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June 29, 1998 NCBFAA Association 'AES Executive Summary' AES Interest-Based Negotiation

Affiliate Associations, Freight Forwarding Committee, Freight Forwarding

Automation Subcommittee

June 29, 1998

Executive Summary

Two significant improvements were made to the Automated Export System (AES) as a result of the interest-Based Negotiations.

• Introduction of an AES filing option that requires no pre-departure information for qualified participants. The timing of the post-departure transmissions has been designed to level out system workload and improve response times. Current AES-PASS participants will have one year to make the required modifications to their programs;
• Addition of a two-stage filing option open to all AES filers to provide for those transactions where all of the required information is not known at the time of exportation.

Companies filing full information pre departure need not make any changes to their programs or procedures.

It is the consensus of the IBN team members that a viable export reporting program has been developed as a result of our negotiations.

I. Background

In 1994, the Customs Service and Bureau of Census jointly developed an "Automated Export System (AES)" to electronically capture data that had been historically submitted via paper shippers' export declarations (SED's). As originally proposed, AES required all SED data to be submitted pre-departure.

The trade. while supporting the concept of electronic SED filing, felt that the initial AES proposal required modification for two primary reasons. First, a significant portion of the trade believes that pre-departure filing of SED data does not conform to current business processes. For example, in many cases, exporters do not have complete information pre-departure. Second, the AES proposal eliminated a privilege that many exporters had exercised and relied upon for nearly 30 years - the Automated Export Reporting Program (AERP) which allowed post-departure filing of SED data for qualified exporters.

In response to the trade's request to address these two issues, Customs and Census developed AES-PASS (Post-Departure Authorized Special Status). AES-PASS allowed qualified exporters to provide a brief pre-departure "IOU". followed by a post-departure submission of the remaining SED data. While this proposal significantly improved the AES offering. the trade remained concerned that the two issues described above had not been completely addressed and that two separate transmissions would be required for each export transaction.

After a period of discussion. Customs, Census and the trade agreed to an "Interest Based Negotiation (IBN)" to resolve the remaining differences. Under the direction of Assistant Secretary of the Treasury (Enforcement) James Johnson, a subcommittee of the Customs Oversight Activities Committee (COAC), supplemented with other experienced members of the exporting community. was selected to represent the trade. Several employees of both Customs and Census represented the government. A series of three interest based negotiating sessions, each lasting three days, was held in April, May and June of 7998. The results are contained in the following report.

II. Purpose and Scope

The purpose and scope of the 1BN negotiations was to determine the source, timing, and level of detail to capture export commodity data in an automated environment. The IBN team sought a solution that is consistent with current business practices of the exporting community and meets the regulatory requirements and needs of all interested government agencies.

NOTE: The Introduction of an electronic environment affords the opportunity to address and assign levels of responsibility for providing accurate and timely export information. The full benefit of the improved export reporting process will not be realized until necessary regulatory changes have been effected.

II). The Four-Track Export Reporting Process

In response to the needs of the business community and the enforcement concerns of the government agencies, we recognize that export shipments require differing levels of information at different times.

A. Track 1: Paper SED, Pre-Departure

• This track has no electronic communication.
• Currently, goods subject to State Department licenses are required to be processed under Track
• The paper Shippers Export Declarations (SED) will continue to be given to the exporting carrier prior to exportation.

B. Track 2: AES With Full Pre-Departure Information

Track 2 is used for shipments far which full commodity information is available prior to departure or for which full pre-departure information is required.

At the present time, full pre-departure information is required for specific types of shipments. For example:

• used vehicles
• essential and precursor chemicals for the manufacture of narcotics
• shipments defined as "sensitive" in various Executive Orders
• overland shipments by exporters not approved far Track #4

When the exporter and/or his designated agent has the information available, we encourage the electronic transmission of that data at the earliest point in the export process.

The exporter/agent will provide the carrier with a unique shipment reference number prior to exportation.

C. Track 3: AES With Partial Pre-Departure Information

Track 3 is available for shipments for which full commodity information is not available prior to export or for shipments by Track 4 exporters far which pre departure information is required for licensing or other purposes.

The data elements on the attached listing must be transmitted prior to exportation. This track applies only to sea and air modes of transportation. all remaining data elements must be transmitted within five (5) working days of the date of exportation. This option is available to AES filers without prior approval.

Track 3 is not available for shipments exported by truck or rail. On air and ocean shipments, the exporter/agent will provide the carrier with the unique shipment reference number prior to exportation.

D. Track 4: AES With No Pre-Departure Information

Track 4 provides a full past-departure filing option to approved exporters. Qualified shipments can be exported with no pre-departure information. Freight forwarders can apply for Track 4 privileges on behalf of an exporter with a signed power of attorney.

Complete commodity information must be filed within ten (l0)working days from the date of exportation.

When the exporter/agent has the information available, we encourage the electronic transmission of that data at the earliest point in the export process.

On this track, carriers will be provided with the exporter's Track 4 identification code prior to exportation.

Track 3 - Pre-Departure Data Elements *

1. Identifier of Exporter - EIN, etc.
2. Forwarder I.D. -EIN, etc.
3. Carrier 1.D. (SCAC or IATA)
4. Country of ultimate destination - ISO code
5. Name of ultimate consignee
6. a) Commodity description or
7. b) Optional - Schedule B # or HTS
8. ) Unique identifying number'- shipment reference number(l7 characters or less), e.g., airway hill #         * Unique Identifying Number/ Shipment reference number must appear in shipper's reference number field on ocean bill of lading
9. Intended U.S, port of export
10.   Estimated date of export
11.   Transportation reference number, e.g., vessel booking number, airway bill #
12.   MOT code
13.   HAZMAT- Y/N?
14.   License code
15. License number

*At this time. Track 3 applies only to air and vessel modes of transportation.

IV, Implementation plan

A. Current AES participants

1. Will continue to participate in current status
2. May convert to Track 3 upon certification of transmission capabilities
3. May apply for Track 4

B. Current AESIPASS Participants

1. AES- Pass participants will be grand fathered into Track 4 for all shipments that are eligible.
2. AES-Pass will sunset one year from the date Track 4 is operational, No AES-PASS IOU will be accepted after the sunset date.

C. AERP Participants

1. AERP will be discontinued December 31, 1999.
2. AERP participants. bath exporters and freight forwarders on behalf of their client exporters, will be given the first opportunity to apply for Track 4. There will be a defined application period for the AERP participants prior to the start of the general application period.

D. Current Applicants

1. Paper filers currently in the AES certification process should continue with the existing AES process. The government agencies wilt work with the applicant for any needed adjustments for Track 3 certification.
2. Paper filers who have submitted a letter of intent for AES do not need to reapply to be eligible for Track 2 or Track 3.
3. Anyone who has submitted a letter of intent for AES-PASS will not have to submit another application for Track 4.

E. Application Procedures for "4 Track Export Reporting Process"

1. Applicants should submit a letter of intent to Census providing a company profile and description of expected export commodities and volume. Applications will be acted upon on a first in. first out basis.
2. Applicants will be tested for correct transmissions prior to certification for AES participation.
3. Applicants for Track 4 will be screened by the partnership agencies (currently Census, Customs, BXA, O~AC and NRC). Each agency will develop its own Internal acceptance standards. The applicant will normally be notified in writing of their eligibility within 30 days. If more research/review is required by an agency, that information will be relayed in writing to the applicant within 30 days along with an estimated date to complete the review. Track 4 applicants must receive approval prior to transmitting under Track
4. Applicants who are denied approval will be afforded an appeal process within the agency that issued the denial. If the denial is sustained, the applicant may reapply for Track 4 after one year from the date of the final denial.

F. Performance Standards For Track ·4

Participants In Track 4 will be subject to continued monitoring by the partnership agencies. If problems develop, the concerned agency will counsel the participant and advise them of corrective action to be taken. Agencies and client representatives will work with Track 4 participants to improve performance as needed. Any individual agency will have the authority to suspend or terminate the participant from Track 4 because of a serious problem or violation.