This article will clarify what USPPI means in trade, explore its specific responsibilities, and highlight the distinctions between USPPI and exporter, helping you navigate the complexities of exporting from the United States.
What is USPPI?
In 2000, the U.S. Census Bureau revised the Foreign Trade Regulations (FTR) and substituted the term “exporter” with the new designation “USPPI.”
USPPI stands for U.S. Principal Party in Interest, which refers to the person or legal entity in the United States that receives the primary benefit, monetary or otherwise, from an export transaction.
Who Can Be a USPPI?
Several parties can potentially be designated as the USPPI in an export transaction:
- U.S. Seller: A wholesaler or distributor of merchandise for export.
- U.S. Manufacturer: If selling their own manufactured goods for export.
- U.S. Order Party: The party that directly negotiates between the U.S. seller and foreign buyer and receives the order for the export of the merchandise.
- Foreign Entity: If physically present in the United States when items are purchased or obtained for export.
- U.S. Customs Broker: In cases where they arrange import clearance of goods that are subsequently exported without change or enhancement.
To better understand who can be a USPPI, let’s look at some examples:
U.S. Manufacturer as USPPI: Company A in the United States manufactures cups and sells them directly to a buyer in China. Company A is the USPPI because it receives the primary benefit from the export transaction.
U.S. Seller as USPPI: Company B in the U.S. buys cups from Company A and then sells them to Company C in China. Company B is the USPPI because it received the primary benefit from the foreign buyer.
Foreign Entity as USPPI: A representative from a Chinese company is physically present in the U.S. to purchase electronics. This representative becomes the USPPI because they were in the U.S. when the goods were purchased for export.
U.S. Company Providing Value-Added Services: Company A in the U.S. stores bamboo stalks for a foreign company and converts them into fishing rods. Company A became the USPPI because it changed the classification of the goods by adding value.
Who Cannot Be a USPPI?
Here is a list of entities that cannot be considered a USPPI:
- Freight Forwarders: Typically, a freight forwarder cannot be listed as the USPPI unless they meet specific criteria.
- Consolidators: Consolidators are not eligible to be USPPIs in most cases.
- Foreign Entities: Unless physically present in the United States when purchasing or obtaining goods for export, foreign entities cannot be USPPIs.
However, there are some exceptions to these rules:
For example, a freight forwarder is acting as a U.S. order party by directly negotiating between a U.S. seller and a foreign buyer and receiving the order for export; they can be considered the USPPI.
Furthermore, a customs broker can be listed as the USPPI if a U.S. customs broker imports electronic components on behalf of a foreign company, and these components are then exported without any modifications.
A foreign entity can be the USPPI only if they are physically present in the United States when purchasing or obtaining the goods for export.
For example, a representative from a Chinese company visits the U.S. and purchases machinery while physically present in the country. In this case, the Chinese company (through its representative) can be considered the USPPI for that export transaction.
USPPI vs. Exporter: What’s the Difference?
While the terms are often used interchangeably, a USPPI is the party that benefits most from the export transaction, while an exporter is the party that has the authority to control the export, and these are not always the same entity.
An exporter is defined as “the person or organization in the United States who has the authority of a principal party in interest to determine and control sending of items out of the United States.”
In general terms, a USPPI falls under the category of an exporter, but not all exporters are USPPIs.
What are the Responsibilities of USPPI?
Filing the Electronic Export Information (EEI)
- The USPPI is responsible for creating conformity to the Electronic Export Information (EEI) through the Automated Export System (AES) unless they have authorized an agent to file on their behalf.
Ensuring Compliance with Export Regulations
- The USPPI must ensure compliance with all applicable U.S. export control laws and regulations, including those enforced by the Bureau of Industry and Security (BIS), the Directorate of Defense Trade Controls (DDTC), and the Office of Foreign Assets Control (OFAC).
- This includes determining the correct Export Control Classification Number (ECCN) for their goods, obtaining necessary export licenses, and screening parties involved in the transaction against restricted and denied party lists.
Recordkeeping
- The USPPI is required to maintain accurate records of all export transactions for at least five years, including copies of the EEI, export licenses, shipping documents, and any correspondence related to the export.
Responsibilities in a Routed Transaction
- In a routed export transaction, the FPPI may authorize or agree to allow the USPPI to prepare and file the EEI. If the FPPI agrees, the USPPI must provide the FPPI’s authorized U.S. agent with specific export and licensing information to assist in preparing the EEI.
What Documents Should USPPI Prepare?
Shipper’s Letter of Instruction (SLI): This document provides clear instructions to the freight forwarder or authorized agent about the export shipment. It should include details like the USPPI’s name, address, EIN, point of origin, Schedule B number, commodity description, quantity, value, and export control information.
Power of Attorney (POA) or Written Authorization: If the USPPI is authorizing an agent to file the Electronic Export Information (EEI) on their behalf, they need to provide a power of attorney or written authorization to the agent
Electronic Export Information (EEI): The USPPI is responsible for either preparing and filing the EEI themselves or providing accurate and timely export information to their authorized agent for filing. The EEI is filed through the Automated Export System (AES) and includes detailed information about the shipment.
Commercial Invoice: This document should be consistent with the information provided in the SLI and EEI.
Export License or License Exception documentation (if applicable): If the shipment requires an export license or qualifies for a license exception, the USPPI should prepare the necessary documentation.
Frequently Asked Questions
What distinct roles do the USPPI and FPPI have in international trade?
The USPPI is the party that benefits from exports, usually located in the U.S. The FPPI (Foreign Principal Party in Interest) is the overseas entity that buys the goods.
What is the significance of a USPPI reference number in exports?
The USPPI reference number helps track and manage your export filings. It’s used in the Automated Export System (AES) to ensure that all required information is correctly reported.