Exporting From the USA: Who can be an exporter according to the USSPI rule?
The end of 2021 saw new record highs in U.S. exports as never seen since 1950. The increase in export trade can be attributed to increased foreign demand by countries like Mexico, Brazil, and South Korea.
The prosperity of USA international trade has consolidated the country’s rank as the largest trading nation and second-largest goods exporter the world over. Not only that, the lucrative export trade has attracted more U.S. sellers and buyers to join the export trade.
If you plan to ship items from the USA, here's what you need to know about exporting from the USA and who an exporter is.
So, what are exports?
Exports are any intermediate goods, final goods, resources, or services that sellers sell to buyers in a foreign country.
When a USA seller receives a purchase order from a foreign buyer in another country, fulfills the order, and ships the goods abroad, the goods in question become exports.
The seller becomes an exporter.
Who is an exporter?
An exporter is a person or legal entity that government authorities or customs authorize to send goods from one country to another.
An exporter may not be the actual seller of the goods. They can be an intermediary or agent that the seller uses to send the goods to the buyer's country.
So, who is a U.S. Principal Party in Interest (USPPI)?
The USPPI is a natural person or company in the United States of America that receives the primary benefit, monetary or otherwise, from any export transaction.
Apart from being the chief beneficiary of the export transaction, the USPPI is responsible for declaring or registering the export using the Automated Export System (AES) to the Census Bureau. The USPPI's role is to ensure that all parties in the export process receive all the necessary documentation or information about the exports.
The USSPI can be any of the following parties;
• A U.S. seller: The wholesaler or distributor of goods for export
• A U.S. manufacturer who sells goods for export
• A U.S. order party: This is the person who facilitates the deal between the U.S. seller and foreign buyer. The order party is the one who receives the order for the goods for export.
• A U.S. customs broker: The person or legal entity that obtains and ensures the clearance of goods for export through customs.
• A foreigner: A foreign entity can become a USSPI if physically present in the U.S. to purchase the goods for export.
So, who can be an exporter according to the USSPI rule?
According to the Census Bureau, an exporter is a person or organization residing in the USA with the authority of a principal party in interest to determine and control the sending of goods/services out of the U.S.
From the USPPI rule, an exporter can be;
A U.S. seller
You are an exporter as long as you sell goods to a person or entity outside the U.S. When you get a purchase order from a foreigner outside the USA and agree to fulfill the order, the American government considers you an exporter.
An exporter can be a wholesaler or a distributor supplying goods to areas outside the U.S.
A U.S. manufacturer
The USA is one of the few countries famous for producing and selling high-quality goods. And because of this, there is high demand for U.S. products from many countries.
Many factories or companies create or make goods for outside consumption. Examples of such goods include electronics, apparel, and other consumer goods.
As long as you are a U.S. manufacturer who produces goods for export, you are an exporter.
A U.S. order party
The U.S. order party is the intermediary (anti person or legal) that directly negotiated the contract between the U.S.-based seller and the foreign buyer.
The order party is the one who received the order for the export of the goods. In this instance, the responsibility of sourcing the products, acquiring the right seller or manufacturer, and exporting the goods falls on the order party.
A foreigner can become an exporter when they come to the USA to buy or obtain the goods.
To better understand this, let’s use this illustration.
Suppose a company in Uganda sends a representative to buy electronics from company A in the USA. The Ugandan representative will come to the U.S. and purchase the electronics from company A. The representative also authorizes company A in the USA to move the electronics on their company's behalf.
In this case, the Ugandan company representative who was physically present in the USA and purchased the computers in the USA is the USPPI. And sometimes the exporter.
Note: These are some facts worth noting on the distinction between the USPPI and the exporter;
• The U.S. Census Bureau's Foreign Trade Statistics Regulations (FTR) defines the exporter as the USPPI.
• An exporter can always be a USPPI, but the USPPI cannot always be an exporter.
• The difference between these two terms (exporter and USPPI) was brought about by the Custom's and Border Patrol (CBP)
What do you need to become an exporter?
You can become a USA exporter in six simple steps.
• Identify items to export (the market opportunity)
• Find out the viability of the market (assess the export risks)
• Get an export strategy (market entry)
• Acquaint yourself with all the leading players in the export process
• Get export training
• Start exporting
To successfully become an exporter, you'll need to comply with the Export Administration Regulations (EAR) fully. The EAR are rules that regulate and control the export of goods and services from the USA. These rules are regulated by the Bureau of Industry and Security (BIS) under the Department of Commerce.
Documents required when exporting from the USA.
Exporting from the USA is relatively easy. It requires minimal paperwork. As an exporter, these are some of the documents you’ll need when it comes to selling and shipping items out of the USA.
An export license is a legal document by the government that permits you (the exporter) to conduct a specific export transaction.
Is an export license mandatory?
No. As it happens, almost 95% of all goods shipped from the USA to foreign countries/buyers don’t require an export license. As long as you deal in products that don’t fall in the licensing category, you can start exporting from the USA without an export license.
Export licenses are required in specific transactions. They depend on the type of product to be exported, the country it is going to, the end-user, and the purpose of that product.
Exports that require licenses are subjective to different licensing agencies. The U.S. Dept of State's Directorate of Defense Trade Controls and the Bureau of Industry and Security (BIS) are in charge of licensing most of the country's exports. But when it comes to military goods, it is the Department of Defense Trade Controls to license these goods.
Note: it is the responsibility of the exporters to find out whether or not their merchandise falls in the licensing category.
Pro Forma Invoice
The pro forma invoice is a declaration of intent by the seller to provide the goods/services to the buyer at a specified date and price.
The pro forma invoice contains details of the order such as the product description, quantity, weight, total amount payable, and other information about the transaction. It is a price quotation document or an estimated invoice that the seller uses to request payment from a buyer before the goods are dispatched or supplied.
You can only send the pro forma invoice to a client who has committed to buying from you to confirm pending details. Once the customer agrees to everything, the seller delivers the goods with a formal invoice.
The commercial invoice is a bill for the goods sold from the seller to the buyer. It is a legal document binding the seller (exporter) and the foreign buyer. It details the goods sold and the money to be paid.
A commercial invoice is vital in determining custom duties. The government uses it to value the exports and assess the relevant export duties on a shipment.
Every shipment has a packing list. The packing list documents everything about the packaged goods in the shipment.
It lists the nature of the items, the weights, and measurements of each carton, the destination port, the name, address, and country of the consignee/receiver of the goods.
The packing list helps custom officers know what is in the shipment. And this helps them identify what items require licenses, what carton to inspect, and ensure that the consignment is lawful and safe.
Can you export items from the USA to any country in the world?
No. There are some countries that the U.S. government placed bans on. The USA government placed sanctions against Iran, Cuba, North Korea, and Syria.
As an exporter, you should carry out your due diligence to determine which countries you can lawfully transact with.
You have to abide/comply with all the applicable regulatory requirements set by the federal bodies that place these bans and regulations on certain exports to these countries.