FTS-DOC ITA

Moderator: Linda Abbruzzese

June 22, 2009

1:00 pm CT

Coordinator: At this time all participants are on a listen only mode. During the question and answer session, please press star one on your touchtone phone to ask a question. Today’s conference is being recorded. If you have any objections, you may disconnect at this time.

And now I’d like to turn the call over to Linda Abbruzzese. Ma’am, you may begin.

Linda Abbruzzese: Thank you and good afternoon for those of you joining on the East Coast, and good morning for those of you joining on the West Coast. Thank you very much for joining us for a webinar on the Bureau of Industry and Security EAR compliance webinar. I am pleased to note that we have more than 233 people registered for this webinar today.

I am Linda Abbruzzese, International Trade Specialist for the Marketing Communications Office for the US Commercial Service at the Department of Commerce. This Webinar is being brought to you in cooperation by the US Commercial Service, and the Bureau of Industry and Security, and I would like to welcome all participants in the export community for joining us all across the United States to learn about ways to measure EAR compliance in AES and more information on EAR.

In a moment I’ll turn this presentation over to Ashley Miller, the trade-in industry specialist, as well as Jerry Horner, Senior Trade and Industry Analyst, and Jennifer Watts, trade and industry analyst also of the Bureau of Industry and Security. All presenters will be available at the end of the presentation to answer your questions, and contact information will also be provided.

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Now I’d like to introduce live online Ashley Miller, who is our trade and industry analyst for the Bureau of Industry and Security. Ashley, thank you for joining us.

Ashley Miller: Thanks Linda. Again, my name is Ashley Miller, and I’m an analyst with the Bureau of Industry and Security or BIS, with the US Department of Commerce in Washington, DC. I’m also joined by two my colleagues, Jennifer Watts, and Jerry Horner. We’re going to talk to you today about complying with the Export Administration Regulations or EAR, when reporting in AES.

We work for an office in BIS called the Office of Technology Evaluation, which was created in part to measure the effectiveness of export control. So this means that we use available data such as AES to evaluate what - to evaluate what’s being shipped from who and to who, and we look at how exporters are complying with export control laws and regulations.

And if you look on your screen now, we just have a brief questionnaire. If you could let us know what type of business you’re in from - we have freight porter, exporter, consult and carrier, are you a software provider, are you with government, are you with another business. We’d appreciate it if you’d vote or tell us your business.

So it’s not always so simple to know whether or not a company’s complying with all government regulations when exporting, and that’s why companies are investing more time and money (at) the compliance programs and internal audits.

And just as industry audits their processes, so does the government to ensure that exporters are complying with government regulations. Jen, Jerry, and myself perform similar audits and measure exporter compliance using EEI from AES to determine if EAR requirements are being met.

So in today’s presentation, first I’ll go over a little bit of background on the Bureau of Industry and Security, then I’ll show you the data elements in AES that are specifically related to the EAR. We’ll also go over how we at OTE measure exporter compliance in AES, and I’ll discuss some common compliance problems that we find.

We’ll also go over some examples and we’ll show you how to check your organization’s compliance using the commerce control list -- or CCL -- and commerce country chart. Then at the end we’ll have any questions - or answer any questions you may have about the presentation.

Okay so let’s get started. The Bureau of Industry and Security -- our mission is to advance national security, foreign policy, and economic interest. For the audience that’s not familiar with BIS I’ll go into a more detail about what we do.

One, we develop export control policies, so we administer the Export Administration Act through the publication of the Export Administration Regulations or EAR, and we do this by working with the State Department, Energy Department, and Department of Defense to make sure controls are in place in the international security - to protect our national security, rather.

We also participate in meetings with the National Security Council and with other international export control members to set export controls on the international level. We do export licenses. BIS reviewers close to 20,000 export license applications annually to determine whether or not the exporter may or may not ship their item to a certain country end user, et cetera.

We prosecute violators to heighten national security. Within BIS is the Office of Export Enforcement. And these are - which is comprised of agents that investigate exports to determine if they’re made in compliance. And for those that aren’t in compliance, such as exports to denied persons or parties or exports without licenses, penalties, and/or prosecution can result in a violation.

And what we’re doing here today is more of an informed compliance. We’re telling you the problems that we see in our data analysis, and specifically the types of data trends that we look at to identify non-compliance. Our office is not an enforcement office, but we do refer our findings to enforcement offices when we see trends that look abnormal.

And lastly there, we work to protect US technology, especially because it’s used in our nations defense. Put simply, if our technology’s in the hands of our enemies, it affects not only our troops abroad, but each and every one of us here.

Okay, so in AES there are three types of exports that are specifically related to the EAR, and those are license exports or authorizations, license exceptions, and no license required or NLR transactions. And each of these transaction types are designated in AES with a code, so if you see here licenses are designated by Code C30, C31, and C57.

License exceptions are under C35 to C56, and these make up about 1.2% of all exports. And NLR transactions, or no-license required transactions, are under C32 and C33. And the C character is used to designate that the transaction type is under the Department of Commerce authority.

So in addition to the license type field in AES, we play close attention to these other data the elements when measuring EAR compliance. There’s about 36 data elements in AES, but it - in OTE we’re specifically concerned with the ones you see here.

As I mentioned license types -- we’ll check the types, beginning with the C designation, and identify whether the item is shipped under a license, license exception or NLR, and if these are used properly. We’ll look at the license number -- and this is the approved license number provided by BIS. This helps us compare the license details against the actual export.

We look at the export control classification number or ECCN, and this is a number that describes the item on the commerce control list. And this is used in conjunction with the license types and allows BIS to determine whether or not the licenses types and/or ECCN was used properly.

We also look at the country and this helps us determine if the license, license types, or ECCN was reported correctly, and if the - and if any additional controls are placed on the destination country. We’ll look at quantity and value of the shipment, and this helps us to see if limits, if they exist, are not exceeded.

We’ll look at the parties to the transaction, which include the export or the consignee, the US agent and the AES filer, and if non-compliance is found, this helps to identify who’s contacted for education or who we would refer to for enforcement. And these fields are also used to check whether or not items have been shipped to prohibited parties.

And lastly we have the harmonized system, HS, or Schedule B number, and this helps us to identify items that are subject to control through an internal program that we have, which correlates the (HSB) numbers with the ECCN.

All right, and here we have a screenshot from AES Direct, and this is a commonly used application for exporters and freight forwarders when filing their export information electronically. The majority of AES filers use AES Direct or a specialized software that’s like AES Direct. So in addition to the license type field, AES Direct has the fields for the license number and the ECCN.

The license number is required for C30 and C31 license types. And the license number in the ECCR screen (closely) along with other elements or against the approved license application data to measure compliance effectively. You can see it highlighted in blue on your screen.

So if you click on the license type field, you’ll see a drop down, and these are the license types again that we at BIS closely check to make sure they’re being used properly. Just want to know (if a) license exceptions are to be used when one is required. You shouldn’t use a license exception when the item is authorized as NLR, and we’ll go over that a little later.

Every time a license exception is reported, except for some types of - some forms of TMP, which is one license exception, the - you have to report the ECCN. The ECCN is required for almost all license exceptions, and that change went into effect on April 28, 2008.

And I just want you to note this screen, because everything we talk about here hereafter refers to this license type field. So on the next few slides, Jerry Horner is going to go over in details problems we see with reporting with these elements along with the country of destination.

I ask that the audience give attention to these elements when reporting in AES. Freight forwarders who are keying in information on behalf of the exporter must also recognize when the exporter is giving them non-compliant information and notify them immediately. And now I’ll turn it over to Jerry.

Jerry Horner: Thank you Ashley. Good afternoon everyone. I’m going to talk to you today just a couple slides on the actual implementation of this BIS measures of EAR compliance in AES.

It also began back in 2006. Prior to that, BIS more or less measured the compliance based on a transaction by transaction level. However, in 2006, when we established our exporter’s compliance with the EAR using AES information, it became more of a broad AES and EAR compliance measure instead of looking at transaction by transaction.

The office of Technology Evaluations, which Jennifer and Ashley and myself are a part of, we took a broader look at all of the transactions. And you’ll see a list of them on the screen up there right now.

They are the - those items that are subject to a license requirement and those that are specifically licensed under C30 and C31, one being general licenses, the other ones being special comprehensive licenses, and the new authorization, which is under C57 validated end user, and then the second part are, like Ashley already spoke about, the license exceptions under C35 through C56.

And then the last one, which represents the majority of the exports that leave the country and the majority of the exports that we see filed by exporters and (with the) freight forwarders are designated under no license required.

I’m sure most of you who are exporters or who are freight forwarders have as part of your compliance program an auditing and monitoring module. And we recommend if you don’t that that should be in there. And one of the things that you most likely will do in that module is to make sure you have proper export documentation, and with that you have proper export reporting though AES in the form of electronic export information.

The government, especially BIS, is no definitely from you in having a module called auditing and monitoring. As you are auditioning and monitoring your daily business and making sure you are doing things in compliance with our regulations, the government is also monitoring and auditing to make sure you are doing - you are reporting your exports in line with our regulations. And not only that, we are measuring whether our export controls are effective in this century.

So that’s really what we’re doing here in terms of this compliance measure program, and we are comparing the licenses that we have on file with BIS with the actual license data that you report in AES. We are verifying that the license exception exports that you report in AES are reported in accordance with the EAR. And lastly, we are verifying that no license required designation exports in AES are designated properly.

We put a lot of emphasis on this third bullet, because in many of our traditional seminars we know there are companies that aren’t even aware of BIS or the State Department and the ITAR and the EAR.

And when there was a paper SED, we know there were rubber stamps that specifically said NLR or (Gdeath) or EAR99, so we put specific emphasis on this third bullet because we want you to make you aware that there are export controls for particular items and that you shouldn’t rubber stamp everything NLR. If you are, be assured that the government is looking to make sure that these are classified correctly.

Next slide I want to discuss is the actual findings that the BIS definings in this export EAR compliance program. The first is - the first finding is a mismatch between the AES data and the license data. And Jennifer is actually going to go into the specifics.

Second is an improper use of the export control classification number or the commerce-control list base license exception. The third is an improper use of no-license required code C32 and C33. If you are familiar with AES you know there are two designations for no license required and they are under the codes C32 and C33.

And we’ll go into detail how those are used interchangeable and incorrectly by exporters and freight forwarders. And then lastly is just improper classification or designation of no license required, using it when a item could be controlled.

Just some statistics about this, since we started this in 20065. We began measuring items subject to a license requirement and found that the baselines in 2005 was actually 84.8%. We set a goal in fiscal year 2008 for a improvement to 87%, which we met because we put in in April 2008, as Ashley said, a requirement for the ECCN.

We’re looking for improvements so that we meet a goal in fiscal year 2009 to 95%, and then in fiscal year 2010 to 97%. So these findings are pretty self-explanatory, but now we’re going to go into more detail as I turn it over to Jennifer Watts.

Jennifer Watts: Thank you Jerry. I’m going to go into some detail here, talking first of all about the mismatch between AES data and licensing data. Specifically we’re going to look at problems we’re seeing where the ECCN on the license should match what’s entered into the AES. We’re seeing AES filings that use ECCNs that are not on the license as specified.

We should also see that the country on the license matches with AES. And the value of your license cannot be exceeded in AES. We should not see shipments against the license that exceeds the total dollar value designated on a license. And we’re also seeing that many of the licenses that BIS issues for items are not utilized in AES, so we’ll go into each of those into more detail.

For those of you that are freight forwarders today -- and from the poll we see there are several of you joining us today -- you may want to speak with your client or your (SPTI) and tell them about making sure that the country consignee and the ECCN on the license conforms with what they’re going to be using for the AES submission.

So first we’re going to talk about ECCNs that are under the AES that don’t match what you have on the license. Often the approved license, which may have one or many ECCNs or even EAR 99 associated with it, does not match the AES record. This should not occur. Every BIS license export under C30 or C31 should have an ECCN match against the license. Both the license number and ECCN are at the line level, so the filer can report several ECCNs for the same license number on several (lines).

Another problem we see is where the country is not matching in the AES records compared to what’s on the license. The country on the license should match the country in the record. And you might ask which country. For BIS we expect that the minimum that the consignee country should be reported.

We also see the purchaser or intermediate consignee that is on the license reported in AES. This we should not see. We should be seeing who the export is intended for, not any intermediary parties. Currently there’s no field for an end user in the AES records; however, many licenses we issues are end user based, and as the exporter or freight forwarder, end user is known at the time of export BIS would prefer that you report that country in AES.

Another problem we see is that the value of the license is exceeded in the AES shipments. If any of you ship items subject to the ITAR, you’ll know that your AES filings are automatically decremented against your license value. BIS (that) occurs manually behind the scenes.

The value of the approved license and any additional shipping tolerances by ECCN should not be exceeded in AES. We’re seeing this, and this is a violation, and this is something that we would refer to our Office of Enforcement. So you need to be careful in filing an AES to make sure those dollar values are within the limits outlined in your license.

Finally, we’re seeing that a lot of licenses for commodities are utilized in AES. Over the past several years we see about 50% of the licenses that are issued are actually used by exporters. And we find this an important measure for us to determine the impact of export controls on utilization, whether this is something that companies are doing just to have in case, or if there’s things that we could be doing better or, you know, kind of the reasons behind some of the lack of utilization.

We recently put out a notice of inquiry in the federal register asking for input from exporters on this, and we did find that many companies will go out sitting on projects and maybe get licenses, anticipating that they are awarded the contract. And maybe there’re not some different scenarios for that, but we’re still looking to gather information on that to make ourselves as (unintelligible) more efficient.

And this gets back to pretty much the existence of our office -- Office of the Technology Evaluation, which again is looking at the overall effectiveness of our export controls and what we can to do to make sure that we’re doing everything correctly.

The next problem we’re seeing is improper use of ECCNs and license exceptions. We see that ECCNs are invalid or an ECCN is not eligible for a list-based license exceptions, but exporters are using those exceptions incorrectly. We also see where the country is not eligible for list-based license exceptions where the LVS or low value shipment exception - the value designated in that exception is exceeded.

And finally we’re seeing ECCNs that are not eligible for a license exception ENC for encryption item. There’s only four ECCNs that are eligible for that exception, and we’re seeing many more than that in AES.

So going back to ECCNs that are invalid, to this - to address this problems, ECCNs will soon be added in AES, and an exact match will occur when an ECCN is reported by the filer. We expect that the ECCN list will be kept current and added to compliance programs.

License exceptions are defined in Part 740 of the EAR - and these are authorizations to allow you to export or re-export understated conditions, times subject to the EAR that otherwise would require a license. Once again the regulation Part 740.1D (suppliers) to ECCN and the exception to be reported on the AES record with the exception of TMP C40.

There are four list-based or CCL-based license exceptions. Exporters must check the ECCNs listed in the CCL of the EAR to know whether the license exception is available for that ECCN. We’ll show you an example of this in a few moments.

(Four list-based) license exceptions can only be used when exporting to certain country -- LVS, such as low value shipments, GBS, which is shipments to country Group B countries, and TSR technology and software under restriction, can only be used with country Group B, countries from the EAR.

CIV, which stands for civil end users, can only be used with D1 country group from the EAR. LVS, the low value shipment exception, allows filers to report when the value of the ECCN is under - or rather the export is under the value designated in the ECCN.

So if you have - you’re exporting something designated by a certain ECCN that’s under the dollar value specified, you’re able to use this license exception. And as I mentioned before, these limits are strictly enforced, so be cognizant of what that dollar limit is.

And finally the license exception for encryption is ENC. This exception is items under four ECCNs from Category 5 of the CCL. And those are 5A002, 5B002, 5D002, or 5E002. We should not see ENC with any other ECCNs except for those four; however, we are seeing many AES transactions where other ECCNs are being used with ENC.

Our presentation today does not include how to know whether your product needs an ECCN or not, or whether it is licensable or not. However, classification is your responsibility. Who knows the product better than you -- the exporters or manufacturers. In classifying the product you need to start with the category, which has been arranged from zero through nine, and then their product, which is letters A through E.

And if you need assistance, you should send a classification request to BIS. Once a classification is defined as an item on the CCL with an ECCN or EAR 99, exporters and/or their filers need to know how to report the other EAR related information that is true, accurate, and complete.

There are many ECCNs reported to BIS that are in the proper format that do not exist on the CCL. BIS tracks these mis-keyings, and these count against your compliance (freight). The ECCN must be in the format of a numeral alpha character and then three numeral characters or EAR 99. And also for a C33, this can be left blank. We mention this to you, because you soon must enter the ECCN correctly and it must match the five position number on the CCL.

Once again if your not item is not specifically described in the CCL, you may report it as EAR 99. EAR 99 is defined in Part 732 and 758 EAR. Subject to the EAR also includes any controls on the end user - end to end user, and EAR 99 is commonly reported for NLR exports that may also be used for licenses.

We’re going to look at an example of an ECCN that is - we’re going to see if it’s eligible for a license exception or not. Here we have police helmets under ECCN 0A979 that’s controlled for crime control reasons. You can see that designated by that CC abbreviation.

You will note that the list-based license exceptions are not applicable to this item. Therefore if the country of destination is controlled for crime control reasons, the list-based license exception cannot be used. Either another license exception may be eligible or a license may be required. Nonetheless, we should not see LVS, GBS or CIV reported with Bureau A979 in AES.

Okay we’ll go to another example. Here on the other hand is an item 3A001, electronic components. This ECCN is eligible for license exceptions LVS, GBS, and CIV. These list-based exceptions may be reported in AES for the - this ECCN 3A001. Exporters should read this description carefully though to make sure the specific section of Part 740 of the EAR allows for the use of the license exception.

It’s also not enough to know of the ECCN is eligible for a license exception. Exporters must also know of the destination country is eligible for the exception as well. For example, in 3A001, is GBS available if our item is under 3A001 subparagraph A1B? The answer here is yes. If you look under the GBS description you’ll see that A1B is listed.

What if we wanted to send this item to China? Can we still use GBS? The answer for this is no. And why is this? EAR 7 - Part 740 specifically says that LVS, GBS, and TSR license exceptions, which are list-based, are limited company country Group B, which is found in Supplement 1 of Part 740. China is not part of Country Group B. It’s in Country Group B1, so GBS cannot be used, and the item would have to be approved for a license to be exported to China.

Now if a country from Group B was the destination, then GBS may be used. So also that countries from country Group B1 may be used with CIV license exception, assuming all other criteria has been met and the shipment is not a - to the military end user.

So assuming the criteria has been met -- and we’ll go back here -- and you’re exporting a 3A001 subparagraph A11 item to China, may you use license exception CIV? If you look under license exception CIV, you’ll say - see that yes, A11 is listed. And since China is in Country Group B1, you are able to use CIV, provided it meets all the other criteria.

Now in - turning back over to Jerry so he can go through some of the other items that we’re seeing - excuse me, to Ashley, so we can see some of the other issues we’re seeing in the AES.

Ashley Miller: Thanks, Jen. Just really quickly we received a question earlier, and that is when will the subparagraph for the ECCN be in the AES - be in AES data elements. And the answer to that is there are no plans currently to report in subparagraph level of the ECCN in AES at this time; however, it is something that has been discussed.

Okay so just going back to the example, I’ll show you an example of how to check if your transaction exceeds the LVS value limit. This is another common problem that we have with our license exception LVS. And here again we have ECCN 3A001, electronic components. And we see that LVS is applicable for this ECCN, so it may be used in lieu of a license if all of the criteria for the use of LVS is met. And again, you’d want to check Part 740.3 of the EAR to check this license exception requirements.

So in this example we see that there are low value limits to abide by as well, so if the item is under Subpart B for ECCN 3A001, the value of the export cannot exceed $1500. For most subparts, B, D, E, F, and G, the LVS exception can exceed $3000, and for A and some parts - subparts in B except for A1A and A5A, the limit’s $5000. And you should note that you should not report LVS for any item with a value over $5000. $5000 is the limit for this exception.

And lastly here we have the most common problem, a compliance problem with an accurate exporting in AES. We’re seeing ECCNs that are not eligible for license exception ENC, and this an exception used for an encryption item.

So here’s an excerpt for the regulations that define license exception ENC. And if you’ll note, this exception only applies to four ECCNs, and that’s5A001 certain subparts 5B002, 5D002, and 5E002. But for BIS continues, to see other ECCNs reported with this license exception C50, we ask that you don’t do that. This skews our data, which is very crucial to those agencies that monitor exports of encryption.

So if you have a laptop that contains encryption, you should report the encryption item separately. And this is why AES has the license type ECCN and value at the line level so you can report those separately. But what we think is happening is that exporters are shipping laptops and PC computers and other software that has encryption built into it, and they’re using the ENC excellent with the ECCN of those products. And we ask again that you please list them separately.

So now we’ll turn it over to Jerry, who’ll go over some NLR designation examples.

Jerry Horner: Thank you Ashley. Once again we’re getting questions along the way as we’re giving this presentation. Just to answer one of them, someone asked if the license exceptions are required, if they are valued under $2500. And they are not treated the same way as licenses, so AES reporting is not required if your license exception is under $2500, okay?

Just one note on that, we do have a new authorization. Don’t confuse that with the - as an exception. If you do use validated end user, it’s an authorization, and it’s treated like a license. So there is no low value exception for VEU.

So what I want to talk to you now about is the NLR designations, and they are C32 and C33 in AES. About 96% of all exports are reported under the destination NLR C32 and C33. As you could see, that’s a lot of exports, and BIS is checking the NLR data and to ensure, as I said before, that exporters and freight forwarders are not rubber stamping everything with NLR. We want to make sure you are practicing some due diligence before using the NLR designation.

So here’s how we would measure whether the designation is used properly. First we’ll look at all the NLR exports that have an ECCN, and make sure that the combination of the ECCN and the country of destination are eligible for the NLR. Someone also asked a question if they were shipping something NLR to Australia, is the ECCN required if it’s AT only. In this part of the presentation we’ll answer that.

To explain, we first want to distinguish between C32 and C33 to make sure you know which one you should be using. C32 is used when the ECCN is controlled for reasons other than or in addition to anti-terrorism. C33 is used when the ECCN is either controlled for anti-terrorism only, or there is no ECCN in EAR used and the item’s going to Puerto Rico or the Virgin Islands.

So in the question we got when in - and the item was going to Australia under NLR, and it was controlled - the item was controlled only for anti-terrorism, that would be C33. We prefer an ECCN if you have one; however, it is not required in AES.

Secondly, we want to make sure that you are using the commerce control list and the commerce country chart correctly before using the NRL designation. And we’re going to go into some examples right now in how that takes place.

Before doing so, it’s important to know what the reasons for control are that you will see on the commerce control list. Well let’s assume your product has an ECCN and your instructions are to use NLR as the destination. First you want to look at the reason for control under that ECCN to determine whether to use C32 or C33. If it is only AT controlled and the country is not controlled for AT on the country chart, then NLR under C33 is okay.

If the item has a reason for control other than AT or in addition to AT, and the country is not controlled for any of those reasons that you see here on the screen, the NLR under C32 is okay. Let’s look at some CCL items so that we fully understand this requirement.

Here we have a CCL item -- police helmets and shields, and parts not elsewhere specified under 0A979. Okay, you’ll notice that the reason for control here is CC which as you saw on the last screen, stands for crime control. It is obviously not control for AT reasons, so you would not use C32 for this export; you would use C32.

However, you have to make sure that your country of destination on the commerce country chart is not controlled. So for instance let’s say we are exporting these police helmets to Australia. If you look at the CCL country chart and look on the right side of the screen under CC1, which is for crime control, Column 1, you’ll see that there is no check or no X in the field for Australia, okay? Therefore in this case you can use C32 as your NLR designation, okay?

Just one thing. I want to remind everyone, always check the reason for control against the country table and look at the narrative of the ECCN and license conditions to determine if any other criteria apply to the control. What we have been seeing is companies just see that their item is AT - is other than AT, but don’t look to see if there’s a check on the country box and automatically put NLR. Please don’t do that, okay?

All right, the next one is an example of - actually I’m not going to tell you what it’s an example of. I’m going to make you answer this one yourself. We have an ECCN 6A001, which is on the commerce control list and defined as acoustic system.

Question -- looking at the reasons for control, what would be the NLR designation you would use for this one? Okay. Okay, very good. Keep going. Okay 63% of you said that you could use C32 for this, 35% said you can use C33 or 33%. I’m sorry, but those of you who said you could use C33 are incorrect.

The reason is, if we go back, you’ll notice A001, the reason for control is national security and anti-terrorism. If it was anti-terrorism only and the country was not controlled for anti-terrorism you could use for C33. But because it is controlled for a reason other than anti-terrorism -- in this case, national security -- you can use C32, okay?

However, once again you must check the country chart to make sure the country that it’s destined to is not controlled. So remember it was anti-terrorism and national security and the regulation said national security Column 2. So if we go to the country chart and we look under Belgium for instance and we go to national security 2, go down, you’ll see under Belgium there is no X. So that is when you can use the NLR designation.

Let’s say for instance it was destined to the Bahamas. You’ll see then that there is an X. Then NRL cannot be used and you’d have to look at - you’ll have to look at that criteria because you may have to come in for a license or use a license exception, okay?

All right, the next example is this one -- 3A991, electronic devices and components. You’ll see the reason for control here is AT only. So for AT only, we want to know is this one - what license NLR designation can you use here, okay? And most of you should know that this one is C33, because C33 applied to AT only - AT items only.

Once again, you also want to look on the country chart to make sure the country that it’s destined to does not have a check in the box for AT. And you won’t find most of the countries on the country chart having a check in the AT box. The - you may see it for Iran for Syria, Sudan, Cuba, or North Korea, but other than that, you won’t see any Xs there. So if you’re not shipping to one of those countries, you’re pretty much okay and you can use the NLR C33 designation.

Okay, all right, so just remember some - one thing as we review the NRL designation. Once you go trough and you look at the - if you are handling a product and exporting one that is on the commerce control list, make sure you’re paying close attention to the reason for control.

If you’re taking the reason for control box and comparing it on the country control chart with your country to see if there’s an X in the box, and if there is, then you probably have to come in for a license or get a license exception, depending on the addition criteria.

If there is no X in the box, you (were - it’s) EAR 99 as your classification, then you’re most likely can use NLR, okay? But you also want to look at additional criteria in the EAR and additional conditions to make sure you’re covered by that.

Okay one thing that Ashley did say is this EAR compliance program is one way for us to measure the effectiveness of export controls and also to keep the exporting community in compliance with our regulations. So by reporting in AES properly the items that are subject to the EAR, you will hopefully prevent delays in exporting.

If you look at the red flag presentations by both US Customs and the agents of BIS they will both say that one of the red flags is violations or improper reporting of the SED is what they used to say before. But now there is no paper SEC, they will say violations or improper reporting of the EEI, which is electronic export information in AES.

And so you want to make sure that you are - your shipment is in compliance in your EEI reporting is in compliance with the EAR, because if there are violations of the EAR, we can once again refer you or your name to the Office of Export Enforcement. The Census Bureau may also do that. The Customs Service at the port may see something that’s a violation, and what you don’t want is this last bullet here, which is penalties.

So with that, I think we will answer a few questions. Our contact information is right here, okay?

Linda Abbruzzese: Thanks Jerry and thanks to Ashley and also to Jennifer. Now we’ll ask - I’ll go to the written questions - a couple of written questions. I’m going to put this on speaker phone. And I will start with the first question that has been asked looks like from Robin Shaw.

This question - well she says hello, and she asks, “If we have a commerce license, when is that input into AES so you can file against it? It is immediately when it is issued?” Do you guys know? I’m sure you know.

Man: Go ahead.

Kirsten Mortimer: After the license is issued and if you check on our call status line (stella) if it says that it’s been approved with conditions that it would fit - what RED to AES system. So it happens overnight, so if you get something approved and it says in your (Nap-R) that it’s approved, then the AES will also see that it’s approved.

Linda Abbruzzese: Okay, great. Thank you Kirsten. Next - the second part or another question from (Robin Shaw) is, "With license exceptions available, are they always listed under the ECCN or can you look for more license exceptions in the EAR?

Jennifer Watts: I can take that one. As we mentioned, there’s three list-based license exceptions - or four, rather -- the LVS, CIV, the four that we talked about. There are additional license exceptions that aren’t always listed with the ECCN, so you do need to look at Part 740 of the EAR to see if you qualify. And depending on the details of your transaction whether you may be able to use another license exception, the new one tied directly to that ECCN.

Linda Abbruzzese: Okay great. Thank you Jennifer. (Kathy Drews) has a question, ”A conversion utility was mentioned to convert HS numbers to ECCN numbers. Is that available to us in some way?” Jerry will take this question.

Jerry Horner: The government does not provide a conversion HS to ECCN, because we’ve done a feasibility study on this, and it’s a many to many relationship. And we don’t want to give you any false guidance, but we do understand the interest in this and there are many commercial programs out there that do this.

We will say that we are looking at some international programs that do this to see how those international countries actually use this as a benefit to their exporters. So we’re still looking into it, but we do not have one. And right now we don’t have any current plans to put one up there. Thank you.

Linda Abbruzzese: Thank you Jerry. And I’ll take our last written question from (Paulette Colba). She says, “Many US TPIs do not tell the forwarder that their products or EAR 99, they leave the box blank. A forwarder cannot tell if this is blanking EAR 99, a T32, ECCN or if the USPPI doesn’t know the controls even exist. Therefore the USPPIs could tell the forwarder that their products are EAR 99. It would be helpful if you could mention this since you have so many USPPIs attending today. Can you comment on that?”

Jerry Horner: Yes. Thank you (Paulette) and hi (Paulette). It is true that there have been - we’ve seen from our experience that there’s just a lack of communication between the USPPIs and the freight forwarders. If freight forwarders notice that something is designation as EAR 99 or NLR, but they feel it is controlled, they do have an obligation based on the guidance we give to freight forwarders to report such things to the government.

However, USPPIs are responsible for the classification and the license authorization, and license determination. And we are mentioning here that you should do a better job in informing your freight forwarders of the classification of your products, because most government agencies will say if there is a violation, all parties to the transaction are normally brought into the questioning or the review of the item, so everyone is actually looked at. so this could prevent that if the communication is better.

Linda Abbruzzese: Okay, great. Thank you, Jerry. Now we’ll open up the lines for voice questions. And I’ll give this over to the operator. You can ask a question by pressing star one on your telephone.

Coordinator: Thank you. This is the operator. Once again as a reminder, if you’d like to ask a question, please press star one and record your name. Our first question would come from (Sharon Jennings). Your line is open.

(Sharon Jennings): No question. Mine was answered. Thank you.

Coordinator: Our next question would come from (Timothy Woo). Your line is open.

(Timothy Woo): Good afternoon. My question is I’m a fright forwarder, and let’s say I’m appointed to file AES, so my question is, who is responsible to check and verify license detail and requirements for license and CCL? Would it be the exporter or the freight forwarder to verify?

Jerry Horner: The answer is the exporter. The US Principal Party and Interest is responsible for license authorization, license determination, and that includes classification of the product, okay, but the freight forwarder, if they get information if they recognize that it’s a violation, they need to report that immediately.

Okay so the freight forwarder does have some limited responsibility or an obligation if they find something in violation with what they’ve been given by the USPPI, okay?

(Timothy Woo): So in the end, ultimately the freight forwarder still is responsible to check regardless, no? And if the exporter provides the incorrect info, then who is going to be ultimately be responsible for violation and penalties?

Jerry Horner: It would be the USPPI because they’re responsibility for that information that you are questioning -- the license, authorization or determination, and the classification of the item.

(Timothy Woo): Thank you.

Jerry Horner: Okay.

Coordinator: Our next question would come from (Janice Dobson). Your line is open.

(Janice Dobson): This question’s for Jerry. Earlier you mentioned - you answered someone else’s question regarding when, based on dollar value, on - an EEI needed to be filed and an ECCN or HTF code needed to be filed.

Jerry Horner: Yes.

(Janice Dobson): Could you repeat that slowly?

Jerry Horner: Yes, that was specifically license exceptions. There are a number of exporters and freight forwarders out there that feel that because a item is under a license exception, it is - you have to report it regardless of the value. And that’s not true. If there is an item under a license exception, and the license - and the item is valued under $2500, it is exempt under the Census Bureau’s low value exception regulation. Okay?

(Janice Dobson): Is there - can I follow up with that? Is there also an exception related to HTF codes and $1000?

Jerry Horner: No.

(Janice Dobson): Does that ring a bell? Okay, thank you.

Jerry Horner: No. Yep, the HTF exemption is still $2500 on exports.

(Janice Dobson): Thank you.

Jerry Horner: Okay.

Coordinator: Our next question would come from (Lucy Scerna). Your line is open.

(Lucy Scerna): Hi, my question is the following. If we are getting the SEDs from the customers - the AES from customers from forwarders that handle the shipments, and they are missing the tax ID of the exporter is that could be a - like a penalty or can cause a problem for us? The values and everything is showing correctly.

Jerry Horner: I would ask you to refer that to the US Census Bureau -- their regulations department, because that’s regarding their data elements.

(Lucy Scerna): Yes.

Jerry Horner: If you need information for them, you may call - it’s 1-800-549-0595, Extension 3.

(Lucy Scerna): Okay. And - thank you. And I have one more question, and that will be if the forwarder is a customer forwarder, files the SED and they only provide the AES number, is that enough proof for us if they say just, “Okay you are not a USPPI or we just can’t provide them not the (ITN) number.” Is that enough information for us as a record keeping as due diligence?

Jerry Horner: You’re a freight forwarder?

(Lucy Scerna): No, we are a manufacturer.

Jerry Horner: You’re a manufacturer. And you should have as part of your record keeping requirements supporting documentation that helps that freight forwarder create the SED or the EEI in AES. So if you only have - if you’re audited and only have the (ITN) but you do not have supporting documentation for that shipment in AES, then mostly like you’re going to - you’re not going to be a compliant.

So you not only should have the ITN but you should have all supporting documentation for that shipment that that freight forwarder keyed for you in AES.

(Lucy Scerna): Thank you.

Jerry Horner: Okay. And you - ma’am you can look at the record keeping requirements under 762 of the Export Administration regulations for more details regarding that.

(Lucy Scerna): Thank you.

Jerry Horner: You’re welcome.

Coordinator: Our next question would come from (Jeffrey Simpson). Your line is open.

(Jeffrey Simpson): Hi, it’s question I have is right now the limit is $2500 for (no) AES filing. Is there going to be a change to that, or is there plans to change that in the future to get rid of the dollar amount, and have everything filed through AES?

Kirsten Mortimer: That question actually would probably more appropriate for the Census Bureau to answer. To my knowledge there isn’t a change in the works, but again, Census Bureau would probably be the more definitive answer to have the answer to that question.

(Jeffrey Simpson): And as a follow up to that as well, right now we’re relying on getting customs and revenue service for trade data for Canada. Again, it’s probably Census, but do you know of us being - having to file AESs going to Canada any time in the future, or are we going to continue to rely on Canadian customs?

Jerry Horner: It is required right now if the item is controlled, but (or) no license required or license exceptions. It’s - as far as I know -- and we talk to Census regularly -- there’s no plans. The other thing is, I’m assuming if - since Census recently published a final rule mandating AES, you know, some of these issues may have come up in that - prior to them publishing that regulation.

So if there was no language in that regulation regarding. And one thing you may want to look is the comments to that notice of proposed rules when they put out mandatory AES to see if that question was (there). But we are not aware of any expansion of reporting under low value or Canadian exports.

(Jeffrey Simpson): Thank you.

Coordinator: Our next question would come from (Pam Ulysses). Your line is open.

(Pam Ulysses): Yes, hi. We are an exporter and we have situations where we drop ship to third parties on behalf of our other offices overseas, and the value that we report on the EEI is our charge to our overseas office. However, the invoice that accompanies the shipment reflects the value to the third party, which will be higher than the value reported in AES. And we’ve recently have some - had some shipments stopped by an officer at the port because of the value mismatch. How do we overcome that?

Jerry Horner: The valuation questions really aren’t our questions. They’re really Census questions.

Kirsten Mortimer: Does this relate to an LVS (system)?

(Pam Ulysses): No, it does not. It’s simply that the value that’s been reported in AES does not match the accompanying documents, but from everything that we can tell, we are supposed to report the value that we would be charging to our office overseas, not the value charged to the third party. And unfortunately, when we contact Census, we have a hard time finding somebody who can explain to us what we need to do in order for these shipments not to be stopped at the border...

Jerry Horner: Yes, the...

(Pam Ulysses): ...or at the airport.

Jerry Horner: I used to work there, and I know they will say that there’s no concordance of the elements between AES and the invoice, because situations like this may happen. They may have to intervene with you and the custom service. However it gets a little sticky when the item is actually licensed and there’s a value on the license and that differs from what’s on the invoice.

(Pam Ulysses): Yes, none of our items are every licensed. Would you have a suggestion of who or what office we could speak to about that?

Jerry Horner: Yes, the - were you on the line when I gave that 1-800 number.

(Pam Ulysses): Yes, we have that.

Jerry Horner: Okay, that’s the number you want to call, and the Chief of the Regulations branch is (Joe Cortez) if you wanted to speak with somebody in particular.

(Pam Ulysses): Okay, thank you very much.

Jerry Horner: He'll never forgive me for giving that out with 200 people on the line.

(Pam Ulysses): Thank you.

Coordinator: Our next question would come from (Ken Wetkowski). Sir, your line is open.

(Ken Wetkowski): Yes, I’m a freight forwarder, and I just have a question concerning the value of a license shipment on the BIS. You had mentioned that AES is not declimenting BIS licenses. Since a USPPI may be used in multiple forwarders and all may be listed on the license, is there any was the forwarder could check the value of what’s remaining on a license, or is that really the USPPI’s responsibility?

Kirsten Mortimer: Forwarders aren't listed on BIS licenses because they’re in the United States, so you wouldn’t be...

(Ken Wetkowski): Okay.

Kirsten Mortimer: ...and you don’t have access. The only person who has access to the information on the licenses - the license holder because of confidentiality provisions of the Export Administration Act.

(Ken Wetkowski): Okay, so they would be - the - so if I receive a shipment from them, I’m assuming that the - there is value left on the license?

Kirsten Mortimer: Right. I mean basically the AES record from our perspective is an export control document, so...

(Ken Wetkowski): Okay.

Kirsten Mortimer: So when giving you that mapping to fill it out, you’re - they’re basically certifying is they’ve met the terms and conditions of the use of that license. So...

(Ken Wetkowski): Okay.

Kirsten Mortimer: ...if they’ve got it - if they’re slipping beyond the value and there’s no shipping tolerance available, which they would have needed to determine that...

(Ken Wetkowski): Okay.

Kirsten Mortimer: ...yes, they’re the ones in violation, right.

(Ken Wetkowski): Okay. All right, thank you.

Coordinator: Once again if your - if you’d like to ask a question, please press star one. If you’re question’s already been asked, please press star two to withdraw your question. Our next question would come from (Mark Burdolf). Sir, your line is open.

(Mark Burdolf): (Unintelligible).

Man: Yes.

(Mark Burdolf): Yes, hi. I just have a simple question. We’re an exporter and oftentimes we get customers wanting to know more about exports and BIS. What - do you have a point of contact for those people, or an email or just use the website, because generally we just give them the website - the BIS website. So I was wondering if you could give us a phone number or an email or something of that sort in order for us to give the customer more information about export basically.

Kirsten Mortimer: Good, that’s a great question. We really recommend sending people to the website. We have a lot of publications as well as online training if you go to seminars and training. And the exporter - Office of Export Services has counseling divisions that can assist callers. And the phone number in DC is 202-482-4811, and the West Coast office is 949-660-0144. And then there’s a another one in Northern California, but I don’t know that off the top of my head.

But certainly they can always call for assistance, but a lot of times it’s helpful of them to go to the website and get a little familiarized, especially like the licensing frequently asked questions. It’s a brochure that’s’ really helpful for people who basically think that the freight forwarder is supposed to do all this, and they kind of have questions and answers about, you know, who’s responsible for what and how it works

Jerry Horner: So let me just add to that. Since AES is now mandatory for exporters and the agents to report the export information, if anybody on the call is new and just trying to gather information about AES, you can go to www.census.gov/trade. And if you are interested in a user friendly reporting program that Census developed that is free to exporters, it is www.aesdirect -- all one word -- .gov.

Coordinator: Our next question would come from (Teresa Delosantos). Your line is open.

(Teresa Delosantos): Yes, my question is when you retired classification, how long does it take to have a response?

Kirsten Mortimer: If you’re - first of all we really ENC people to do self-classification when at all possible, because they know their product the best, because there are sometimes delays in getting written classifications.

(Teresa Delosantos): Yes.

Kirsten Mortimer: We typically say four to six weeks, but there are certain engineers and certain technical areas where, you know, they just have a large workload and you might be waiting longer. So if it’s self-classified, that’s great. If you have a question that’s specific to a classification where you just need a little clarification, call export counseling and we may be able to get you in touch with the technical person to answer a question that might help you with your self-classification.

(Teresa Delosantos): Okay. I have another question. I work in the trade compliance department, so we always auditing our people, consolidation centers, distribution centers, which they transmit AES, but there’s a way our program that you’re trying to develop or will develop, would the exporter be able to audit both transmissions? Maybe my question is not clear?

Jerry Horner: No, that’s true. I think I understand what you’re trying to - what you want to do. You want to be able to monitor or audit the information that’s being reported on your behalf by your agent.

(Teresa Delosantos): Correct.

Jerry Horner: You can do so, but you have to request the information by your EIN number through the Census Bureau.

(Teresa Delosantos): It - and there’s a away - another way that we can audit those? I know it takes time where you need to send a letter?

Jerry Horner: Yes. That’s the only way possible right now to do so.

(Teresa Delosantos): Oh okay.

Jerry Horner: They - there is a program called the automated commercial environment...

(Teresa Delosantos): Yes.

Jerry Horner: ...and the Census is working with the US Customs Service and trying to develop a way where exporters can go into that portal and retrieve their information. But I think they’re just in the beginning of those discussions.

(Teresa Delosantos): Okay.

Jerry Horner: Okay?

(Teresa Delosantos): Thank you.

Jerry Horner: If I could just add a comment to everybody, just as review - Jennifer alluded to it a little bit, but before the end of the fiscal year -- and the fiscal year ends September 30, 2009 -- a lot of the information that we presented to you today, there are going to be additional edits and validations in AES.

So not only will your ECCNs have to, if you use one, has to match specifically to the commerce control list, but the information that Ashley and Jennifer went over about using appropriate or eligible ECCNs with list-based exceptions, that edit will also be going into the system as well as using the eligible countries with list -based license exceptions.

So if you get errors that say the ECCN is not on an approved list, and once those edits go into effect, that’s the reason why -- because you’re not following the requirements in the EAR. Thanks.

Coordinator: Our next question would come from (Terry Liner). Your line is open.

(Terry Liner): Hi. I’d like to see if you would please explain to me more about the C50, possibly with some examples, and how does it differ from the C38.

Jerry Horner: Thirty-eight (unintelligible).

Kirsten Mortimer: Well license - there’s two different license exceptions. C50 is for license exception ENC, and C38 is for license exception TSR. And for guidance on when to use ENC, it’s probably best to speak to someone in the information technology control division, because ENC’s a fairly complex license exception, and it has different parts. Sometimes you actually have to come in to BIS prior to using ENC and have a review done. And a lot of companies that have already had these reviews done, post them on their website to indicate ENC eligibility.

TSR generally is not a license exception that you’re going to be using for software or any type of encryption type of product, so TSR is usually a call for a technology and software restricted, and you have to get a letter of assurance with - from your customer before using TSR. And it’s relates to - I have to double check, but it relates to items that are generally controlled for national security reasons. But it’s not - you’re not going to use TSR for encryption controlled items for the - that I’m aware of.

But they’re very different, you know, for very different uses. So if you have any specific questions you can give us a call at 202-482-4811 and we can talk to you about that.

(Terry Liner): Okay. Thank you very much.

Kirsten Mortimer: Yes.

Coordinator: Our next question would come from (Viermo Ramirez). Your line is open.

(Viermo Ramirez): Hello everybody. The question that I have is, when there are any violations on the EEI filing or any control item, who is penalized in that case -- the company, or is it individuals who filed the paperwork from the companies behalf?

Kirsten Mortimer: Well no one here from the Office of Expert Enforcement, so that’s not something - I’m sure it depends on the circumstances whether or not it was, you know, depending on the circumstances, I’m sure they look at - they talk to the individuals and the companies to see who, you know, was involved and who knew what at the time, and that sort of thing.

But if you’re interested in finding out about, you know, examples of violations you might want to take a look at our home page -- www.BIS.doc.gov -- and take a look at a publication called Don’t Let this Happen to You, which our office of Export Enforcement puts out. And they have examples of mistakes that have been make, the kind of penalties involved, and, you know, sort of what happens to the individuals or companies. That will be worthwhile. If you’re curious about that, take a look at that.

(Viermo Ramirez): Okay, thank you.

Jerry Horner: Yes I’d just like to add on that, that we do have a recommended list of export management compliance program elements, one of - the first one, which is management commitment, and they are more or less the managers responsible for making sure that staff get trained, you know, and that you have written procedures, et cetera.

So you’re asking if - is an individual responsible, and Kirsten I think answered that -- that’d be an Office of Enforcement decision. However, if you have an effective compliance program, those certain things shouldn’t happen -- that the training should trickle down, the training should be appropriate for the individual, and that should come from management.

So if you do get a chance you may want to partake in a - either future webinar on the export management compliance program or attend a seminar on this as well, because it is interesting and the Export Management Compliance Program elements happen to be the same ones that are used in mitigation of penalties as well.

(Viermo Ramirez): Thank you.

Coordinator: Our next question would come from (Griselda). Your line is open.

(Griselda): Hi. We are (unintelligible). My question is - you already answered part of this, but we still would like to confirm about the value and the license requirements.

You mentioned or we understand that if we have a license requirement from an invoice less than 200 - $2500, we do have to transmit the license. But what I wanted to confirm, is it what you said is that if it’s - would have license requirement but we find an exception and it’s less than $2500, then we wouldn’t have to transmit. Is that what you meant?

Kirsten Mortimer: Yes, that’s correct.

(Griselda): Okay, perfect. That was it. Thank you very much.

Coordinator: Our next question would come from (Janet Dobson). Your line is open.

(Janet Dobson): I have a question regarding assigning ECCNs. There was some discussion during the presentation about the exportation of hardware and software, where the software was a controlled item -- if you could repeat what you stated there.

And also as a follow up, if you are sending a - we’re a manufacturer of machinery. If we’re sending machines in a specific act - to perform a function that’s not controlled - so it’s not for example to create nukes - but certain aspects inside the machine may be controlled, how do we report that? Thank you.

Kirsten Mortimer: Well as far as ECCNs go, with Commerce, we don’t really have what they all a feed rule. So pretty much you look at the items that’s being exported, not the things that are inside the item, to determine the ECCN classification. The thing is, is that if you have like a laptop and you preloaded software onto that, the software is considered separate from the hardware, and so that’s when we are talking about you would report two different ECCNs.

It could be that the laptop is NLR and that the software is ENC, or maybe the - or maybe you’re getting that under license exception (unintelligible) because, you know, you’re eligible to do, you know, in certain circumstances you could do that. That sort of depends on the situation. But anyway I don’t know if that answers your question or not.

(Janet Dobson): In the case of the laptop and the software, I’m not familiar - I’ve never filed my own EEI. I’ve always used a forwarder. If on the invoice it simply says a laptop with software so it’s one line item, are you able to articulate, you know, have a one to many relationship where you are selling one item laptop with software but have two ECCN numbers associated with that item? Because they only have one dollar amount, you know, if say I’m selling them both for $1000.

Man: (Unintelligible) category 4. Right?.

Woman: Right. Yes.

Jerry Horner: Yes, ma’am. I - based on the experience we have, most of the times, that is going to go under the component itself, which is the laptop. And I believe those are all under Category 4 or - right, or 3.

(Janet Dobson): Yes, the laptop’s a Category 4, but if it’s got software - most software on laptops have encryptions. They’re controlled through the encryption.

Jerry Horner: Yes.

Kirsten Mortimer: They might be 5D992 more than likely or 589 - or 5D002, depending on what it is.

Jerry Horner: Yes, depends if it’s specialized encryption or if it’s mass market.

(Janet Dobson): Yes.

Jerry Horner: Okay.

(Janet Dobson): And I - in the case I’m anticipating, it’s actually not a laptop, but a computer server...

Jerry Horner: Yes.

(Janet Dobson): ...with software that does qualify for ENC.

Kirsten Mortimer: Right. Then, you know, you might - we might need to speak with you offline, because it kind of depends, from what I understand, speaking with people who license the encryption products. I mean if they say it’s a 5002 and then you’re server is, you know, 5 - or 4A003, then I think you’re going to have to list both separately -- the ECCNs.

(Janet Dobson): Okay. And one question maybe you can answer is, if I - if you do have to list both, does my invoice have to have them separate? So there must - my question is, must there be a one to one relationship between a value - an item with a value and an ECCN number?

Jerry Horner: Yes, I see what you’re saying. I think if we put that requirements in - that ENC requirements with this four ECCNs, that may be the effect of this change is that you would have to break out the value for the encryption part of the system or the laptop, et cetera.

Let us look at that with the encryption office, because I don’t know if we want to - I can’t really say whether or not that burden would be placed on the exporter. And if so, we may have to reevaluate the feasibility of making that change.

(Janet Dobson): Thank you.

Jerry Horner: Thank you. Good question.

Coordinator: Our next call - or excuse me, our next question would come from (Gail Harrison). Your line is open.

(Gail Harrison): Thank you. I have two questions. First question is, are we going to be giving the presentation slides afterwards?

Linda Abbruzzese: Oh hi.

(Gail Harrison): Hi.

Linda Abbruzzese: This is Linda. Yes, the PowerPoint presentation slides are actually - they can found on the upper right hand side of your computer. There’s an icon, and if you put your cursor over it, it says handouts. And when you put your cursor over that icon, it looks like there are three pieces of paper overlapping one another, you can actually checkmark the box and download the PowerPoint presentation slides either onto your desktop or to another folder.

(Gail Harrison): Oh, the meeting has expired right now, so is there something I can - Linda I can just email you later?

Linda Abbruzzese: Sure, but you can - the meeting is still on and you can still do it. I can do it. You can still log on, but...

(Gail Harrison): Okay.

Linda Abbruzzese: ...yes I can definitely send you the PowerPoint presentation slides.

(Gail Harrison): Okay. Second question is for Jerry. I know this question has been answered a couple times, but still want to double check. It’s about the ENC encryption items license exception.

As exporter, we are required to report ENC transactions on an annual - semi-annual basis, so what I’m hearing is there is no bearing in terms of dollar values, where we come to EEI reporting anything under $2500 under ENC. We are not required - in terms of EEI we’re not required to report that. Is that correct?

Jerry Horner: Yes, you got two different reporting requirements. The low value - or the - yes, the low value exemption in AES does not apply at all to your semi-annual and your annual reporting to BIS, okay? So what you’re required to do in your semi-annual and annual reporting of ENC items to BIS and to NSA, you still have to do that. And I don’t believe there’s any exemption on that, but your EEI information there is.

(Gail Harrison): Okay.

((Crosstalk))

Kirsten Mortimer: Everyone should keep in mind that even if you’re not filing an AES record because it’s under the $2500 exception, you still have to document in your records what authorization you shipped under, and the fact that you’re eligible for it, because those records are still something that BIS can ask for with Export Enforcement.

So if you determine something’s EAR 99 no license required, you don’t have any end user end use concerns and you’re good to go, you should be documenting that in your records and keeping your records for the - define your time period as set forth in Part 762 of the regulations - of the Exporter Administration Regulations.

(Gail Harrison): Yes, I heard that part. What if the company has a (automation) to capture all the ECCN number in terms of license exception? And because of that, then the system automated report that regardless of what, that right now is not a (logic) to stop that from reporting for values under $2500. Would that cause the problems in - for the...

Jerry Horner: System?

((Crosstalk))

(Gail Harrison): ...for the objective that you’re trying to achieve.

Jerry Horner: No, the - you can report that stuff. We got a lot of companies that report at the invoice level anyway that give us everything from one cent all the way to whatever, but if you can’t stop your program from reporting it, just report it. You know, we may use the raw data for something, you know, for statistical purposes it may not be used, I don’t know. But if that’s the way you’re set up to report it, just report it.

(Gail Harrison): Okay, thank you.

Linda Abbruzzese: Okay, thank you everybody. I’m afraid that is all the time we have. And remember, for those of you whose questions we weren’t able to get to, or for any questions that you wrote down and you still would like to talk to one of our speakers, please note the contact information on your screen. This is one from the Bureau of Industry and Security at the Office of Technology Evaluation.

We also have another contact number here for a specific EAR related questions at 202-482-4811. I would definitely just like to say thank you to Jerry Horner and Jennifer Watts, Ashley Miller, and of course (Kristen) [sic] Mortimer for their expertise and knowledge of this presentation. Also please check out the Bureau of Industry and Security’s website at www.BIS.doc.gov for more information, as well as the US Commercial Services website at www.export.gov.

Thank you everybody for participating and joining us. Thank you to our speakers...

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