Is there such a thing as a $0 value transaction? The case of $1 making a 45 day difference in processing a BIS export license!

This week, here at TSI Global Consulting, we have been working on a BIS export license application for a client that needs to export some export controlled equipment (we will leave out the specifics for client confidentiality reasons). The export is for temporary demonstration which brought up an interesting issue. Intuition says, use $0 as value on the export license application. After all, this is not an export sale and the equipment will be brought back into the USA after it has been previewed and shown around in the market by the potential distributor. We were even advised by an export counselor at BIS to do exactly that, use $0 in the value line and make a notation on the application why we were doing so (i.e. temporary demonstration license only). The EAR provides no guidance at all in this situation. So, we did exactly that and filed the license application last week for $0. Then, after filing, the revelation hit! What about the EEI? Can an exporter record a value of $0 into the EEI? After all, the EEI is a required filing for all items exported under a validated license, even demo units. The answer is no, the EEI requires a value for exports. But once again, intuition says, why would you want to “mess up” the U.S. Census Bureau’s export trade statistics by recording a value for an export that is not really an export since it is for temporary demonstration only? After all, isn’t the primary use of the EEI to collect official U.S. trade statistics? The problem in this case scenario, putting intuition aside, is that the Automated Export System for recording EEI  does not accept $0. Rather than waiting for a license to be issued and having to refile the license subjecting us (and our client) to a new likely 45 day interagency review we contacted the licensing officer at BIS and had them look into the issue for us. Thankfully, it was resolved within two days. The licensing officer changed the application to reflect a $1 value for each of the two pieces of equipment to be exported.

So there is the answer, if and when you need to temporarily export demonstration units of export controlled products that are under a validated license, use $1 as the proxy value. It will avoid lots of headaches and delays and the nuisance of having to refile for a new license when EEI fails to accept an item ready to be exported at $0 value. The other lesson learned from all of this is, if you are new-to-export licensing, hire a consultant or an attorney to file on your behalf. How many clients would have thought about the issue of the EEI when preparing the application? Not to toot our own horn here, but our services likely saved this particular client 45 days and an unnecessary migraine that would have rose to the fore when they went to file EEI only to have the transaction rejected since the value was $0 instead of $1. Sometimes $1 can make all the difference! 

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