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Understanding U.S. Principal Party in Interest — Part 1

12/13/01 6:00 PM | Catherine J. Petersen | Export Regulations, Export Compliance, Export Forms (Export Documents)
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This is the first of four articles that will discuss the definition and use of the U.S. Principal Party in Interest (USPPI) and provide real-life case studies (with the names changed) of which firm is legally the USPPI.

This is the first of four articles that will discuss the definition and use of the U.S. Principal Party in Interest (USPPI) and provide real-life case studies (with the names changed) of which firm is legally the USPPI.

Case_Study-World_GlobeIn the fall of 2000, the U. S. Census Bureau updated the look of the Shipper's Export Declaration (SED) and the corresponding Foreign Trade Statistics Regulations. The SED and regulations became law on October 1, 2000, with a grace period for compliance until April 1, 2001.

These changes were more than a badly needed facelift to the SED, which was last updated in 1988. The new rules changed Block 1a from "Exporter" to "U. S. Principal Party in Interest" or USPPI. There are several reasons that the regulations changed. Three of the reasons are summarized here:

  1. Clarify and specify the documentation and documentation sharing responsibilities of all parties in an export transaction. In a routed export transaction the forwarding agent is responsible for providing the U.S. principal with documentation verifying that the information provided by the U.S. principal was accurately reported on the SED/Automated Export System (AES).
  2. Identify the data the USPPI is responsible for reporting, which is their name, Employer's Identification Number (EIN), and basic commodity information to the U.S. agent of the foreign principal party in interest in a routed export transaction (excluding ultimate consignee). This is all they will be liable for. Bureau of Export Administration (BXA) and U.S. Customs concur with this provision.
  3. Create conformity in document issuance. For purposes of completing the SED/AES the exporter is always designated as the USPPI, and the Foreign Trade Statistics Regulations clearly specifies who that party must be. Also, the Export Administration Regulations define the parties who may be listed as "applicant" on the BXA license. The only difference is that the EAR, in certain routed export transactions, will allow the agent of the foreign principal party in interest to be listed as the exporter on the license.

This has caused consternation and confusion among many companies that are shipping their merchandise to foreign customers as they try to understand the regulations and determine who is legally defined as the USPPI for their shipments.

The best website to search answers and look up the regulations is the U.S. Census website. The Census website provides these definitions of the USPPI:

Who is the U.S. Principal Party in Interest (USPPI)?

The person in the United States that receives the primary benefits, monetary or otherwise, of the export transaction; generally that person is the U.S. seller, manufacturer, order party, or foreign entity. The foreign entity must be listed as the USPPI if it is in the United States when the items are purchased or obtained for export.

Who cannot be the U.S. Principal Party in Interest (USPPI)?

The forwarding agent or the consolidator cannot be listed as the U.S. principal party in interest on the SED or AES record.

Who can be the U.S. Principal Party in Interest (USPPI)?

Generally that person can be the:

  • U.S. Seller (wholesaler/distributor) of the merchandise for export.
  • U.S. Manufacturer if selling the merchandise for export.
  • U.S. Order Party - Party who directly negotiated between the U.S. seller and foreign buyer and received the order for the export of the merchandise.
  • Foreign Entity if in the U.S. when items are purchased or obtained for export.

Case Study

This first case study is a common export transaction and is relatively easy to determine who is the USPPI. Future case studies will demonstrate how complex it can be to determine the USPPI.

Seller: Monterrey Fish Supply & Trading Co., 14555 Monterrey Bay Road, Monterrey, CA 98888

Monterrey Fish Supply & Trading Co. sold 30 Metric Tons of frozen fish to their customer in Taiwan under CIP Kaohsiung, Taiwan, international freight prepaid. Monterrey will be the shipper on the international bill of lading and they will issue the international commercial invoice.

USPPI in this transaction: Monterrey Fish Supply & Trading Co.

Exporter in this transaction: Monterrey Fish Supply & Trading Co.

It is important to remember that this is an excerpt from a variety of sources, including the regulations. If your situation differs from the one described above and you need further clarification for your records, the U.S. Census welcomes your inquiries at ftdwebmaster@ccmail.census.gov.