Agencies paper over AES differences as export rules near fruition

The U.S. Census Bureau could publish by the end of this month new export compliance rules that have sat in limbo for three years, government officials and industry sources familiar with the situation say.

The news comes four months after agency officials indicated they had resolved a standoff with the Department of Homeland Security and that a final rulemaking was imminent.

Census was prepared in 2005 to issue a notice of proposed rulemaking updating the foreign trade regulations, but DHS blocked the effort after failing to gain approval to share export transaction data with foreign governments as part of antiterrorism cooperation. Census jealously guards Census data at the transaction level to protect the privacy of companies that submit confidential information to the government. DHS also raised security concerns about Census continuing to allow post-departure filing of export documents by approved companies. It wanted Census to either eliminate post-departure filing in AES, technically known as Option 4, or substantially increase the requirements for accepting new companies in the program. DHS also did not want existing post-departure filers simply grandfathered into the mandatory program.

The Foreign Trade Division uses data from AES to help calculate the country's trade statistics. Customs and Border Protection uses AES data to target illicit exports before they leave the country.

Most shippers' export declarations must be filed prior to export. Under post-departure rules, approved exporters and freight forwarders can process export declarations up to 10 calendar days after departure of the goods. About 2,300 exporters gained post-departure filing privileges before Census placed a freeze on accepting new applicants to the program.

Census officials have previously said that the final copy of the AES regulations will closely resemble the original version of the 2005 proposal. 

Todd Owen, CBP executive director of cargo and conveyance security, said during a House hearing Tuesday that the administration plans to publish a final rule mandating the electronic filing of shippers' export declarations in the near future.

Several industry sources have learned that the rule requiring exporters or their agents to file export documents through the Automated Export System could be published within seven to 10 days.

The development is considered good news by many companies involved in international trade because it makes data submission uniform and more efficient by eliminating the filing of error-prone paper documents. They also believe it preserves the practice of post-departure filing for certain commodities for which complete information is unavailable at time of transport departure. Many exporters believe DHS finally capitulated to Census, but an industry source and close reading of administration statements suggest that DHS has not given up its quest to end Option 4 and share data with other agencies and governments.

DHS agreed to an interim compromise to get the security benefit of reviewing shipping data early in the process, thereby giving Customs a better chance of halting an illegal export before it leaves the country and the ability to enforce AES compliance.

Rather than stand in the way of the regulation, Homeland Security officials now appear prepared to seek a legislative solution that would end Option 4 and give them authority to share export data with other governmental entities.

Owens hinted at the administration's intent when he testified before the Foreign Affairs subcommittee on terrorism, non-proliferation and trade, that risk management depends on the ability to receive electronic information before the cargo departs the country.

To adequately assess and identify potentially high-risk shipments intended for export, it is essential to our enforcement efforts that advanced electronic information is provided through the AES for all shipments that require an SED. This will allow CBP sufficient time to screen high-risk cargo, while not impeding the movement of legitimate shipments leaving the United States, he said.

His testimony was part of a hearing on a bill by Rep. Bill Manzullo, R-Ill., and Adam Smith, D-Wash., that would mandate use of AES, establish a mandatory licensing program for AES filers and attempt to reduce inadvertent illegal exports by providing an automated warning about restricted parties and embargoed countries.

The bill also attempts to give more authority to the Commerce secretary in the tug-of-war over the export data controlled by Census. The Securing Exports Through Coordination and Technology Act clarifies that under current law the Commerce secretary is the person who determines on a case-by-case basis whether SED information can be shared with other government agencies and foreign governments for national security purposes.

An industry observer believes the bill gives DHS an opportunity to present its case for having final say over the data because Commerce is not in a position to understand the broader security picture.

Last year, former DHS Deputy Secretary Michael Jackson stated that the department may have to go to Congress to break the impasse with Census over the blanket sharing of export data for antiterrorism purposes. 

Source: American Shipper