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Export Compliance: Who is the Responsible Party in a Transaction?
October 20, 2016 Office of Small Business

Export compliance regulations seem to cloak definitions and myriad export requirements with acronyms meant to make things simpler. Oftentimes, they cause even large companies to take pause and wonder what they all mean. Any U.S. business whose products eventually end up outside the country are subject to compliance responsibilities that come with a heavy penalty for getting it wrong. Familiarity with the basic definitions and requirements is a prerequisite to avoiding pitfalls when selling your products into international markets.

Who is the USPPI?

Under the U.S. Census Bureau’s Foreign Trade Regulations (FTR), the U.S. Principal Party of Interest (USPPI) is defined at the person or entity in the U.S. who receives primary benefit of the export transaction. The classification came about due to difficulties encountered by Census, the Bureau for International Standards (BIS) and the Customs and Border Patrol (CBP) in enforcing export regulations for “routed transactions”. Routed transactions are those where U.S. manufactures are sold Ex Works (EXW) but with no functional or legal responsibility in the export process. The USPPI is still responsible for providing their name, address, and all the commodity information to the filing agent routing the transaction.

Compliance Responsibilities of the USPPI

The USPPI’s responsibilities for compliance include all of the following as provided for in the Foreign Trade Regulations:

  • Determining Commodity Jurisdiction - The Department of Commerce is responsible for dual-use exports, Department of State for defense exports (which are not covered by EXIM Bank)
  • Identifying the End User and End Use - The USPPI must conduct all due diligence to ensure buyers or the buyers end users are not on the U.S. Denied Persons List.
  • Classification number must be obtained under Schedule B requirements or the U.S. Harmonized Tariff Schedule (HTS).
  • Licensing requirement determinations must be made by the USPPI by obtaining an Export Classification Number (ECCN).
  • Mandatory Electronic Filing Information (EEI) must be filed in the Automated Export System (AES) to insure all relevant information on the USPPI is filed, or authorization to an agent to file on their behalf is provided, without removing the burden of correct and timely information such as:
    • USPPI Name and Address
    • USPPI Tax ID Number
    • Consignee Name and Address*
    • Consignee Contact Name and Phone Number*
    • Country of Ultimate Destination*
    • Consignee Type*
    • State of Origin
    • Schedule B Number and Commodity Description
    • Schedule B Quantity and Unit of Measure
    • Value
    • Domestic or Foreign Indicator (i.e. unaltered foreign content)
    • ECCN

* (not required from the USPPI in a Routed Transaction)

  • Authorization for the Freight Forwarder to file the EEI – The USPPI must provide Power of Attorney authorizing filing on USPPI’s behalf. Once again, this does not remove the requirement for accuracy of the information in the EEI or any burden of updates from the USPPI. 
  • Routed Transactions – The USPPI ships to agent in U.S. and the Foreign Principal Party in Interest (FPPI) authorizes the U.S. agent to file the EEI with the AES. Note: by the end of 2016 the Automated Commercial Environment (ACE) will become the primary system through which the trade community will report imports and exports for determination of admissibility.
  • Shipment records must be maintained for five years from the date of shipment.

Resources & Alternative Options

Training seminars are offered by BIS on a regular schedule. They provide instruction from U.S. Government officials with first-hand experience in export control policies, regulations and procedures. The BIS offers both two-day core courses on the Export Administration Regulations (EAR) as well as in-depth courses on topics of interest to the exporting community. 

The services of reliable freight forwarder can definitely take a lot of the burden of filing off your hands, especially if you are a small business exporter. Don’t take my word for it; check out this video by our Eastern Region Managing Director, Sharyn Koenig, on the value finding a good freight forwarder. Words to export by!

To learn about how to protect against non-payment risk, improve your competitive position, ensure liquidity, and provide buyer financing - click on the link below to request a free consultation.

Get a Free Export Finance Consultation Today!


EXIM’s Blog postings are intended to highlight various facets of exporting, but the postings are not legal advice, and are not intended to summarize all legal requirements associated with exporting.