BIS - Proposed changes to EAR rules for exports involving "foreign principal party in interest" 

February 7: A proposed rule from the Bureau of Industry and Security (BIS), U.S. Commerce Department, was published in the Federal Register this week with an intention to clarify the responsibilities under the Export Administration Regulations (EAR) of those parties involved in export transactions when a "foreign principal party in interest" (FPPI) is responsible for the transportation of the items that are subject to EAR out of the United States.


The subject transactions are referred to as "routed export transactions."

In routed export transactions, the U.S. principal party in interest (USPPI) may retain the responsibility and authority under the EAR to determine license requirements and, if necessary, to apply for a license from the BIS.

Alternatively, if certain criteria are met, the USPPI may allow the FPPI, acting through a U.S. agent, to assume these responsibilities and authority.

Proposed rule

The BIS proposed rule [PDF 237 KB] would:

  • Replace the term "routed export transaction" with a new term that would better define certain transactions of particular interest to BIS, specifically a "foreign principal party controlled export transaction"

  • Refine certain procedures for creating a "foreign principal party controlled export transaction"

  • Facilitate enhanced public understanding of the EAR by eliminating perceived discrepancies between the EAR and the Census Bureau’s foreign trade regulations with respect to the definition of a "routed export transaction"

  • Clarify the responsibilities of each party engaged in a transaction subject to the EAR and provide clearer instructions for USPPIs to delegate responsibility for license requirement determinations

Comments to the proposed rule changes are due by April 7, 2014.

For more information, contact a professional with KPMG’s Trade & Customs practice:

Douglas Zuvich

(312) 665-1022

Andrew Siciliano

(631) 425-6057

John L. McLoughlin

(267) 256-2614

Todd R. Smith

(949) 885-5617

Luis A. Abad

(212) 954-3094

Amie Ahanchian

(202) 533-3247

Or your local KPMG Trade & Customs professional.

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