Routed export transactions
International trade comes with a whole lot of abbreviations and terms. Among all that, is the routed export transaction. What does a routed export transaction mean? Well, routed transactions occur when an overseas buyer agrees with a freight forwarder or other agents to export the commodity from the United States. This is contrary to the usual export transaction where the seller arranges the transport of the export out of the country. This is of some importance to understand as it has an impact on whoever is required to file the electronic export information (EEI) through the automated export system (AES).
Let look at an example:
A.U.S principal party in interest (USPPI) sells two artifacts to a foreign principal party interest (FPPI) in Italy. The USPPI is the party in the U.S that gets a primary benefit, monetary or otherwise from the transaction. The FPPI orders the USPPI to send the paintings to an agent in Florida. The FPPI sanctions the agent to file the EEI in the AES for their sake and ship the goods to Italy.
In this example, each party has an important role that we are going to discuss in this article.
Filing the EEI through the automated export system (AES)
Export information for most exports from the U.S. should be filed through AESDirect on the Customs and Border Protection’s (CBP) Automated Commercial Environment (ACE) portal.
After determining that an export shipment needs an AESDirect filing, the next step is to determine the person to do the filing. But that is when both routed and standard exports can differ in requirements.
The foreign principal party interest
In a routed export transaction, there must be someone or party to purchase the goods for export or the party whose final delivery will be made. This role can be played by the ultimate consignee.
U.S. Principal Party in interest
Often, exporters are grouped in the same category of the U.S. principal party in interest (USPPI). Therefore let’s look at their roles in detail. USPPI is a part or legal entity in the U.S that gets a primary benefit, monetary or otherwise from the transaction.
As FTR defines, the USPPI can be a:
- Seller of the product for export
- Order party who directly negotiates between the U.S seller and an overseas buyer and receives the export order of the goods.
- A foreign entity in the U.S when products are purchased for export
- Manufacturer who sells the goods for export
Who should file through AESDirect?
Now although the USPPI has given up the responsibility of exporting goods themselves, they still need to give certain information regarding the export to the party that is doing the filing. Normally, they have two options:
The FPPI can legalize an agent to file the EEI
Often, the foreign buyer relies on the freight forwarder or any agent that arranges the shipping of the goods out of the U.S to submit the export information through AES on behalf of FPPI. To do it legally, the legalized agent must gain the power of attorney or sections from the FPPI.
The sanctioned freight forwarder will need the following data from the USPPI:
- The name and the address of the USPPI
- The identification number of the employer or tax identification number of the USPPI
- The point of origin for the goods ready to be exported
- The good’s code, whether domestic (D) or foreign (F)
- The correct schedule B number
- The suitable schedule B commodity descriptions
- Appropriate quantity and unit measure
- The shipment value
- The shipment’s export control classification number (ECCN) or sufficient information to determine the ECCN.
The USPPI should present this information to the forwarder or agent using the shipper’s letter of instruction (SLI) form.
Sometimes, the forwarders can ask the USPPI to give them the power of attorney or written authorization for filing AESDirect entries, although it is not legally mandatory.
The FPPI can authorize the USPPI to file the EEI
The USPPI is not required to give in the EEI through AESDirect in a routed export transaction. However, they may agree to do so. Before the filing of the EEI, the USPPI must gain the power of attorney from the FPPI.
Routed export transactions involves various parties and each party has an important role to play. The concept can be a little challenging at first, but it is generally simple to understand.