1 SUPPORTING STATEMENT U.S. Department of Commerce

U.S. Census Bureau Automated Export System (AES) Program

OMB Control No. 0607-0152

A. Justification

1. Necessity of the Information Collection

The clearance under OMB Number 0607-0152 c overs the AES (Attachment A) and related documents (e.g., Letter of Intent, AES Direct Registration and Certification Quiz [Attachments B, C, and D]). With this submission, the Census Bureau is requesting

continued clearance with revisions for th e Automated Export System (AES) program.

The Census Bureau requires mandatory filing of all export information via the AES. This requirement is mandated through Public Law 107-228 of the Foreign Trade Relations Act

of 2003. This law authorizes the Secretary of Commerce with the concurrences of the Secretary of State and the Secr etary of Homeland Security to require all persons who file export information according to Title 13, United States Code (U.S.C.) , Chapter 9, to file such information through the AES.

The AES record provides the means for collecting data on U.S. exports. Title 13, U.S.C., Chapter 9, Sections 301-307, ma ndates the collection of these data. The regulatory provisions for the collection of thes e data are contained in the Foreign Trade Regulations (FTR), Title 15, Code of Federal Regulations (CFR), Part 30. The official export statistics collected fr om these tools provide the basic component for the compilation of the U.S. position on merchand ise trade. These data are an essential component of the monthly totals provided in the U.S. Internationa l Trade in Goods and Services Press Release, a pr incipal economic indicator and a primary component of the Gross Domestic Product (GDP).

These data collected from the AES record ar e also used for export control purposes under Title 50, U.S.C., Export Administration Act, to detect and prevent the export of certain items by unauthorized parties or to unaut horized destinations or end users.

Since 2007, the Census Bureau and the U.S. Customs and Border Protection (CBP) have implemented the following enhancements to the AES: (1) modified Bureau of Industry and Security Export Control Classification Numbers (ECCNs) ; (2) developed country of destination drop down menu selection box; (3) developed verify messages for shipments destined to Iran, North Korea, Sudan, Cuba , Pitcairn Island, Icel and and Nicaragua; (4) modified security requirements for AES Direct accounts; (5) eliminated the Social Security Number (SSN) as a valid identifica tion type; (6) developed a shipment manager screen; (7) added warnings to filers when they are submitting shipments in the education/test region and when they are re -using a Shipment Reference Number; (8) upgraded the AES Broadcast messaging system to a self-managed software with almost immediate dissemination; and (9) upgraded AES Direct servers and system to a more2 current and scalable infrastructure. With the publication the Final Rule, Foreign Trade Regulations (FTR): Mandatory Automated Export System Filing for all Shipments Requiring Shipper’s Export Declaration (S ED) Information: Proposed Substantive Changes and Corrections, the following enhancements will be implemented in the AES: (1) develop ultimate consignee type drop down menu selection box; and (2) develop

license value fields for licensed shipments only.

The revisions should not affect the average three-minute response time for the completion of the AES record. The additional time requi red to complete the new fields in the AES record is offset by constant advances in te chnology and heightened knowledge of filers since the implementation of mandatory electronic filing in July 3, 2008.

The changes identified in this Final Rule will require the addition of two data elements in the AES. The added data elements include the ultimate consignee type and the license value. The ultimate consignee type is a manda tory data element and is selected from a drop down menu based on the knowledge the exporte r has at the time of filing. If the ultimate consignee types listed do not apply or if the ultimate consignee type is unknown, the filer will not incur any additional burden because the u ltimate consignee type field

will have “Other” and “Unknown” as selections. The next data element added is the license value, which is a conditional data elem ent. This value will only be required if the shipment contains a licensable commodity. Currently, less than two percent of records filed require a license. Co mpleting this field will not affect respondent burden significantly since the additional field affects only a small percentage of the shipments that are required to be reported in the AES.

In addition to the two new data elements added to the AES, filers will be required to file in the AES when exporting used self-propelled vehicles. The requirement to file in the AES for all used self-propelled vehicles ap plies regardless of va lue or country of destination. Currently, four percent of records filed in the AES are for used selfpropelled vehicles. The Census Bureau does not capture statistics for used self-propelled vehicles valued less than $2,500. The Bureau of Transportation St atistics published the national transportation statistic s in 2011 and stated that the average cost of a used passenger vehicle car was $8,786. By using these statistics, it could be conjectured that most used vehicles are currently being captu red in the AES. However, with the new requirement to file all used self-propelled vehicles, we anticipate that the number of filings will slightly increase. Although additi onal filings will be re quired it is critical to capture this information for the purposes of export control under Title 50, U.S.C., Export Administration Act, to detect and prevent the export of certain items by unauthorized parties or to unauthorized de stinations or end users.

The Census Bureau will allow the trade comm unity to continue using the current AES until the implementation date identified in the Final Rule, Foreign Trade Regulations (FTR): Mandatory Automated Export Sy stem Filing for all Shipments Requiring Shipper’s Export Declaration (SED) Inform ation: Proposed Substantive Changes and Corrections. Implementation of the revised FT R is 270 days from the effective date of

the Final Rule.3 2. Needs and Uses

The information collected via the AES show s what is being exported (description and commodity classification number), how much is exported (quantity, shipping weight, and value), how it is being exported (mode of transport, exporting carrier, and whether containerized), from where (s tate of origin and port of export), to where (port of unloading and country of ultimate destination) , and when a commodity is exported (date of exportation). The identification of the U. S. Principal Party in Interest (USPPI) shows who is exporting goods for consumption (contr ol purposes), while th e USPPI and/or the forwarding or other agent information pr ovides a contact for verification of the

information.

The information is used by the Federal Govern ment and the private sector. The Federal Government uses every data element on the AES record for statistical purposes, export control, and/or to obtain data to a void taking additional surveys.

Data collected from the AES serves as the o fficial record of export transactions. In addition, the mandatory use of the AES enables the U.S. Government to produce more accurate export statistics. Currently, the manda tory use of the AES allows the Bureau of Industry and Security (BIS) and the CBP to enforce the Export Administration Regulations for the detection and prevention of exports of high technology commodities to unauthorized destinations; the enforcement of the International Traffic in Arms Regulations (ITAR) by the U.S. Department of State; and the validation of the Kimberly

Process Certificate for the e xport of rough diamonds. The Ce nsus Bureau delegated the authority to enforce the FTR to the BIS’s Office of Export Enforcement along with the Department of Homeland Security’s ( DHS) CBP and Immigrations and Customs Enforcement (ICE).

Other Federal agencies use these data to develop the components of the merchandise trade figures used in the cal culations for the balance of payments and GDP accounts to

evaluate the effects of the va lue of U.S. exports; to plan and examine export promotion programs and agricultural development and as sistance programs; and to prepare for and assist in trade negotiations under the Ge neral Agreement on Tariffs and Trade.

Collection of these data also eliminate the need for conducting additional surveys for the

collection of information as the AES shows th e relationship of the parties to the export transaction (as required by the Bureau of Econo mic Analysis). These AES data are also used by the Bureau of Labor St atistics as a source for deve loping the export price index and by the U.S. Department of Transporta tion for administering the negotiation of reciprocal arrangements for transportation faci lities between the United States and other countries. A collaborative effort amongst th e Census Bureau, the National Governors’

Association and other data user s resulted in the development of export statistics requiring the state of origin to be reported on the AE S. The information collected enables state governments to focus activities and resources on fostering exports of the kinds of goods that originate in their states.4 Export statistics collected from the AES aid private se ctor companies, financial institutions, and transporta tion entities in conducting ma rket analysis and market penetration studies for the development of new markets and market-share strategies. Port authorities, steamship lines, steamship freight conferences, airlines, aircraft manufacturers, and air transpor t associations use these data for measuring the volume and effect of air or vessel shipments and the need for additional or new types of facilities.

The implementation of quality standards is an integral part of the pre-dissemination review of the information disseminated by th e Census Bureau (fully described in the Census Bureau’s Information Quality Guidelin es). In addition, information quality is incorporated into the clearance process required by the Paperwork Reduction Act.

3. Use of Information Technology

The AES was developed jointly by the Census Bu reau and the CBP. It is an information gateway for both the Census Bureau and the CBP to improve the timeliness and accuracy of export trade statistics, improve customer service, ensure compliance with and enforcement of export laws, and to provide for paperless reporting of export information.

There are 45,443 AES filers submitting export information for 275,843 USPPIs. These AES submissions represent approximatel y 1,516,859 export records monthly which is 100 percent of non-Canadian expor t transactions. The USPPIs are not required to submit an AES record for exports to Canada, except for shipments that are license-controlled, contain rough diamonds, used self-propelled vehicles, or are en route through Canada destined for a third country. Under th e terms of a Memorandum of Understanding (MOU) with Canada, the Census Bureau uses Canadian import data as a replacement for U.S. export information. Including automa ted Canadian data, the Census Bureau

receives all of its information from automa ted sources. The AES improves the accuracy and timeliness of processing trade statistics. In the AES, system ed its prohibit entry of

invalid information and corrections must be made before these data are accepted and processed. As a result, AES records have less than a five percent error rate. With the regulatory changes reflected in this rule, the average response time for filing an AES

record remains three minutes.

4. Efforts to Identify Duplication

The Census Bureau maintains ongoing contac t with other federal agencies involved in export or export control functions. The Cens us Bureau has representatives on various International Trade Data System working groups to ensure that expor t data collected by the Census Bureau are not duplicated by other agencies and that other agency use of the export information collected from the AES a dheres to the Census Bureau statutory and regulatory guidelines on access, use, release, security, and confid entiality. In addition, the Census Bureau keeps up with policy a nd regulatory changes being made by other federal agencies to ensure that they comp ly with the guidelines listed above and do not duplicate information currently being co llected by the Census Bureau.5 5. Efforts to Minimize Burden

The Census Bureau makes available the AES Direct from a downloadable file on the

Web. The AES Direct is a free Internet-based program fo r filing information to the AES.

The AES Direct provides online registration, tutorial, certification, and a ssistance in filing export information electronically. It also provides users the capability to recall a previous shipment or record for use as a template for the creation of subsequent shipment records.

The AES PcLink is free software that enables users to create the AES information off-line at their own personal computer.

In addition, the Census Bureau established the AES Weblink . The AES Weblink is another

enhancement to the AES Direct . The AES Weblink is the AES Direct application that receives data from another Internet applicati on (i.e. the filers own shipment application)

and facilitates the transmission of the filer’s data to the AES via the AES Direct . The

AES Weblink checks for the data elements required for its initiation, requests missing data not supplied by the filer’s existing Internet application, and submits these data to the

AES Direct for validation and tran smission to the AES.

The following burden reducing in itiative for the AES filers have also been implemented: (1) The template manager enables all users within a company’s account to search for, create, update, copy, and delete templates. In addition, companies are able to store up to 100 templates per account (2) The shipment manager allows companies to perform

customized audits of AES records filed with in the past five y ears (3) A pull down menu which displays full country names makes it easie r for users to select the correct Country of Destination (4) acco unt settings in AES Direct have been modified to allow automatic password retrieval and new account roles allow for simplified account management.

Information is constantly being gathered from the AES for use by the CBP, the Census Bureau, other federal agencies, and the expor t community. The AES continues to expand and is the central point th rough which electronic export information is filed. A centralized electronic system of data collection enables mo re efficient reporting, while reducing the burden in filing and increasi ng the movement of U.S. exports.

Export information and transportation data collected from the AES provides complete, timely, and accurate data. This is accomplishe d by using the edit fields that are in place in the AES. For example, if an error occu rs while filing export information, it must be corrected immediately while th e filer is inputting the inform ation, otherwise the system will not verify that the trans action is valid and accepted.

Several agencies including the Census Bur eau, CBP, BIS, and the U.S. Department of State (State Department) have been involve d in an extensive outreach and education effort to ensure that the trade community is aware of the export f iling requirements in an effort to improve compliance. The Census Bureau also partners with private organizations and trade associations to provide additional educational opportunities to those involved in the expor t process. Additionally, the Census Bureau has ongoing efforts to keep the trade community informed and up to date regarding new trade trends6 and regulatory changes that can affect the co mpany’s operations and business practices. As a result of these efforts, the following tools have been made available: (1) export training videos; (2) the Global Reach blog; (3 ) sample shipments which serve as guides on how to file the AES record and displays completed AES records with all data elements reported and defined; and (4) updated user guides which detail proper procedures for creating the AES record, sending the AES record to the AES, retrieving the AES record to verify and/or update export information, printing the AES record and deleting the AES record. Currently, these efforts have resu lted in increased compliance and improved filing of AES records.

Under the terms of a MOU signed by the CBP, the Census Bureau, Statistics Canada, and Canadian Customs, the United States can subs titute Canadian import statistics for U.S. export statistics. Conversely, the MOU enables Canada to substitute U.S. import statistics for Canadian exports to the United States. This exchange eliminates the filing of over ten million AES records annually.

The average response time for the completi on of the AES record is three minutes. Advances in technology, increases in us er knowledge, and additional initiatives, including enhancements to the AES aid in reducing the reporting burden to AES filers who are subject to the additional filing re quirements. Mandatory reporting through the AES has provided a decrease in response burden through automation. Repetitious information can be entered automatically, and common information required by different agencies would be entered only once.

6. Consequences of Less Frequent Collection

Less frequent collection of e xport statistics would result in the loss of current monthly

released data. This would a dversely affect the release of the current monthly goods and services trade balance figures , and if delayed enough, could affect the GDP estimate.

Should the Census Bureau begin to release th e official export stat istics on a quarterly basis, information currently released around 40 days after the month of export would be delayed an additional 80 days. This could greatly impact the merchandise trade balance, produced by the Federal Government, which is one of the most sensitive and closely watched of the principal economic indicat ors. The Council of Economic Advisors, Congress, the Trade Policy Agencies, the pr ess, and financial markets focus great attention on the monthly release. Slight move ments in the deficit a ffect public policy, financial decisions, Congression al actions, and market moveme nts. The trade deficit is one of the most important economic issues of recent years.

Separating the AES record from the actua l export movement of a shipment would

disallow the use of the AES record as a tool to be used for export control purposes by the CBP, the ICE, the BIS, the State Department, or any other federal agency utilizing the information for detecting and preventing the export of high technology commodities to

unauthorized destinations.7 7. Special Circumstances

The collection of export information from the AES record is conducted in a manner consistent with the OMB guidelines except that the response is required more frequently than on a quarterly basis. E xporters must present the Intern al Transaction Number (ITN) or exemption statement to the exporting carrier prior to every export. In addition, where the CBP requires that a manifest be filed, al l required ITNs, exemption statements, etc. must accompany that manifest (19 U.S.C.). This is due to the fact that the information is necessary to obtain current da ta for the monthly balance of trade, and is used on an ongoing basis by the CBP, the BIS, and the Stat e Department for export control purposes.

8. Consultations Outside the Agency (Census Bureau)

The Census Bureau has established a ma iling list of more than 90,000 individuals and businesses that export. We inform these cont acts of any developments or changes within these data collection program and frequently receive feedback by email, telephone, or in writing from these entities. The Department of Commerce and Census Bureau Regional offices maintain a rapport with members of th e local trade community and refer them to the Census Bureau headquarters whenever necessary. These are another source of additions to our mailing list.

The Census Bureau’s Foreign Trade Divisi on maintains a Website and blog that is accessible over the Internet. It provides up-to-date information on all major developments relating to the AES record provi sions. These sites are used extensively by the trade community and other federal agencies to keep informed on current export trade policies as they pertain to developments regard ing the preparation and filing of exports.

The Census Bureau regularly participates in seminars and co nferences sponsored by various trade organizations, such as th e National Customs Brokers & Forwarders Association of America, the Joint Industry Group, the Natio nal Council on International Trade & Development, the Industry Sector Advisory Committees, and others. These

seminars and conferences educate the trade community of the expor t filing requirements as it pertains to the FTR, Title 15 CFR, Part 30. These seminars and conferences address numerous topics such as how to maintain compliance with the U.S. export regulations, accurately preparing the AES record, f iling through the AES, and classifying commodities. Although these programs are not specifically designed to elicit public response, the seminars do provide a means of obtaining the public’s views on statistical regulations governing exports. Comments received at thes e various conferences and seminars are on an individual basis, informal in nature and not for building a consensus. Participation in these conferences enable s the Census Bureau to keep the trade community informed of current regulatory policy decisions as well as allows for the exchange of information between the trade community and the Census Bureau on actions that we propose to take that would ha ve an impact on the trade community.

The Census Bureau also conducts the AES PcLink workshops around the country to provide hands-on training on the use of the AES. Also, the Census Bureau directly8 participates in seminars sponsored by trad e organizations, exporting companies, the CBP and the BIS to provide outreach a nd education on the AES program.

On January 24, 2011, the Census Bureau published a Notice (Page 4089-4091, Citation 76 FR 4089) in the Federal Register inviting public comments on the Census Bureau’s proposed information collection, the AES progr am. There were four comments received in response to this notice. One commentor strongly supports the continued collection of export data through the Census Bu reau’s AES or through the AES Direct . The commentor also supported the additional data elements to reflect the new export reporting requirements. The second commentor had conc erns with the new requirement to report

the container number for containerized vessel. They believe that this requirement would impact their ability to report accurate a nd timely data. The third commentor expressed

concern that the additional data elements woul d be costly to implement as well as would discourage exports, decreasing the likelihood of meeting the National Export Initiative’s goal. These comments were similar to comments received on the January 21, 2011, Notice of Proposed Rulemaking, Foreign Tr ade Regulations (FTR): Mandatory AES Filing for all Shipments Requiring Shipper’s Export Declaration Info rmation: Proposed Substantive Changes and Corrections. The Ce nsus Bureau has reviewed all comments

and after consideration remove d several of the proposed data elements and requirements because of the significant cost and burden th e trade community would incur to implement those changes. The Census Bureau also acknowledges that some of the proposed

information to be collected is available in th e export control licensing system. Therefore, the Census Bureau has eliminated the requireme nts to report the country of origin, license applicant, end user and cont ainer number for containerize d vessel in addition to other modifications to the proposed rule published on January 21, 2012.

9. Paying Respondents

The Census Bureau does not pay responde nts to provide the AES information.

10. Assurance of Confidentiality

The AES record is exempt from public disc losure by statute, Sec tion 301(g), Chapter 9, Title 13, U.S.C., and exemptions (b)(3) and (b)(4) of the Freedom of Information Act, Title 5, U.S.C., Sections 552 (b)(3) and (b)(4 ). Public Law 96-275 amended Section 301 by adding Paragraph (g) to provide that “S EDs (or any successor document), wherever located, shall be exempt from public disclosure unless the Secretary determines that such exemption would be contrary to the national interest.” Departme nt Organization Order 35-2A, Section 3.01a, delegated the authority to make the national interest determination

to the Director of the Census Bureau.

In addition, the filing of complete and accurate export information via the AES is mandatory under Chapter 9, Title 13, U.S.C. Literature describing the AES program advises exporters that the requirement is ma ndatory and that the Census Bureau keeps such information confidential. During the AES Direct registration process, filers must check a box stating that they certify that all st atements made and information provided is9 true and correct and that the pe nalty provisions for violations of the U.S. laws (referenced on the AES record) as related to exportation are understood.

Statements and literature describing the AES program advise exporters that the requirement is mandatory and that the Census Bureau keeps such information confidential under Chapter 9, Title 13, U.S.C., Section 301(g).

11. Justification for Sensitive Questions

The AES records do not contain any questions of a sensitive nature.

12. Estimate of Respondent Burden

The following table shows the total annual re sponses, and the time required to collect information and to complete the AES recor d. The hours per response also include time required for record keeping.

Annual Hours Per = Total Hours Responses Response AES 18,202,308 .05 910,115

The estimate of approximately three minutes (.05 hours) per electronic AES submission

is based on historical records and an exam ination of an electronic submission. We estimate that approximately one quarter to one third of the information reported in the AES is repetitious and can be automatically inserted on each electronic submission. An example of such repetitious informati on is the name, address, and Employer

Identification Number of the USPPI. Many automated filing respondents extract preexisting information from their electronic da tabases eliminating the need to repeatedly enter duplicate information.

Respondent Cost Burden Hours Cost AES Record 910,115@$17.86/hour $16,254,656

The estimate of $17.86 per hour is roughly base d on the wages of the cargo and freight agents responsible for preparing the AES reco rd. The estimate was derived from the U.S. Department of Labor’s occupa tional employment statistics.

13. Estimate of Cost Burden

The Census Bureau expects that varying cost s will be incurred for respondents submitting AES records. For respondents that use the AES Direct , the only cost involved is a personal computer and access to the Internet. Since this investment would be used for more than AES purposes, the cost of this investment would be minimal. For some respondents that make use of the AES, there wi ll be an initial softwa re cost in developing10 the link with the AES system. These res pondents may purchase pre- developed software packages that usually cost between $500 and $4,000. We estimate that approximately 225 USPPIs or, more likely agents, such as fr eight forwarders that service many of the small and medium-sized exporters using this process, will purchase compatible software within the next three years. Using $2,250 as an average cost, we estimate this initial software procurement will cost the export community about $506,000. Some filers may also program the linking process into thei r existing programs, which is generally less expensive than purchasing or developing new software. Further, purchasing of outside freight forwarder services, if utilized by re spondents, is part of usual and customary business practices and not specifically requ ired for this information collection.

14. Cost to Federal Government

The Census Bureau bears the primary federal cost of the AES Program. Since the collection of export data is an integrated program, detailed costs are not available for each individual AES record. The export statis tics program in the Foreign Trade Division is estimated to cost $10.7 million for fiscal year 2012. This cost includes the additional expense of $300,000 to incorporate the regulator y changes. The number of AES records received by the Census Bureau varies from reporting period to re porting period (monthly) depending upon international economic activity.

15. Reason for Change in Burden

The burden associated with this collection is being increased by 118,508 hours due to an adjustment in the number of annual responses.

16. Project Schedule

The Census Bureau processes export data reported on the AES record for publication in categories outlined in the regular foreign trade statistics program. These data are collected and published monthl y, approximately 40-45 days after the month covered.

The CBP is responsible for the initial collection of AES record information at the port of export. The collection and compilation of monthly export data is conducted on a

transactional basis rather than as a statistically designed sample.

17. Request to Not Displa y Expiration Date

We do not wish to display an expiration da te within the AES because AES software is vendor developed. To include an expirati on date within AES-based software would impose extensive and costly changes on AES software vendors and filers.

18. Exceptions to the Certification

There are no exceptions.