{"id":31277,"date":"2016-03-31T19:21:19","date_gmt":"2016-04-01T00:21:19","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/uncategorized\/exporter-of-record-status.html"},"modified":"2017-11-03T14:52:29","modified_gmt":"2017-11-03T19:52:29","slug":"exporter-of-record-status","status":"publish","type":"corporate","link":"https:\/\/corporate.findlaw.com\/business-operations\/exporter-of-record-status.html","title":{"rendered":"Exporter of Record Status"},"content":{"rendered":"
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With the advent of U.S. Customs’ Outbound Compliance<\/a> program many U.S. companies are tempted to restructure their sales to foreign customers and to make such sales on an ExW<\/a> or "domestic sale" basis in order to avoid exporter of record status. This temptation is real because status as exporter of record makes U.S. companies responsible for export clearance and for compliance<\/a> with U.S. export laws and regulations, thereby exposing non-compliant exporters to Customs’ enforcement actions. While the opportunity to eliminate responsibility for export clearance and liability for export compliance<\/a> might have great appeal, U.S. companies should not conclude that avoiding "exporter of record status" is always in their best interests, in that such avoidance forces a U.S. company’s foreign customers to assume the "exporter of record" role and causes a U.S. company to forfeit control over the export<\/a> of their product, thereby exposing a U.S. company to a whole host of risks and problems as outlined below.<\/p>\n

Foreign Buyers Precluded From Export Clearance Duties<\/b><\/p>\n

Foreign buyers are precluded by U.S. regulation from performing most export clearance duties because they are foreign and must, as a result, appoint a U.S. agent to perform these duties on their behalf. This adds cost in buying from a U.S. seller as seen from the foreign buyer’s perspective and is generally considered to be an inconvenience by most foreign buyers.<\/p>\n

U.S. Agents Unwilling to Conduct Foreign Buyers Responsibilities<\/b><\/p>\n

The U.S. agents appointed by foreign buyers are often reluctant to conduct a foreign buyer’s export clearance responsibilities in the U.S. agent’s own name and frequently designate the U.S. seller as the "exporter of record," without the knowledge of the U.S. seller and without first obtaining authorization from the U.S. seller. In this situation, a U.S. seller is unwittingly exposed to: (a) administrative penalties<\/a> (monetary fines and or denial of export privileges) arising from any violation of U.S. export laws and regulations perpetrated by a foreign buyer’s U.S. agent, should such agent fail to comply with U.S. export laws<\/a> and regulations and deliver the U.S. seller’s goods to a prohibited end user, to a prohibited destination or to be used for a prohibited end use; and (b) liability for General Average peril if the vessel on which the U.S. seller’s goods are shipped sinks or is forced to jettison cargo while en route to its ultimate destination.<\/p>\n

U.S. Buyer Exposed to Diversion of Goods<\/b><\/p>\n

Even if a foreign buyer does appoint a U.S. agent who does make an attempt to comply with U.S. export laws and regulations, the U.S. seller remains exposed to the foreign buyer’s diversion of the purchased goods to the U.S. market, in the event that the foreign buyer’s U.S. agent is unable to obtain U.S. export clearance for the purchased goods or in the event that the foreign buyer simply decides to divert the goods purchased from the U.S. seller back into the U.S. market as opposed to exporting the purchased goods as originally agreed.<\/p>\n

Foreign buyers can also elect to divert the goods that they have purchased from a U.S. seller to a foreign market which:<\/p>\n