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You export cargo every day to Europe. You have become rather good at it. You have provided your preferred freight forwarder with an export POA and even fill out a complete SLI on every shipment that leaves your building. You clearly understand that all of your cargo is not licensable going to the destinations that you ship to in Europe. Everything is going great!


Imagine that you receive a request from a new client/FPPI in Europe near your largest consignee. They ask you to prepare a shipment that is being sold Exworks. They are paying for the freight and as such, they have hired their own freight forwarder, and it is not your preferred freight forwarder.


This situation describes a routed export transaction. Census regulations found in Title 15 30.3 (e) CFR define a routed transaction as “A routed export transaction is a transaction in which the FPPI authorizes a U.S. agent to prepare and file the EEI.” This further defines that the USPPI (YOU, the exporter) must provide name/address of the USPPI, EIN#, state of origin, FTZ (if applicable), commercial description, origin (D or F), HTS or schedule B, quantities, value and the ECCN (export control classification number-remember this is based on the destination).


Since the FPPI is “routing” the cargo it is quite possible, in fact even likely that the USPPI may NOT know the final destination of the cargo. This could present some additional compliance risk concerns to consider.


Note that BIS (Bureau of Industry and Security) regulations require that the USPPI do more than the Census regulations referenced earlier. According to Title 15 758.3 (b) CFR, “The U.S. Principal Party in interest is the exporter and must determine licensing authority (license, license exception, or NLR), and obtain the appropriate license or other authorization, unless the U.S. principal party in interest obtains from the foreign principal party in interest a writing wherein the foreign principal party in interest expressly assumes responsibility for determining licensing requirements and obtaining license authority, making the U.S. agent of the foreign principal party in interest the exporter for EAR purposes.” Per these regulations, either the USPPI or the U.S. agent of the FPPI must determine whether a license is required.


Regulations provide a solution to ensure full compliance! Have you considered the risk your organization may have because of routed export transactions? Contact us today and we can help find solutions to manage that risk!

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