1. MASS EXPORT CENTER Export Control Reform - ECR Automated Export System - AES December 10, 2013 Moe Mitchell

2. AES Automated Export System (AES) is the electronic method of filing the Electronic Export Information (EEI) with the U.S. Census Bureau. ─U.S. Customs and Border Protection (CBP) also has access to AES in order to help enforce export laws ─It was designed to assure compliance with and enforcement of laws relating to exporting, improve trade statistics, reduce duplicate reporting to multiple agencies, and improve customer service. WHO CAN FILE? United States Principal Party (USPPI) USPPI’s agent - POA needed to do so. USPPI needs to supply necessary data USPPI is defined as the party that gains the benefit from the export transaction. Foreign Principal Party in Interest (FPPI) – generally requires an agent (freight forwarder / routed transaction requires POA – INCO terms Ex-works)

3. Automated Export System (AES) Why are AES filings Required? Used in calculating monthly trade balance Gather statistics for trade negotiations with other countries Used by Customs for export compliance

4. AES Required Information Complete names and addresses of both the Shipper / USPPI and ConsigneeComplete names and addresses of both the Shipper / USPPI and Consignee Detailed description of commodities being shippedDetailed description of commodities being shipped Shipper contact (first name, last name, 10-digit telephone number) information is requiredShipper contact (first name, last name, 10-digit telephone number) information is required Employer Identification Number (EIN)Employer Identification Number (EIN) Shipment value in US Dollars rounded to the nearest dollar amountShipment value in US Dollars rounded to the nearest dollar amount 10-digit Schedule B Number10-digit Schedule B Number Export License Exception codeExport License Exception code Export Control Classification Number (ECCN) if required by License Exception code utilizedExport Control Classification Number (ECCN) if required by License Exception code utilized Validated export licenses or export license exemptionsValidated export licenses or export license exemptions

5. 5 Automated Export System (AES), Electronic Export Information (EEI) 2014 changes AES was one of the first US Government attempts to replace paper in the export process it eliminated the paper Shippers Export Declaration (SED) 15 CFR part 30 is the regulation issued by the US Dept of Commerce which provides the details related to AES data submission. The following are key changes effective on Jan. 8, 2014 with a deployment date of April 5, 2014. The post-departure filing is moving from 10 days after departure to 5 days. Must be approved to participate. The ultimate consignee type is now required. There are four options and they are Direct Consumer-D, Government Entity-G, Reseller-R or Other/Unknown-O Foreign Trade Zone numbers are moving from 5 digits to 7 digits in size License Line Value at the commodity level is a new data element associated with licensed export shipments

6. 6 Automated Export System (AES), Electronic Export Information (EEI) 2014 changes – Continued New Filing Citations additional No Electronic Export Information required or NOEEI 30.XX These are Citations which say why on a given shipment AES and the EEI data is not required. They must be citied on the export documentation such as the commercial invoice, air waybill or export manifest for all shipments which do not require AES. A few examples are listed below NOEEI 30.36 – Canadian Exemption for non-licensable shipments to Canada NOEEI 30.37a – Shipment with commodity line levels all below $2,500 USD Shipment reference number may never be reused. All the other AES / EEI changes are related to licensable exports which will not be covered at this time.

7. US Customer Impact 1.When shipper files AES on their own, they must: Confirm export data elements and re-transmit if they change. Retransmit AES if shipment is split and splits depart over 24 hours apart Never reuse a shipment reference number for AES purposes Identify Ultimate Consignee type (D, G, R or O) Retain records for five years 2. When UPS or Agent files on behalf of shipper: Needs complete details to file AES on Commercial Documentation Provide shipper with reports related to AES filings Update AES filings related to transportation data, splits

8. 8 Export Control Reform -ECR Export Control List Review and Creating a Single Control List “In short, the time for change is long overdue if the application of controls on key items and technologies is to have any meaning. We need a system that dispenses with the 95 percent of ‘easy’ cases and lets us concentrate our resources on the remaining 5 percent. By doing so, we will be better able to monitor and enforce controls on technology transfers with real security implications while helping to speed the provision of equipment to allies and partners who fight alongside us in coalition operations.” - Secretary Of Defense Robert M. Gates, April 20, 2010

9. 9 Export Control Reform -ECR Current System The U.S. Government (USG) currently maintains two different primary control lists, the Commerce Control List (CCL) and the U.S. Munitions List (USML), administered by two different departments. These lists have fundamentally different structures, different levels of specificity, and different definitions. For instance, because the Department of Defense has transitioned to more Commercial-Off-the-Shelf procurement in the early 1990s, there is a growing overlap between the two control lists, which fuels growing confusion and inefficiency throughout the current U.S. export control system and affects exporters, the USG, and the U.S. industrial base.

10. 10 Export Control Reform -ECR Proposed System In the ECR Initiative, new “criteria” for determining what items need to be controlled will be based on a three-tier construct, along with a coordinated set of policies for determining when an export license is required will be implemented. The tiered system will also include a “catch all” control for sanctioned end-users and destinations, proscribed entities, and proliferation, and counterterrorism end-uses. The control list criteria will be based on transparent rules, which will reduce the uncertainty faced by our allies, U.S. industry, and its foreign partners. Most importantly, the reform process is intended to develop a new Single Control List that will allow the government to erect higher walls around the most sensitive items in order to enhance national security. In the interim, the USG is working to create a “bright line” between the U.S. Munitions List and Commerce Control List to clearly identify the jurisdiction of controlled items.

11. 11 Export Control Reform -ECR What does this all mean to you as an Exporter (defense related example)? If products manufactured by you had any military purpose or if they are listed on the United States Munitions List (USML) then the ECR would have a big impact. Items on the USML include Firearms, Artillery Projectors, Ammunition, Launch Vehicles, Vessels of War, Tanks, Military Training Equipment just to name a few. The ECR is moving items off the Dept of State USML to the Dept of Commerce, Export Administration Regulations (EAR) Commerce Control List (CCL). The long term goal is to control for export only items which are by nature dangerous to the USA and its allies if they fall into the wrong hands.

12. Thank you