This is the second 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.

As I discussed in my first article in this series, one of the biggest changes to the Shipper’s Export Declaration (SED) required on April 1, 2001, involves the change from “exporter” to “USPPI.”

Rather than wanting the name of the exporter on the new SED, the U.S. Census Bureau wants to know which person in the U.S. receives the primary benefits, monetary or otherwise, of the export transactions. Generally that person is the U.S. seller, manufacturer, order party or foreign entity.

Even if your company doesn’t sell directly to any international customers, you may have domestic clients who do turn around and export your goods. If you know that your product(s) will eventually be shipped internationally—or even if you just suspect that they might—you have certain responsibilities.

First, you may have a discussion with your domestic customer’s freight forwarder about who is the USPPI in a transaction. In the case study below, while the supplier is part of the international transaction, they are not the USPPI and will not be listed on the SED.

Second, even if you are not the USPPI, you can be held legally liable if your goods wind up in a country or in the hands of a company or individual that the U.S. government has banned from conducting business with a U.S. company. To protect your interests, you should check the Federal Register listings of parties with whom you are not to conduct business—either directly or indirectly.

You can find these lists online:

• Denied Persons List
• Entity List
• Specially Designated Nationals and Specially Designated Terrorists
• Debarred Parties
• General Orders in Supplement No. 1 to part 736, Export Administration Regulations

Case Study

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

Supplier: John's Fishing Co., Rural Route 5, Brainerd, MN 55555

John's Fishing Co. sold 30 Metric Tons of frozen fish to Monterrey Fish Supply & Trading Co. ExW Brainerd, MN. Monterrey Fish arranged with the ocean carrier to delivery an empty 40-foot refrigerated container to John's warehouse in Minnesota. All transportation charges were "collect" for the account of Monterrey.

Monterrey will be the shipper on the international ocean bill of lading and they will issue the international commercial invoice.

USPPI in this transaction: Monterrey Fish Supply & Trading Co. Monterrey Fish Supply & Trading Co. will be the USPPI and the exporter, because Monterrey Fish Supply made the international sale and is getting the most benefit from the sale.

Exporter in this transaction: Monterrey Fish Supply & Trading Co. Monterrey Fish Supply & Trading Co. will be the exporter because it arranged and paid for all the transportation with the ocean carrier; it is in control of the export.

Although John’s Fishing Co. is not on the Shipper’s Export Declaration, they are a party to an international transaction.