Know Your Responsibilities as a U.S. Exporter: Key Updates from BIS on Freight Forwarding

As a U.S. exporter, also known as the U.S. Principal Party in Interest (USPPI), you have various responsibilities-even when your overseas customers handle the routing of your cargo. Meeting these obligations can help ensure compliance with regulations and avoid costly and embarrassing export violations.

In March 2024, the Department of Commerce's Bureau of Industry and Security (BIS) updated their Freight Forwarder Guidance and Best Practices document. The updates include essential guidance for exporters, including best practices for selecting a freight forwarder, exporter responsibilities in routed transactions, and new red flags to look for in export transactions.

Below is a high level summary of the BIS document to help you meet your responsibilities as a U.S. exporter.

Selecting a freight forwarder

Choosing the right freight forwarder is a critical decision for U.S. Exporters. The Bureau of Industry and Security (BIS) recommends exporters thoroughly vet all protentional forwarders to ensure they have the necessary expertise and policies.

A well-established export compliance program is vital, and BIS identifies several red flags to watch out for when choosing a forwarder:

• Failure to provide EEI report: The forwarder (authorized agent) files electronic export information (EEI), but does not provide the USPPI with an EEI filing report upon request.
• Absence of power of attorney (POA): The forwarder does not require a power of attorney (POA) or other written authorization from the USPPI for non-routed exports.
• ECCN/EAR99 and license type oversights: The forwarder does not request export control classification numbers (ECCN), EAR99 designations, or license type information (e.g., license number, license exception, no license required) when filing an EEI or using an exemption legend in lieu of an EEI filing.
• Inaccurate AES filings: Automated export system (AES) filings made by the forwarder on behalf of the exporter/USPPI routinely contain inaccurate information.

Carefully reviewing these and other areas both prior to and after choosing a freight forwarder can help mitigate your risks of violating U.S. export regulations.

Exporter's responsibilities in a routed transaction

Even in a routed transaction, where the foreign party selects the freight forwarder, the U.S. exporter retains critical responsibilities and is considered the exporter of record under the Export Administration Regulations (EAR).

As such, the U.S. exporter must determine the license authorization (i.e., license, license exception, or no license required (NLR)) and obtain the appropriate license or authorizations for the transaction. This responsibility persists unless the foreign party expressly assumes these duties in writing.

Regardless of which party determines the license authorization, the U.S. exporter provides the forwarder with all the electronic export information (EEI) necessary for filing the AES, including an ECCN or EAR99 designation, and any updates to this information.

Updated red flags for exporters

BIS has updated its list of red flags, adding two new indicators that U.S. exporters should be aware of:

• Customer or address similarity: If the customer or its address resembles one of the parties on the Commerce Department's BIS list of denied persons, this should raise concerns.
• Final destination listed as freight forwarding firm: A freight forwarding firm listed as the product's destination is another red flag to consider and could indicate an illegal diversion is about to occur.

Be sure to take the time to familiarize yourself with these new indicators. Check out the following resources for more information:

• Export Administration Regulations (EAR)
• BIS's Red Flag Indicators
• BIS's Know Your Customer Guidance

Adhering to these guidelines not only secures the global supply chain but can also help you avoid participating in costly-and potentially embarrassing-export violations.

Following the updated guidance

Navigating the complexities of U.S. export regulations requires diligence and a strong understanding of your responsibilities as a USPPI. By carefully selecting your freight forwarder, ensuring compliance in routed transactions, and staying alert to the latest red flag indicators, you can better protect your business against potential risks.

Stay informed

Developments in customs and trade continue to evolve-stay informed to be prepared:

• Connect with our trade policy experts
• View our Trade & Tariff Insights
• Subscribe to our Client Advisories