On February 5, 2010, U.S. Customs and Border Patrol ("CBP") issued uniform, national procedures1 for the use of licenses and exemptions for temporary imports and exports of defense articles.2 This development is significant given the lack of uniformity among CBP ports for such procedures and the confusion in processing temporary imports and exports. These guidelines also reinforce a November 2009 announcement made by the U.S. Department of State, Directorate of Trade Controls ("DDTC") regarding the use of exemptions for temporary imports under the International Traffic in Arms Regulations ("ITAR").
The procedures require relevant parties to present a hard copy of temporary import licenses (DSP-61) and temporary export licenses (DSP-73) to CBP at the time of entry, along with a hard copy of an Entry/Immediate Delivery Form (CBP Form 3461) and any other required documents. Like permanent export licenses issued by DDTC (DSP-5), temporary import and export licenses will be subject to decrementation, or the subtraction of the item’s value from the license.
The procedures also clarify, however, that relevant parties may continue to submit information to CBP electronically via the Automated Broker Interface (ABI) for temporary imports qualifying for an exemption under ITAR Section 123.4.
Information about subsequent exports of defense articles that were temporarily imported under an exemption (i.e., the return of a defense article to the foreign country from which it was sent) must be submitted as Electronic Export Information (EEI) filings via the Automated Export System (AES).
According to the procedures, when submitting an EEI for such articles, an invoice must be submitted that identifies the number of the import entry document on which the exemption was first declared -- a requirement already partially outlined in the ITAR. A CBP officer may request a copy of the import entry document to verify that the exemption was declared. If the exemption was not properly declared, the shipment will be detained. The language of the CBP procedures indicate that detention will be mandatory in that situation, rather than being within the discretion of the CBP officer. If CBP finds a violation, the exporter or its service provider must submit a voluntary disclosure and an application for a permanent export (DSP-5) before the defense article may be released under CBP’s fines, penalties, and forfeitures procedure.3
The procedures state that first-time violators of the above procedural requirements will be issued a warning and allowed to make necessary corrections.4 Subsequent violations, however, will not be considered "technical violations" and, thus, will not be forgiven with a warning by CBP.
DDTC's November 2009 Announcement
As stated above, CBP’s procedures reinforce DDTC's own November 2009 announcement regarding the entry procedures for temporary imports of defense articles. The announcement clarifies that parties must declare a temporary import exemption at the time of entry to allow exporters to claim the exemption at the time of subsequent export. Declaration is accomplished by annotating the appropriate CBP entry document with the exemption statement quoted in ITAR Section 123.4.5 This announcement is significant because substantial confusion (and ignorance) has existed regarding the requirement to annotate the appropriate CBP entry document with the exemption statement, even though that requirement has been codified as a regulation since 1993 and despite the relative ease with which the exemption may be declared.
Recognizing that foreign persons abroad may return a defense article to the United States, thereby causing a temporary import, without the knowledge of the U.S. recipient, DDTC’s announcement states that the U.S. recipient "should" investigate the nature and cause of the violation and determine if it had any responsibility for the violation. If not, the recipient may proceed with the subsequent export by filing a DSP-5, along with a transmittal letter that explains why the U.S. recipient had no responsibility for the violation and other relevant information about the temporary import. If the recipient was in any way responsible for the violation, the announcement suggests that a voluntary disclosure must be submitted to DDTC. After doing so, the exporter may proceed with the export by filing a DSP-5, along with a transmittal letter that references the disclosure.
Key Points from CBP and DDTC
Several key points can be discerned from the public statements made by CBP and DDTC, as follows:
- Procedural Requirements: Failure to follow the procedural requirements for temporary imports and exports, as provided in the two statements, obviously constitute violations. Accordingly, parties involved in temporary imports and exports should closely examine those requirements and ensure that their own procedures strictly conform to the requirements. If not, parties should adjust their procedures accordingly.
- Increased Enforcement: Given the uncanny timing of the statements, coordination between the two agencies on the issue of temporary imports and exports can -- and should -- be presumed. Coordination is likely to extend to enforcement of the procedural requirements -- the most obvious reason for ensuring strict conformance. The price of nonconformance can be high for relevant parties, exposing them to detention of the item being exported (or temporarily imported) and enforcement actions by both CBP and DDTC.
- Past Violations: CBP’s procedures states that it is "establishing uniform national procedures" for temporary imports and exporters, implying that a party’s past failure to conform to those procedures does not constitute a violation, or at least a violation of CBP’s procedures. However, DDTC’s announcement makes no similar implication as it relates to the ITAR. Rather, the language of DDTC’s announcement indicates that the requirement to properly claim temporary import exemptions at the time of entry was always a requirement. Indeed, as stated above, the requirement to do so is codified in the ITAR. Thus, exporters and their service providers should examine past temporary imports to determine whether any violations occurred and, if so, whether they should be self-disclosed to DDTC.
As stated above, the public statements from CBP and DDTC should be carefully heeded. The likely coordination between the two agencies indicates that they will increase enforcement of the procedural requirements discussed above. The most efficient and wisest approach for exporters and their service providers is to incorporate the procedural requirements for such shipments into their compliance procedures and processes.
1 Linked document is the version issued by CBP’s Houston Field Office to the general public, and not the version issued by CBP Headquarters.
2 22 C.F.R., Parts 120-130.
3 19 C.F.R., Part 171 (2009). See also U.S. Customs and Border Protection, Mitigation Guidelines: Fines, Penalties, Forfeitures and Liquidated Damages (Feb. 2004).
4 As provided in the version issued by CBP Headquarters.
5 Under ITAR Section 123.4(d)(1)(i), the following statement must be annotated on the appropriate CBP entry document: “This shipment is being imported in accordance with and under the authority of 22 CFR 123.4(a)[identify subsection].” In addition, the invoice or other appropriate documentation must include a complete list and description of the defense article(s) being imported, including quantity and U.S. dollar value. ITAR Section 123.4(d)(1)(ii).
For more information, please contact:
Larry Christensen, firstname.lastname@example.org, 202-626-1469
Claire Palmer, email@example.com, 202-626-1575