Census Trade Regulations Branch on Ultimate Consignee

The U.S. Census Bureau’s Trade Regulations Branch regularly receives questions regarding who the Ultimate Consignee is in an export transaction. The questions become more complicated when an end user and the Ultimate Consignee are two different entities, and they reside in two different countries.

In a two-part posting, Gerry Horner, Chief of the Trade Regulations Branch addresses some of your frequently asked questions on the Ultimate Consignee and the end user based on the Foreign Trade Regulations (FTR).

The reporting of the Ultimate Consignee on the EEI becomes more complicated when a known end user and the Ultimate Consignee are two different entities, and they reside in two different countries. The goal of this blog is to answer additional questions on the Ultimate Consignee and the end user based on the Foreign Trade Regulations (FTR).

Part I [link] 

The U.S. Census Bureau’s Trade Regulations Branch regularly receives questions regarding who the Ultimate Consignee is in an export transaction. The questions become more complicated when an end user and the Ultimate Consignee are two different entities, and they reside in two different countries. The goal of Part I of this blog is to answer some of your frequently asked questions on the Ultimate Consignee and the end user based on the Foreign Trade Regulations (FTR).

FTR Section 30.1 defines the Ultimate Consignee as “the person, party, or designee that is located abroad and actually receives the export shipment. This party may be the end user or the Foreign Principal Party in Interest.”

FTR Section 30.6(a)(3) instructs the filer to “report in the Electronic Export Information (EEI) the Ultimate Consignee as known at the time of export. For shipments requiring an export license including shipments to international waters, the Ultimate Consignee reported in the Automated Export System (AES) shall be the person so designated on the export license or authorized to be the Ultimate Consignee under the applicable license exemption or exception in conformance with the Export Administration Regulations (EAR) or International Traffic in Arms Regulations (ITAR), as applicable.”

Let’s look at a few practical examples involving reporting of the Ultimate Consignee:

1. The first and most common scenario occurs when the U.S. Principal Party in Interest (USPPI)/U.S. seller has one Foreign Principal Party in Interest (FPPI)/foreign buyer who is also the only company abroad actually receiving the goods for consumption.
   
   The FPPI/foreign buyer is the party located abroad actually receiving the goods for consumption. Therefore, that party is the Ultimate Consignee.
   
   
2. In this second scenario, the USPPI has knowledge of the FPPI/foreign buyer who is receiving the goods and is in the business of further distributing or reselling the goods to other parties. For competitive reasons, the FPPI/foreign buyer refuses to disclose its customers/end users to the USPPI, even upon request by the USPPI.
   
   It shows due diligence when the USPPI requests the name and address of the end user(s) from the FPPI/foreign buyer, but there is no guarantee that the FPPI/foreign buyer will disclose its customers. This is where the Ultimate Consignee Type becomes very important to the federal government. In this scenario, the AES filer reports reseller/distributor as the Ultimate Consignee Type because the USPPI has the knowledge of the FPPI/foreign buyer’s intent and business practice to resell/distribute the goods. Since there is only knowledge of the FPPI/foreign buyer receiving the goods, report the FPPI/foreign buyer as the Ultimate Consignee. 
   
   
3. In this third scenario, the FPPI/foreign buyer has disclosed the country of the end user(s) to the USPPI. Therefore, the USPPI has knowledge of the actual country of destination, but still does not know the name(s) of FPPI/foreign buyer’s customer(s). 

Since at the time of export there is only knowledge of the FPPI/foreign buyer who is receiving the goods, the USPPI reports the FPPI/foreign buyer as the Ultimate Consignee, reseller/distributor as the Ultimate Consignee Type, and the known country of the end user (the country of the FPPI/foreign buyer’s customer) as the Country of Ultimate Destination. 

In Part II of this blog, we’ll dive into a few more complex scenarios to provide greater clarity on defining and correctly reporting the Ultimate Consignee.

Part II [link

On Sept. 7, 2023, the Trade Regulations Branch of the U.S. Census Bureau published Part I of this Global Reach Blog describing how to report the Ultimate Consignee on the Electronic Export Information (EEI) in the Automated Export System (AES). The reporting of the Ultimate Consignee on the EEI becomes more complicated when a known end user and the Ultimate Consignee are two different entities, and they reside in two different countries. The goal of this blog is to answer additional questions on the Ultimate Consignee and the end user based on the Foreign Trade Regulations (FTR).

Let’s look at a few more practical examples involving reporting of the Ultimate Consignee.

1.      In this scenario, which is commonly called a “drop shipment,” an authorized agent facilitates the export and prepares and files the EEI on behalf of its customer – the Foreign Principal Party in Interest (FPPI)/foreign buyer. The FPPI/foreign buyer could also authorize the U.S. Principal Party in Interest (USPPI) to ship the goods directly to the end user and file the EEI. In these routed export transactions, the FPPI/foreign buyer instructs either the authorized agent or the USPPI to deliver (“drop”) the goods to a foreign party located abroad who is different from the FPPI/foreign buyer.

The foreign party located abroad who actually receives the goods is the Ultimate Consignee.  Although the FPPI/foreign buyer pays the USPPI for the goods being exported and selects the authorized agent/USPPI to file on its behalf in such routed export transaction), the FPPI/foreign buyer will not be shown on the EEI in the AES, as the goods are being shipped directly to the Ultimate Consignee.

2.     In this scenario, at the time of export, the USPPI knows the FPPI/foreign buyer who initially receives the goods and the end user who subsequently buys the goods from the FPPI/foreign buyer. To determine the Ultimate Consignee, answer the following questions:

a.    Is the FPPI/foreign buyer simply passing the goods to the end user (effecting delivery to the end user)?

If the FPPI/foreign buyer simply receives the goods and passes them to the end user, the FPPI/ foreign buyer is an intermediate consignee and should be shown as such on the EEI. The FPPI/foreign buyer clearly is effecting delivery to the known end user, and the known end user at the time of exportation actually receiving the goods is the Ultimate Consignee.

b. Is the FPPI/foreign buyer storing the goods in inventory?

If the FPPI/foreign buyer receives the goods and places them in inventory to be shipped at a later date, that FPPI/foreign buyer is the Ultimate Consignee because there is no guarantee that the goods will be indeed shipped to the end user (known or unknown). 

c.     Is the FPPI/foreign buyer making a characteristic change/adding value to the goods?

If the FPPI/foreign buyer receives the goods and makes a characteristic change or adds value to the goods, the FPPI/foreign buyer is the Ultimate Consignee because the goods to be shipped to an end user are not the same goods in the export transaction from the United States.

3.      In this last scenario, the export is controlled either under the Export Administration Regulations (EAR) by a license or license exception or under the International Traffic in Arms Regulations (ITAR) by a license or license exemption. 

The FTR says, “For shipments requiring an export license…, the Ultimate Consignee reported in the AES shall be the person so designated on the export license or authorized to be the Ultimate Consignee under the applicable license exemption or exception in conformance with the EAR or ITAR.” This can be confusing because most licenses generally include entries for the purchaser, intermediate consignee, Ultimate Consignee, and end user, but the AES does not have entries for purchaser or end user. Is the FTR saying that the party on the license shown as the Ultimate Consignee should always be reported in the AES? 

Unlike a license, there is no application process to export goods under a license exemption and license exception, so it is the responsibility of the “exporter” to ensure the correct parties are reported on the EEI in accordance with the license exemptions and license exceptions.

The Census Bureau’s guidance on who to report when the export is controlled by the EAR or ITAR is the same, regardless of whether the export is authorized under a license, license exemption or license exception. The Census Bureau’s guidance is to report the Ultimate Consignee on the EEI in the AES the same way it is reported in scenarios in both Part I and Part II of this blog. In doing so, you are reporting based on the knowledge at the time of exportation on who will receive the goods and to which country those goods are ultimately destined. In this scenario, you may report the Ultimate Consignee on the EEI that is different than the party in the Ultimate Consignee recorded on the license. This is acceptable because the note to FTR 30.3 says that “due to the differences in export reporting requirements among federal agencies, conformity of documentation is not required in the FTR.” 

In Part III of this blog, we’ll dive into reporting the correct value when the FPPI/foreign buyer is different than the Ultimate Consignee who actually receives the goods.

For more information regarding Ultimate Consignee, please refer to FTR Sections 30.1, 30.6(a)(3), and 30.6(b)(2). For questions, please contact the Trade Regulations Branch at 1-800-549-0595, Option #3, or email at <emd.askregs@census.gov>.