On September 1, 2010, the Bureau of Industry and Security (BIS) published a notice in the Federal Register on an updated set of proposed "Best Practices for Transit, Transshipment, and Reexport of Items Subject to the Export Administration Regulations." The previous list of best practices was posted by BIS on its website on November 24, 2003.
BIS is updating the "best practices" list, which was developed following the solicitation of public comments, in light of the U.S. Government's current export control reform efforts and the increased attention that reexport, transit, and transshipment trade has generated in recent years, both within the U.S. and globally.
BIS states that, "The best practices identified herein include the types of practices that industry has adopted to guard against diversion risk. Both government and industry recognize that implementing effective export compliance programs is an important component of responsible corporate citizenship and good business practices. BIS seeks information to refine and revise this proposed list of best practices to help ensure that industry and the government continue to prevent diversion of controlled items subject to the Export Administration Regulations (EAR) through transshipment points."
In the notice, BIS stated:
The following reflect existing and emerging transshipment best practices that guard against diversion risk. BIS seeks comment on these and additional practices from the public based on experience.
Best Practice #1. Pay heightened attention to the Red Flag Indicators on the BIS Web site (see http://www.bis. doc.gov/Enforcement/redflags.htm) with respect to transactions to, from, or through transshipment hubs. When a company encounters a suspicious transaction, such as those outlined in the ''Know Your Customer'' Guidance and Red Flags (Supplement No. 3 to Part 732 of the EAR), it should inquire further and attempt to resolve any questions raised by the transaction.
Best Practice #2. An Exporter/ Reexporter should seek to utilize only those Trade Facilitators/Freight Forwarders that also observe these best practices and possess their own export management and compliance program.
Best Practice #3. Exporters/ Reexporters should have information regarding their foreign customers. In particular, a company should know if the customer is a trading company or distributor, and inquire whether the customer resells to or has guidelines to resell to third parties.
Best Practice #4. With respect to transactions to, from, or through transshipment hubs, Exporters/ Reexporters should take appropriate steps to inquire about the end-user and to determine whether the item will be reexported or incorporated in an item to be reexported.
Best Practice #5. Freight Forwarders should inquire about the details of a routed transaction when asked by a foreign principal party in interest to ship to a country or countries of destination or ultimate consignees that are different from those provided by the U.S. principal party in interest.
Best Practice #6. An Exporter/ Reexporter should communicate the appropriate Export Control Classification Number (ECCN) or other classification information (EAR99) for each export/reexport to the end-user and, where relevant, to the ultimate consignee.
Best Practice #7. An Exporter/ Reexporter should report such ECCN or the EAR99 classifications for all export transactions, including ''No License Required'' designations to the Trade Facilitator/Freight Forwarder or enter them in the Automated Export System (AES).