If you’re involved in exporting tangible goods from the United States, it’s almost certain you’ll make use of the U.S. Automated Export System (AES).
AES is the electronic means by which the government collects export information. But as is the case throughout the exporting ecosphere, there are some complications and misunderstandings about AES.
If you already know the basics and want to take a deep dive into AES, the Export Compliance Training Institute offers an on-demand webinar, which you can find here.
Meanwhile, here are answers to some of the most frequent questions we receive about export filings requirements and the AES.
What is AES and why does it exist?
AES is a web-enabled system that was first tested in 1995 and widely introduced to exporters in 1997 with two primary missions:
1) Improve data collection and reporting. Much of the official government data on what’s being exported comes from AES.
2) Improve enforcement of U.S. export controls. In many cases, information must be filed with AES before an export occurs. This is also a way to prevent illegal shipment of goods to unauthorized users.
While the vast majority of export controls fall under the ITAR or the EAR, governance of AES is under a third set of rules: the Foreign Trade Regulations (FTR).
FTR is administered by the U.S. Census Bureau, which, like the EAR, is under the larger umbrella of the Department of Commerce. (The ITAR is administered by the State Department.)
Why am I required to file through AES?
Your export filing plays a crucial role in collecting U.S. export statistics and ensuring adherence to U.S. export control laws and regulations.
In an environment where new national security concerns seem to arise every day, AES is designed as a tool for regulators to find and act upon important information quickly.
Here’s an example: Not long ago, a company I’ve worked with submitted information about an export to South Korea – officially referred to as the Republic of Korea. But the person making the filing must have gotten confused about the country names, and instead identified the destination as the Democratic People’s Republic of Korea – North Korea.
Within an hour, an official from U.S. Customs and Border Protection called to clarify details of the shipment and the error was resolved. But it wasn’t a random phone call; like all other sources of big data, AES can be used to flag certain kinds of information as quickly as it gets submitted.
Does AES offer any benefit to users?
AES is designed to streamline the export declaration process for filers as well as government agencies. It also has a reliable function for reviewing past filings that involve your organization – whether they were submitted by you or a third party (more on that below). It’s helpful for seeing what others are putting into the system about your organization, and supports the careful recordkeeping that should be part of any export compliance program.
What’s the difference between AES and EEI?
While answering this question, let’s also address some other terms that often create confusion.
ACE (Automated Commercial Environment): ACE is the federal system for processing all sorts of trade information – including but not limited to exports. It also deals with things like customs entries and border security.
AES: The subsystem within ACE that takes in export data and makes it accessible by Customs and Border Protection and other federal agencies.
AESDirect: The given name of the digital portal that collects information required for AES. In 2016, the functionality of AESDirect was rolled into the ACE system. The term is interchangeable with AES, and is offered here because it still turns up in the regulations and in online information about export filings.
EEI (Electronic Export Information): This is the data that filers submit through AES. The term EEI predates AES; at one time it was submitted mainly, on a paper form called a Shipper’s Export Declaration (SED).
USPPI (U.S. Principal Party in Interest): The U.S. entity that most benefits from the export transaction. The USPPI is usually the same entity that would be considered the exporter under the EAR and the ITAR.
USPPI is defined in the FTR as “The person or legal entity in the United States that receives the primary benefit, monetary or otherwise, from the export transaction. Generally, that person or entity is the U.S. seller, manufacturer, or order party; or the foreign entity while in the United States when purchasing or obtaining the goods for export.”
Who uses AES?
Nearly all exporters need to deal with AES at some point – whether their exports are highly controlled or not. EEI can be submitted in three ways:
- Through the ACE online portal.
- By an authorized agent, typically a freight-forwarder
- Through add-ons available for enterprise-level shipping software
In certain cases known as routed export transactions, the FPPI – usually the buyer abroad – authorizes a U.S. agent to facilitate export of items from the U.S. This agent, typically a freight forwarder, becomes responsible to prepare and file EEI. The FTR is neutral as to how a transaction is structured, but the responsibilities related to EEI can shift as a result.
But whether a transaction is routed or not, as far as the EAR and ITAR are concerned, the U.S. exporter is still by default considered responsible for adherence to export control regulations.
What’s in an AES filing?
No matter who makes the AES filing or what’s being shipped, the data provided includes a lot of what you’d expect: Information about the parties to a transaction; the final destination and intended use of the exported items; quantity and monetary value of the goods; details about transportation arrangements; and any license requirements and claimed license exceptions as established by the applicable export controls, whether the EAR or the ITAR.
Details need to be provided for each line item in a shipment, so an AES filing can be extensive.
When is AES required?
In general, if you’re exporting tangible goods from the United States to any country (or Puerto Rico and the U.S. Virgin Islands), an AES filing is likely to be required.
The Census Bureau offers a guide to navigating AES filings, and U.S. Customs and Border Protection provides its own introduction to AES.
All exports of ITAR-controlled hardware require AES filing, regardless of the destination, value or eligibility for an ITAR license exemption. Details in the ITAR about AES filings can be found here.
The EAR has its own section of filing requirements that effectively supersedes anything the Census Bureau has to say. The upshot is that most items classified in 600-series ECCNs (military items that were formerly controlled under the ITAR), shipments to certain countries, and anything being exported under a BIS license need to be reported in an AES.
If an AES filing requirement isn’t triggered by the EAR, there are two common exemptions to the FTR’s filing requirements:
- Shipments to Canada are exempt from AES filing; this is because Canada shares its import data with the United States.
- If the value of the goods in a single Schedule B number is $2,500 or less, those goods don’t require an AES filing. This is a function of the Census Bureau’s data collection mission as opposed to export controls.
A series of additional exemptions is provided in Subpart D of the FTR. These tend to be narrow and less-frequently used, and it’s worth reemphasizing that they are subordinate to any rules under the export controls of the EAR and the ITAR.
What if AES filing isn’t required?
If a shipment is exempt from an AES filing, you’re still responsible for reporting the exemption citation and export authorization information (e.g. No License Required (NLR) or license exception) to the government. In the absence of an AES filing, that information will go on the bill of lading or other loading document.
Do you have questions about AES and export control filings?
Visit fycxhh.csbz009.com to learn about our company, our faculty, our staff and our esteemed Export Compliance Professional (ECoP®) certification program. To find upcoming e-seminars, live seminars in the U.S., Europe, and elsewhere, and live webinars and browse our catalog of 80-plus on-demand webinars, visit our ECTI Academy. You can also call the Export Compliance Training Institute at 540-433-3977 for more information.
Scott Gearity is President of ECTI, Inc.
