When you export articles, do you ask the ultimate consignee and/or purchaser to complete a supporting statement? These sorts of statements can be found under a number of different names, like:
- BIS-711
- Statement by Ultimate Consignee and Purchaser
- End Use/End User Statement
- Non-Diversion Pledge
- Import Certificate
No matter what you call it, though, we are typically talking about a statement from the intermediate user and/or the end user of an export in which that person pledges not to use or re-export the article in violation of U.S. export laws.
Statements of this sort have become fairly standard in export transactions involving aircraft parts. I frequently get asked about what is required, and the is a tremendous difference between when these statements are required and when they are merely advisable. This article explains both conditions.
When is the Statement Required?
The United States has published a form – the BIS-711 – that is used for obtaining this sort of information. That form (or a permissible substitute) is required when the following conditions are met:
- The exporter is seeking a license
- The license is for 600-series Major Defense Equipment
- The export is destined for any place other than China
When the conditions are met, the BIS-711 is completed by the ultimate consignee/purchaser and is submitted as part of the license application. This is the only situation in which the BIS-711 is required. 15 C.F.R. § 748.11.
Even when the form appears to be required, there are exceptions. For example, when exporting 600-series aircraft parts to China that need a license and are valued at more than $50,000, the exporter is expected to work with the importer to obtain the PRC End-User Certificate from the Chinese government. 15 C.F.R. § 748.10. There are circumstances where 600-series aircraft parts worth between $50,000 and $75,000 can be documented on a BIS-711 in lieu of the PRC End-User Certificate. 15 C.F.R. § 748.11(a)(2). As a matter of practice, I have seen license applications (for goods destined for China) that were accepted with bespoke certifications created by an attorney, instead of the PRC End-User Certificate that is called-out in the regulations.
Another exception exists where the ultimate consignee/purchaser signs a statement on company letterhead that includes the important elements of BIS-711 (a complete list of the elements can be found in Supplement No. 3 to Part 748 of the Commerce Department regulations.
BIS is allowed to require the BIS-711 on a case-by-case basis. So if BIS tells you to obtain the BIS-711 for your license application, then this imposes the requirement even if the regulations did not previously impose it.
The purpose of the BIS-711 (or other letter) is to provide information on the foreign importer receiving the U.S. article and on how the article will be utilized. The BIS-711 or letter is intended to provide assurances from the importer that the article will not be misused, transferred or re-exported in violation of the U.S. export regulations. Obviously, this sort of information can be useful even in situations where the form is not required. So there are situations where the form becomes advisable.
When is the Statement (Merely) Advisable?
It is easy to see that the BIS-711, and statements similar to that form, are completed in many aircraft parts export situations where such forms are not required by the BIS’ regulations. It is more common to see bespoke statements in these other situations, but I have seen a good number of requesters who claim that the form is “required by regulation,” when it often is not so-required.
So if the form isn’t required by the regulations then why do we need to get a signature?
One reason that companies sometimes use forms that look like the BIS-711 is to ensure that they are getting the right information from their business partners, and to ensure that their business partner is committed to the facts that it has provided:
- This can help to establish the facts. Some people will gloss over facts until they are required to certify to them. But once they are asked to sign a form they may look more carefully and then they may update any incorrect information.
- This can help support a decision that no license is required by the fact pattern.
- This can help support a license application even if it is not required.
- This can help to commercially protect the exporter. The exporter often relies on facts provided by the importing business partner. By asking the ultimate consignee/purchaser to sign a certification form, this helps to provide the exporter with some assurance that the stated facts are correct.
- This can help to legally protect the exporter. In the unlikely event that the exporter is accused of some malfeasance, the fact that the exporter relied on facts provided in a signed certification form, helps to suggest that the exporter did not willfully violate the laws. This won’t negate clear-and-contrary evidence of intent but where intent is unclear, this can help make it more clear. Intent is especially important for criminal sanctions, but it can help influence BIS in civil penalty situations, too.
It is important to identify why someone is seeking an advisable version of the certification, because sometimes the bespoke certifications include language that is not useful to the transaction (such as a proposed certification that is not true, or a proposed statement that is not useful, like a limit on performing otherwise legal activities). In those cases, a clear understanding of the intent of the form creator can help address language disputes.
I have also seen companies seeking BIS-711s or bespoke export certifications for purely domestic (non-export) transactions. There is no export law that requires this, but some of the bulleted reasons for advisable statements may apply to the transaction. If they don’t and your business partner insists on an export certification for a purely domestic transaction, then you may need to work with the business partner to establish reasonable transaction parameters.
Resources:
The BIS-711 form is available for download as a fillable pdf form on the BIS web site:
http://www.bis.doc.gov/licensing/BIS711.pdf
Typically, exporters submit this form electronically using the BIS SNAP-R system.
This article provides general rules that apply to the export of aircraft parts subject to the BIS export regulations, but it does not address all possible special conditions or alternatives. Do not rely on it for legal advice – instead consult with a law firm that regularly assists companies with export questions (like ours). Your actual facts may affect the advice that is given.