RAPTAC / Census Updates Country of Origin and Routed Exports

Gerry Horner, Chief of the Trade Regulations Branch at the US Census Bureau, gave the committee an update on two Notices of Proposed Rulemaking: the Routed Export Transaction rule, published prior to 2019, and the Country of Origin data element, released in December 2021.

Country of Origin Data Element

Starting with the country of origin rule: this rule was introduced in December 2021 to incorporate a country of origin data element when the foreign domestic origin indicator is in the Automated Export System [86 FR 71187]. Our Trade Regulations Branch has spent significant time reviewing the comments. Notably, 52% of the total comments were centered on the burdens introduced by the rule.

Given the significant concerns from industry stakeholders about potential costs and current unpreparedness, we are considering three potential paths:

1. Withdrawing the proposed rule.
2. Gradual implementation.
3. Analyzing what aspects would be most beneficial for federal adoption.

The core motive behind this data element is to determine its statistical benefits for the US Census Bureau. We're examining whether there's a genuine need to release data at the country of origin level.  

The emphasis on the foreign component's value in an export is another area of discussion. This criterion differs from other existing systems, like the WTO system or the tariff shift rule. Several feedback points also highlighted the complexities arising from commingled origins.   Notably, the US remains one of the few countries not collecting country of origin data on exports.

Routed Export Transaction: Notice of Proposed Rule Update

The last time we openly provided an update on this was during the BIS update in 2019.   Currently, our regulations, particularly the foreign trade regulation, define a routed transaction as one where the firm principal facilitates the export and prepares and files the electronic export information. Conversely, the EAR speaks about the Foreign Principal Party in Interest (FPI) facilitating the export from the US. The EAR further details what routing is and the conditions where the exporter authorization is granted to an agent in the US, working on behalf of the foreign principal.

The proposed rulemaking [84 FR 67255] aims to embed the routing section within the foreign trade regulations, ensuring both sets of routed export transaction regulations align with each other. Our plan involves defining two types of routed transactions:

1. The US principal party in interest remains the exporter.
2. The agent is granted authority under routing to assume the role of export control, export determination, and to apply for a license if required.

This is crucial for the Census Bureau since we establish the requirements for ACE reports.  Additionally, the new notice of proposed rulemaking will standardize terms like "ultimate consignee," "authorized agent," and "standard export transaction." Presently, while we mention "routed export transaction," we fail to denote its opposite as a "standard transaction." This consistency should be mirrored in both regulations. Other roles, such as the foreign principal party in interest and buyer definitions, need uniformity.

Our goal is to embed these definitions into the foreign trade regulations to standardize what an "end user" means and to define a foreign individual eligible to be a US PPI when they enter the US and procure goods for export.