ACE, AES, CBP, EEI, HS… US exporters have to deal with a lot of
regulations — and a lot of abbreviations. Here we discuss the
importance of filing exports on the Automated Exports System and offer
an overview on how exporters can remain in compliance.
One of the many duties of US Customs and Border Protection
is regulating international trade. As the name suggests, CBP is
responsible for customs, including cargo screening. Companies must
report their imports and exports to CBP and they do so using
the Automated Commercial Environment (ACE) portal. The ACE portal is
found on the CBP website.
In the United States, filing an export declaration is performed
electronically using what’s known as the Automated Export System
(AES). To do this you log on to the ACE portal on the CBP website.
Once you have logged in, you must enter all the shipment information
on to AESDirect.
AES acts as the central collection point for key export data required
by multiple agencies, and replaces the previous paper-bound process
which both exporters and Customs found to be expensive, labor
intensive, and prone to manual errors. AES was designed specifically
to simplify compliance with export-related laws and regulations,
improve trade statistics, reduce duplicate reporting to multiple
agencies, and improve customer service.
But making the process automated doesn’t mean that it’s
challenge-free. Exporters must still understand the requirements
behind filing a proper export declaration. The Electronic Export
Information — EEI — the actual data that exporters submit includes the
exporter’s name, address and identification number. It also includes
detailed information about the products being exported, including
their classification and licensing requirements. Exporters must also
perform proper due diligence when inputting the required data. This
means that if you’re still manually keying your data into AES, and/or
entirely reliant on manual controls for oversight, then you’re at risk
of exposing your company to shipment delays, or even worse, penalties
There are three very good reasons why you should ensure that you
correctly file your exports with AES.
Firstly, breaking the law is not an option. There are civil and
criminal penalties for not filing your export information or for
filing incorrect information. Your company can be fined up to $10,000
per violation — and it is possible that you will face criminal charges.
Do you want your shipment stuck in limbo? An accurate AES filing
helps to ensure that your shipment is released in a timely fashion and
without incurring expensive delays. Delays are costly, both
financially and to your reputation. Nobody wants an unreliable trading
partner. Increased cycle times have a knock-on effect not only to your
customer, but to your customer’s customers too.
Finally, US Customs and Border Protection (CBP) uses AES data to
ensure that all exports are compliant with export regulations. These
regulations aim to ensure that exporters do not send critical goods
and technologies — either by accident or on purpose — to sanctioned
individuals, organizations or countries.
Most exports require AES filing, but there are exceptions. If your
merchandise is valued at $2,500 or more by Schedule B number you need
to file. Schedule B is the US export classification system. A Schedule
B number is a 10 digit code that relates to a product. That sounds
pretty straightforward. But with most legislation there are rules, and
exceptions to the rules, that make things a little more complicated.
Let’s look at some of these.
Did you know that the origin of your goods can impact whether you
need to submit EEI data? Let’s say you are exporting ten items in a
single shipment. All ten items are classified the same, are not
controlled goods, are all of domestic origin, with a declared value of
$300 each. In this case, as the total value exceeds the $2,500
threshold, you must file.
However, let’s say five of the same items were foreign-sourced. In
this instance an AES filing is unnecessary because by origin, the
goods would only have a combined declared valued of $1,500.
You don’t need to file EEI data with AES if you are exporting to
Canada. That means you could happily export goods valued at $25,000
every month and never need to report this to AES. Easy, right? Yes,
except there are exceptions to this exception. If you export
self-propelled vehicles — or other goods that require an export
license or a license exception — to Canada, you must file with AES.
You must also report to AES if you export rough diamonds. No matter
where they go, or what their value, rough diamonds require an AES filing.
There is something else to bear in mind: Even if you don’t need to
file EEI data, you must explain why using the appropriate AES
A number of parties can take responsibility for submitting the AES
filing. Generally speaking, the United States Principal Party in
Interest (USPPI) submits EEI data to AES.
The USPPI can be a wholesaler, distributor or manufacturer based in
the United States. It could also be a third party which has negotiated
the sale between a US seller and a foreign buyer. If you are the
exporter then, for the most part, you will be the USPPI.
Having said that, the USPPI can outsource the responsibility of
submitting EEI data to an authorized third-party, such as a freight forwarder.
Under certain circumstances, the Foreign Principal Party in Interest
(FPPI) can also submit the EEI. The FPPI is the final consignee. If
the FPPI uses a freight forwarder based in the US to arrange the
export, then a US agent of the final consignee can submit the filing.
Here’s where it gets tricky… As an exporter, it is your duty to
ensure all relevant exports have been filed with AES. Therefore, if
you authorize a third-party to do this for you, you will need to make
sure that you have proof of filing and that each filing includes
complete and correct information. This means you still need to track
all AES filings no matter who submits them. Ultimately, you are the
one responsible for any violations. The buck stops with you.
There are two ways you can file EEI data to AES. We will have a quick
look at them here.
The first option is for your company or an authorized third party to
file electronically using AESDirect. In order to do so, you or your
authorized agent must log on to the ACE portal on the US Customs and
Border Protection website. Once you have logged in, you must enter all
the shipment information on to AESDirect. Obviously you will need an
ACE account to do this. If you don’t have one, you can find the
application on the CBP website.
Every item in your shipment must have the proper classification
information such as Schedule B numbers and the Harmonized System (HS)
codes. The HS code is a 6 digit number, known as a subheading. HS
codes classify globally traded products.
As discussed above, Schedule B numbers relate to the US export
classification system; HS numbers are international. Authorities
around the world use HS codes to identify the import duties and tax
rates payable on goods.
Therefore, it is important to include HS codes in most international
export documentation and commercial invoices. Get the HS codes right
and your goods will sail through customs; get it wrong and customs
delays and disputes will arise.
Alternatively you use a software solution such as PRECISION
Global Trade Management. PRECISION Global Trade Management
automates export processes, documentation production and customs
reporting. It records and stores all shipment data in a clear,
consistent manner that is repeatable across customers, shipments and
countries. In addition, PRECISION Global Trade Management
automatically alerts you to critical export shipping and/or regulatory
controls. This includes proactive export screening and license determination.
The solution provides for integrations to customs authorities for
electronic export declarations. This includes AES. Using PRECISION,
you can file on your own behalf, without involving a third-party. If
you are the exporter and thus the USPPI, you bear the responsibility
for ensuring all your exports meet the required regulations.
Leveraging a software solution also means you don’t have to re-enter
the information into a separate system. This is quicker and more
efficient, but crucially it also mitigates the risk of human error.
When you are entering a long series of HS and Schedule B numbers it is
easy for a mistake, such as a typo, to occur. PRECISION Global Trade
Management help you to ensure that EEI data is correctly filed and
your obligations have all been met.
Precision Software, a division of QAD Inc., provides industry-leading
global trade management, transportation execution and multi carrier
shipping software solutions from a single, integrated platform.
Preeminent industry leaders in every region of the world rely on
Precision’s global support centers to leverage thousands of carriers
and manage millions of shipping transactions every day. Our open
architecture easily integrates with Enterprise Resource Planning,
Warehouse Management Systems and legacy solutions. An ISO-certified
company, Precision Software assists companies to minimize shipping
costs, optimize first mile and last mile deliveries, automate free
trade agreement compliance, avoid customs delays and mitigate the
risks associated with dynamic trading environments to maximize their
competitive advantage. Precision Software’s customers span multiple
industries including banking and finance, life sciences, high
technology, retail, industrial, automotive, higher education and
public sector as well as logistics providers. For more information
about Precision Software, visit www.precisionsoftware.com.
MANAGEMENT AND AES FILING FOR US EXPORTERS
COMPLIANCE AS A COMPETITIVE ADVANTAGE: MITIGATE RISK AND GAIN EFFICIENCIES
INTEGRATE EXPORT MANAGEMENT AND TRANSPORTATION