How to survive an export end-use check

An Expert's View about Export Compliance in the United States

Posted on: 1 Nov 2011

Finding out that the government wants to do an end-use check is a lot like finding out that you’re being audited by the IRS. Protect your company from an “unfavorable” end-use check with these tips.

How to Survive an Export End-Use Check By Jim Trubits Licensed Customs Broker, Certified Customs Specialist Finding out that the government wants to do an AVOIDING UNFAVORABLE RESULTS: Loss of export end-use check on your export is a lot like finding privileges is a death sentence for U.S. companies out that you?re being audited by the IRS. Anxiety that sell their products overseas. So how do you begins to take over. You may ask yourself, what avoid ?unfavorable? end-use check results? The did I do wrong? answer lies in how well you complete your screening, know your customer, keep your records, The reality of the situation is that you may and review your documentation. have been selected at random, so don?t panic. Through the U.S. Bureau of Industry and Complete your screening. This one is simple. Don?t Security?the agency that performs these attempt to ship your exports without knowing your checks?the government is attempting to verify screening requirements and completing them in full. that your exported goods are not being used If you export EAR99 goods, you are not exempt from by the wrong people or for the wrong reasons. these requirements. Ultimately, end use checks are a proactive way to protect national security. They help the Know your customer. Let?s assume you?ve com- government inhibit the proliferation of weapons pleted all of your screening requirements. Your of mass destruction, limit support of terrorism, foreign consignee didn?t appear on any of the and identify unauthorized end users. prohibited end-user lists. However, this doesn?t mean that you truly know your customer and your BEHIND THE SCENES: Although the government customer?s operations. The best way to do this is to performs two types of end-use checks, one actually visit your customer. So, plan a visit to the pre-license and one post-shipment, the majority customer?s facility. See with your own eyes what of checks are post-shipment. kind of operation your foreign customer is running. Keep your records. Federal regulations require 1 Fifty percent of post-shipment end-use checks exporters to keep all transaction records for five are conducted by Export Control Officers in U.S. 2 years . Some of the documents that may be embassies and consulates in Moscow, Beijing, requested during a government end-use check Hong Kong, New Delhi, Singapore, and Abu include: Dhabi. The other fifty percent of checks are conducted by U.S. investigative officials. ? commercial invoice During each check, the exporter will be asked for all documentation related to a particular ship- ? purchase order ment. The Export Control Officer will then take steps to verify that the item is being used as ? airway bill or international bill of lading intended by the end-user, at the stated location, as noted in the shipment?s documents. This may ? copy of electronic export information filing involve physically visiting the foreign consignee?s operations to verify location and correct use. If ? screening documentation, if available the officer discovers that the item is not in the location stated on the documents or is being ? supporting documentation (i.e. shipper?s used improperly, the check?s results will be letter of instruction) considered ?unfavorable? and the exporter?s future shipping activities will be monitored more ? technical specifications closely by government officials or in some in- stances, completely prohibited. Review your documentation. It is important to review any export documentation prepared by you ©2011 Mohawk Global Trade Advisors www.mohawkglobalta.com and on your behalf. Your freight forwarder can help you with this process but make sure that you take time to carefully inspect the documents yourself. ? Look for incomplete and innacurate information ? If documents share the same data, check to make sure that the data matches on each one ? Does the commercial invoice identify all parties to the transaction (the ship to and sold to par- ties, price payable to, etc? ? Does the invoice include a commodity description sufficient enough to correspond to the schedule B number used? ? Are the serial numbers correct on the commercial invoice and other shipping documents? 3 ? If your goods require a destination control statement does the statement appear on all of your documents? ? If a freight forwarder files your electronic export information (EEI), did you use a Shipper?s Let- ter of Instruction to help prevent AES filing errors? ? Did you independently review the EEI for accuracy? ? If you didn?t receive a copy of the EEI from your forwarder, did you request a copy? Does your compliance program include a procedure that requires a copy of every EEI from your forwarder? The Bureau of Industry and Security expects every exporter to know their compliance responsibilities and to abide by them. It is up to you, the exporter, to determine exactly how. Protect your company from an ?unfavorable? end-use check by completing your screening, knowing your customer, keeping your records, and reviewing your documentation. 1 Statistic taken from an online transcript of a presentation given by Jose Rodriguez on July 20, 2011 in Washington D.C. dur- ing the 2011 Update Conference on Export Controls and Policy. See http://www.bis.doc.gov/seminarsandtraining/update2011/ end_use.pdf 2 See ?Records to be retained,? Code of Federal Regulations, Title 15 Part 762.2 3 See Code of Federal Regulations, ?Steps regarding Shipper?s Export Declaration or Automated Export System Record, Destina- tion Control Statements, and Recordkeeping,? Title 15 Part 732.5; ?The Shipper?s Export Declaration (SED) or Automated Export System (AES) Record,? Title 15 Part 758.1; ?Destination Control Statement? Title 15 Part 758.6; and Recordkeeping? Title 15 Part 762. ©2011 Mohawk Global Trade Advisors www.mohawkglobalta.com
Posted: 01 November 2011

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