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The Export Administration Regulations (EAR) place legal responsibility on all persons who have information, authority or functions relevant to carrying out export transactions subject to the EAR. Forwarding agents may have compliance responsibilities under the EAR even when their actions are dependent upon information or instructions given by those who use their services. However, hiring a forwarding or other agent (hereafter “agent”) to perform various tasks does not necessarily relieve a party of its compliance responsibilities.
On July 10, 2000, the Bureau of Industry and Security published amendments
to the EAR affecting relevant sections to the EAR, including: Section 748.5,
regarding parties to a transaction, Part 758 on export clearance, and relevant
definitions in Part 772.
Primary responsibility for compliance with the EAR falls on the “principal
parties in interest” (PPI) in a transaction. Generally, the PPIs in
an export transaction are the U.S. seller and the foreign buyer.
In a “routed export transaction,” in which the foreign PPI authorizes a U.S. agent to facilitate the export of items from the United States, the U.S. PPI may obtain from the foreign PPI a writing in which the foreign PPI expressly assumes responsibility for determining licensing requirements and obtaining authorization for the export. In this case, the U.S. agent acting for the foreign PPI is the “exporter” under the EAR, and is responsible for determining licensing authority and obtaining the appropriate license or other authorization for the export.
An agent representing the foreign PPI in this type of routed export transaction must obtain a power of attorney or other written authorization in order to act on its behalf.
In a routed export transaction, if the U.S. PPI does not obtain from the
foreign PPI the writing described above, then the U.S. PPI is the “exporter”
and must determine licensing authority and obtain the appropriate license
or other authorization.
In a routed export transaction in which the foreign PPI assumes responsibility
for determining the appropriate authorization for the export, the EAR require
the U.S. PPI to furnish the foreign PPI and its agent, upon request, with
the correct Export Control Classification Number (ECCN) or sufficient technical
information to determine the ECCN. In addition, the U.S. PPI must provide
the foreign PPI and its agent with any information that it knows will affect
the determination of license authority.
In a transaction that is not a routed export transaction, if the U.S. PPI authorizes an agent to prepare and file the export declaration on its behalf, the U.S. PPI is the “exporter” under the EAR and is required to :
(A) provide the agent with the information necessary to complete the SED;
(B) authorize the agent to complete the SED by power of attorney or other written authorization, or by signing the authorization block on the SED; and
(C) maintain documentation to support the information provided to the agent for completing the SED.
If authorized by either the U.S. or foreign PPI, the agent is responsible for:
(A) preparing the SED based on information received from the U.S. PPI;
(B) maintaining documentation to support the information reported on the export
declaration; and
(C) upon request, providing the U.S. PPI with a copy of the SED filed by the agent.
Agents are responsible for the representations they make by signing an export declaration. Moreover, no person may proceed with any transaction knowing that a violation has occurred, is about to occur or is intended to occur in connection with it. It is the agent’s responsibility to understand its obligations.
Agents, especially those acting as the “exporter,” should understand the “Know Your Customer” Guidance and Red Flags found in Supplement No. 1 to Part 732 of the EAR. Agents and exporters should decide whether there are red flags, inquire about them, and ensure that suspicious circumstances are not ignored.
Both the agent and the PPI which has hired it are responsible for the correctness of each entry made on a SED. Good faith reliance on information obtained from the PPI can help protect an agent, but the careless use of pre-printed “No License Required” forms or unsupported entries can get an agent into trouble.
An agent should avoid making commodity classifications for which it lacks technical expertise, and should obtain support documentation for ECCNs and other material.
On September 30, 2002, the President signed into law the Foreign Relations Authorization Act, Public Law 107-228 (the Act). Section 305(d) of this law mandates the electronic filing of SEDs through the AES system, an electronic method for filing the paper SED information directly with the Bureaus of Census and Customs and Border Protection. Under current Census regulations, export information is compiled from both paper (SED) and electronic (AES) records.
The Act also establishes civil and criminal penalties for delayed filings, failures to file and false filing of export information and/or using AES to further illegal activity. The Act provides for:
On February 17, 2005, the Census Bureau published a proposed rule entitled “Mandatory Automated Export System Filing for All Shipments Requiring Shipper’s Export Declaration Information” to implement the provisions of Sections 304 and 305 of the Act.
Subpart H of the proposed rule includes the following new penalty provisions:
Whether filing on behalf of the USPPI or the FPPI, the authorized agent has the following responsibilities: