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.
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
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.
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
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
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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?
? If your goods require a destination control statement does the statement appear on all of
? 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.
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/
See ?Records to be retained,? Code of Federal Regulations, Title 15 Part 762.2
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
©2011 Mohawk Global Trade Advisors www.mohawkglobalta.com