How to Determine the USPPI

David Noah | October 21, 2015 | Automated Export System (AES), Export Basics
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How to Determine the USPPI | International Trade BlogIn the exporting industry, we tend to talk about our roles in general terms: I’m the exporter, you’re the importer, he’s the freight forwarder, etc. However, these terms aren’t always precise enough.

In some circumstances, it's more accurate to say “I am the U.S. Principal Party in Interest (USPPI)" instead of “I am the exporter.” It's important to understand the difference in meaning between these two terms.

A Little Background

Why do we need to differentiate between terms like exporter and USPPI to begin with? The simplified answer is that in fall 2000, the U. S. Census Bureau updated the look of the Shipper's Export Declaration (SED) and the corresponding Foreign Trade Regulations. The new rules, while badly needed, changed Block 1a from "Exporter" to "U. S. Principal Party in Interest.”

There are several reasons that the regulations changed—here are three.

1. To 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 USPPI with documentation verifying that the information provided by the USPPI was accurately reported on the old SED and now through the Automated Export System (AES).

2. To 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 (FPPI) in a routed export transaction (excluding ultimate consignee).

3. To create conformity in document issuance. For purposes of completing the old SED and now for the purpose of filing through AES, the exporter is always designated as the USPPI, and the Foreign Trade Regulations clearly specifies who that party must be. Also, the Export Administration Regulations (EAR) define the parties who may be listed as the applicant on the BIS 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.

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So, who is the USPPI?

The best website to find answers to questions regarding the USPPI and learn about regulations is the U.S. Census Bureau website. The Census Bureau defines the USPPI as follows: "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."

The National Customs Brokers & Forwarders Association of America (NCBFAA) says it this way: “If you are the recipient of the purchase order from the overseas party for cargo that is exported and you are invoicing them for the product, you are the USPPI no matter what the terms of sale are.”

In addition to defining who the USPPI is, the Census Bureau also defines who cannot and who can plausibly be the USPPI.

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

The forwarding agent or the consolidator cannot be listed as the USPPI on the AES record with one very specific exception. A freight forwarder who acted as a customs broker and arranged import clearance of goods can be listed as the USPPI if the goods are subsequently exported without change or enhancement.

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—the party who directly negotiated between the U.S. seller and foreign buyer and received the order for the export of the merchandise.

Why can this be confusing to understand?

In some situations, determining the USPPI isn’t always a simple task because it’s not immediately obvious what party is in charge or has control. We discuss real-life case studies (with the names changed) of which firm is legally the USPPI in our series, Understanding the U.S. Principal Party of Interest.

Stay tuned! In part two of this series, we’ll discuss the USPPI’s responsibilities in an export transaction, including information about compliance.

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