didn't clear, Horner said. But a company was compliant in another instance when it made a $15,000 shipment after exhausting $90,000 of its $100,000 license, Horner said. The single-transaction license overage covered all $105,000 associated with that license, he said.

The Census Bureau has transferred about 20,000 companies to ACE, spread across about 40,000 total users, after the agency finished shifting all legacy AES users to ACE on May 20, Census Trade Ombusdman Theresa Gordon said during the BIS conference. ACE has processed 4.5 million exports bearing unique ITNs, she said. "We’re getting a lot of usage in the system, and a lot of positive feedback on how the system works, the functionality ... and the response time," she said. "So we’re constantly looking for any suggestions and feedback that you have. You all help us keep the system working properly." The most shipments BIS received in one day happened on Oct. 21, when 40,000 filings were created, about 4,000 of which were drafts, meaning 36,000 were unique ITNs, Gordon said. On an average weekday, Census sees about 32,000-35,000 unique ITNs, she said.

Filers usually access more than 1,000 ACE export reports per week, including reports divided by Export Identification Number (AES-201 report), or U.S. Principal Party in Interest ID Number (AES-202 report). The Commerce Department also plans to propose a rule that would provide original ITNs and dates of export in USPPI Agent-Filled Routed Transaction reports, known as "AES-203s," she said. Five years' worth of data is waiting to be sorted out through this type of report, Gordon said.

David Garcia of CBP during a conference session said he hopes more information regarding the in-progress ACE truck manifest comes out of a meeting between rail carriers, CBP and Mexican Customs scheduled for next week in El Paso. The manifest is still under discussion at the Customs Commercial Operations Advisory Committee, he said. Garcia also highlighted the fact that the Drug Enforcement Administration gave CBP a large set of Harmonized Tariff Schedule codes that it flagged as “allowed” for exports. CBP compares this with a reference database to ensure sound enforcement. Furthermore, about 70 participants are engaging in an Environmental Protection Agency ACE pilot at the points of entry at Laredo, Hidalgo and El Paso, for exports of lead acid batteries. The EPA in December is expected to issue a final rule on filing exports in ACE, Garcia said.