Frequently asked questions in global trade

We are constantly in exchange with our customers on hot topics around global trade, logistics, and IT. One of the channels we’re using to stay in touch is our online community. Many interesting discussions take place in this forum and every time someone raises a question, it is echoed by others or its relevance is confirmed by numerous more. With this in mind, I’ve selected a good mix of recently asked questions with value for the larger community, so we can share it also with our blog readers.

The following questions and answers focus on customs processes and export controls. Maybe you’ve been wondering about the same things. Or your colleagues might have – so please share the information as you see fit. We are no consultants at AEB, so the below cannot be taken as legal advice, of course, but it can still provide good direction and impulses. Please ensure to confirm any follow-up actions on your side with responsible authorities and applicable regulations.

I hope that some of these questions also hit a nerve in your company. Please let me know if you would like to know more about any of the areas mentioned – just contact us or connect with me on LinkedIn.

This question comes up over and over in our company. In which cases do we need to consider US sanction lists? Is it voluntary or mandatory? What happens if an EU or an APAC company appears on a US sanction list? What are the consequences for us?

Response:

This is a two-part question.

• Firstly: All business partners should be screened against global sanctions lists – including US lists – to ensure a company does not trade with restricted parties. This is not a one-time screening, but applies to all business transactions. Once parties appear on a sanctions list, trade may be fully prohibited or restricted to certain goods.
• Secondly: US re-export controls under the US Export Administration Regulations (EAR) apply to goods that contain US parts above the “de-minimis” threshold. If the share of US components is above 10% of the value (for embargo countries) or 25% (other countries), the goods must be classified and the transaction must undergo an export control check under EAR. This even applies if goods are shipped within the EU or APAC. Violations of US export control regulations can bring about hefty fines: under EAR, maximum criminal fines are $1 million per violation and maximum jail time is 20 years. This is in addition to possible loss of export privileges and reputational damages, of course.

Export Controls with AEB

Compliance Screening with AEB

Our supplier has informed us that their company was “split” – and as a result, two new companies were founded under new company names. My question is this: Do I need a new supplier’s declaration from my supplier? Or is it sufficient for me to attach the official notification from our supplier to my documentation?

Response:

The company that provided your current supplier’s declaration no longer exists. Why this is the case (e.g. company split) does not matter. But it is a fact that you cannot hold anyone liable if worst comes to worst. Consequently, a new supplier’s declaration should be requested.

Supplier Declaration Exchange with AEB

We would like to export test equipment for a vessel to a ship that currently lies offshore Nigeria. The flag under which this ship operates is not known to us. We plan to export the goods from Europe by air cargo to Cameroon first and from there to the ship. The test equipment is intended to be used for various tests on board the ship and once completed, the goods will be returned to us in Europe. What is the destination country in this case?

Response:

Generally, when delivering goods to ships on the high seas, the country of destination corresponds to the nationality of the ship. In order to create your export declaration in compliance with customs regulations, you will need to find out the flag this ship operates under after all.

To determine the nationality of a ship www.vesselfinder.com might be helpful for you. This website also offers many more details about individual ships as well as real-time tracking.

We have exported a shipment and noticed only afterwards that one item we have listed on the export declaration was not included. The goods have already left the EU, however, the customs clearance is not completed yet. Can we still change the export declaration at this point?

Response:

You can only make changes once the endorsement of exit is available and a movement reference number (MRN) has been assigned. To make corrections, you will need to duplicate the current MRN and correct the relevant item with the missing goods. The customs authorities will then require all relevant documents – for example the original invoice and the corrected invoice. They will also need an explanation as to what happened – for example: “goods have been forgotten during the loading process”. A confirmation of receipt from your customer might be a good idea, too. Once all is plausible to the customs authorities, the new data will be accepted and a new endorsement of exit will be issued.

Export Filing with AEB

We are based in Germany and plan to combine two of our existing products into one through a minor modification. This new product is then intended to become a part of the driving control system of an Indian tank. In my view, this new product is in line with items that have been constructed or modified for military purposes under the German export control list. But it can also be used for civilian purposes – would we still need to request an export license in that case?

Response:

We would recommend to first contact the authorities to confirm that your new product is indeed considered to have been modified for military purposes. It depends on the extent of modifications and for some goods that were subject to insignificant changes, export license may not be required at all. If it is indeed the case, however, and your product really falls under military goods classifications, then yes, you will need to request an export license – even if it is also used for civilian purposes in line with dual-use regulations. And by the way – also civilian goods with military end-use purpose would require a license.

In 2014, we have sold a device to a customer of ours in Kyrgyzstan. Recently, the device needed to be repaired under warranty and was returned to us. We have imported the item and customs cleared it for free circulation in the EU. We have then sent it to our supplier in Germany, who in turn sent it on to their facilities in the UK to be repaired. It’s now back in our warehouse and we would like to get it ready to be shipped back to our customer in Kyrgyzstan. How should we export this shipment – does an inward processing relief apply?

Response:

Inward processing relief applies when goods are, for example, sent from the EU to a third country to be repaired and are then returned to the EU following the repair. This is not the case in your scenario. Following your regular import clearance in the EU and movements within the EU, you are now exporting again to a third country, which requires a regular export declaration. You might have been able to save duties at point of import from Kyrgyzstan, by customs clearing the goods under outward processing relief instead of clearing it for free circulation.