The U.S. Census Bureau received many questions and comments in response to two previous Global Reach blogs (posted September 3 and October 11) on “Who Is the Ultimate Consignee?” when reporting the Electronic Export Information (EEI) in the Automated Export System (AES). 

We appreciate your valuable feedback. The goal of this blog is to highlight and respond to some of your questions and comments that included requests for more guidance from the Census Bureau on specific scenarios involving the Ultimate Consignee, Intermediate Consignee, and end user in export transactions.

Who Is the Ultimate Consignee? Part I
 

Q1: In a routed export transaction, an authorized agent/AES filer is selected by the Foreign Principal Party in Interest (FPPI)located in a foreign country. When the FPPI provides the name of the ultimate consignee as a third-party logistics (3PL) company, who is actually receiving the goods, is it acceptable to report the FPPI name and address care of the 3PL as the Ultimate Consignee?

A1: We suggest that the AES filer practice due diligence by asking the FPPI questions and continuing to request details on the known end-user information to ensure export compliance. However, for a variety of reasons, the FPPI may not provide it. Therefore, the AES filer should follow the requirement in the Foreign Trade Regulations (FTR) to report the Ultimate Consignee as known at the time of export, which would be the name of the FPPI, and care of the 3PL as the address. Additionally, if the AES filer believes the withholding of information from the FPPI is a red flag, the AES filer should report potential violations to the U.S. Bureau of Industry and Security (BIS) or U.S. Customs and Border Protection (CBP).
 

Q2: Unlike a license, an export under a license exception or exemption does not have an application. In these cases, how is the AES filer to report the Ultimate Consignee consistently with the license exception or exemption?

A2: Information on the parties to an export transaction, regardless of the export’s designation (licensed, license exception or exemption or “no license required”) should be known at the time of export and reported on the EEI in the AES by the USPPI or the authorized agent. The guidance provided in blogs I and II should be followed regardless of the export designation. For best practices, refer to Supplement No. 3 to Part 732 of the Export Administration Regulations (EAR) – Know Your Customer Guidance. 
 

Q3: Please confirm in scenario 3 that when the USPPI is shipping the goods to the Foreign Principal Party in Interest (FPPI)/foreign buyer in its home country, but somehow obtains knowledge that the FPPI/foreign buyer is going to export from that country to another country, the Ultimate Consignee is always the FPPI/foreign buyer, even if the USPPI has knowledge that the goods are going elsewhere.

A3: In scenario 3, the USPPI only has knowledge of the country where its FPPI/foreign buyer will be reselling/distributing the goods. However, the USPPI has not been provided with the details of the end user’s name or address. In this scenario, the foreign buyer is the Ultimate Consignee, however, since the USPPI has knowledge of the Country of Ultimate Destination, the USPPI should report the Country of Ultimate Destination of the end user and the Ultimate Consignee type as reseller/distributor. 
 

Q4: Please ensure that CBP does not penalize when the country of ultimate destination is not identical to the country of the Ultimate Consignee.

A4: In 2014, the BIS provided the requirement to add the Ultimate Consignee Type on the EEI in the AES because of an increase in the lawful transshipment from the ultimate consignee to end users. One purpose of the Ultimate Consignee Type is to provide knowledge to the U.S. government when an Ultimate Consignee is a nongovernment reseller, retailer, wholesaler, distributor, distribution center, or trading company. When this requirement was added to the AES, it was understood that the country of ultimate destination may not conform to the Ultimate Consignee Country if the complete knowledge of the country of end-use was known but the end user was not known.

Who Is the Ultimate Consignee? Part II

Q1: If a foreign buyer applies paint or packaging to the good(s) before they are resold/distributed to the end user, is the paint/packaging considered by the Census Bureau a change in characteristic or added value?

A1: If the foreign buyer/FPPI applies paint to a good and the paint is considered a coating which changes the Schedule B classification, the Census Bureau considers that to be a change in the good’s characteristic. On the other hand, if the Schedule B classification does not change after the paint is added to the good and the paint adds no value to the good, the known end user is the ultimate consignee. Furthermore, packaging is not considered a change in the characteristic of the good and does not add value to actual good being exported.
 

Q2: In a drop shipment, if the FPPI pays for the export but does not take possession, does the Census Bureau want the FPPI in the Intermediate Consignee field?  

A2: The Census Bureau requires that the Intermediate Consignee be the person or entity located abroad who acts as an agent for the principal party in interest and takes possession of the goods for the purpose of effecting delivery of goods to the Ultimate Consignee. Therefore, the answer is no. If a FPPI does not take possession of the goods, they would not be reported on the EEI in the AES as an Intermediate Consignee.
 

Q3: If the answer to the above is no, please rewrite the definition of Intermediate Consignee to say that the Intermediate Consignee must take possession if that is consistent with effecting delivery.

A3: This request has been noted to amend the Intermediate Consignee definition in the FTR to add “and takes possession of the goods.”
 

Q4: In the definition of Intermediate Consignee, the FTR say that the name and address of the Intermediate Consignee (if any) should be reported. This has always been confusing. What does "if any" mean?

A4: The words “if any” confirms that the Intermediate Consignee is a conditional data element. Under §30.6 of the FTR, data elements identified as “conditional” should be reported if they are required for or apply to the specific shipment. Therefore, the Intermediate Consignee would only be a reporting requirement if for a specific shipment there exists an Intermediate Consignee, a person or entity located abroad who acts as an agent for the principal party in interest and takes possession of the goods for the purpose of effecting delivery of goods to the Ultimate Consignee.   
 

Q5: Change the "the foreign country" in the Intermediate Consignee definition to "a foreign country." The "the" makes it seem as the foreign country is the same as the Ultimate Consignee country.

A5: This request has been noted to amend the Intermediate Consignee definition in the FTR to replace “in the foreign country” with “located abroad.”  
 

Q6: Has the Directorate of Defense Trade Controls (DDTC) of the State Department confirmed that the Census Bureau guidance is consistent with the International Traffic in Arms Regulations (ITAR). Currently, box 14 of the ITAR license reads Foreign End User and box 16 reads Foreign Consignee. 

A6: The Census Bureau received a response from the DDTC that, “The ITAR requires that the ultimate end user be identified on license applications. We also have foreign consignees (integrators) and foreign Intermediate Consignees (box kickers/freight forwarders).” Therefore, for exports subject to the ITAR, report on the EEI in the AES the Ultimate Consignee as the ultimate end user and the Intermediate Consignee would be whoever takes possession of the goods while effecting delivery to the ultimate end user. 
 

Q7: Does this guidance replace the ITAR Ultimate Consignee guidance in the newsletter article Clarification to October 2010 Newsletter — DSP-5 licenses in the AES?

A7: In these two blogs, the guidance has been brought up to date. As stated above, DDTC provided up-to-date input on the requirement to report the Ultimate Consignee on the EEI as the ultimate end user on the ITAR license application. That response from DDTC confirms that the known end user is required as the Ultimate Consignee on the EEI record, consistent with the information in the blogs.
 

Q8: When the EEI doesn’t match the export license (ITAR or EAR) because the USPPI address reported in AES is different from what is on the approved export license, the Census Bureau should point out to exporters that this is not a violation of either regulation, but a necessary compliance step under the FTR. Some exporters believe that “conformity of documentation” means that everything needs to match perfectly (license, commercial invoice, EEI). However, it is impossible for these forms to match because of different requirements in the EAR, ITAR and FTR. If there is an audit performed by the BIS or DDTC, they should understand why there are different addresses on the main export control documents: invoice, bill of lading/air waybill, and EEI.

A8: It is common for data not to conform on different forms because government and commercial forms may have different purposes. Because of this nonconformity, the Census Bureau added a note to 30.3 of the FTR, which reads: “The EAR defines the “exporter” as the person in the United States who has the authority of a principal party in interest to determine and control the sending of items out of the United States (refer to 15 CFR 772 of the EAR). For statistical purposes “exporter” is not defined in the FTR. Instead, however, the USPPI is defined in the FTR. For purposes of licensing responsibility under the EAR, the U.S. agent of the FPPI may be the “exporter” or applicant on the license in certain routed export transactions (refer to 15 CFR 758.3 of the EAR). Therefore, due to the differences in export reporting requirements among federal agencies, conformity of documentation is not required in the FTR."