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	The "Canadian Exemption" As all U.S. exporters must know by now, the Department of Commerce (through the Census Bureau of course) intends to eliminate all paper Shipper's Export Declarations (SED) by the end of 2005 or early 2006. How will this affect U.S. exports shipment to Canada? We have held numerous training presentations on the planned switch from the paper system to the Automated Export System (AES). During these presentations and in other general discussions with exporters regarding proposed export process changes, we frequently receive inquiries regarding documentation requirements for U.S. exports of goods and services to Canada. For the edification of the readers of Beyond Virginia we are pleased to provide the following guidance regarding the subject. First, no Shipper's Export Declarations (or AES filings) are required for shipments to Canada UNLESS: a. The shipment requires a U.S. Department of Commerce export license, OR b. The shipment requires a U.S. Department of State export license, OR c. The shipment is subject to Department of Justice, Drug Enforcement Administration, export declaration requirements, OR d. The merchandise is only being transshipped through Canada with an ultimate destination in another country. This last element is one that bears scrutiny because in order for the U.S. exporter to assure itself the merchandise is being retained in Canada for the use by Canadian persons, the exporter must have written documentation to that effect from their Canadian consignee. Further, it should be noted that the ITAR (International Traffic in Arms Regulations) was updated as of May 30, 2001 to specify that exports to Canada could only use the Canadian exemption if the recipient of the export was, 1) Canadian federal or provincial authorities, 2) Canadian firms registered in Canada. There are certain other exceptions but generally, you cannot ship defense articles to Canadian firms unless they are registered in Canada under its new control regulations. Again, it is prudent to acquire a letter from the Canadian consignee which provides the U.S. exporter with the appropriate registration information of the consignee and a positive statement that the merchandise is being retained in Canada. Otherwise, an ITAR export license and the AES filed clearance are required for export. In each of the above circumstances, the appropriate exemption clause must be cited on the exporter's shipping documents, i.e., for shipments subject to Commerce regulations the citation is "exempt under 15CFR30.58" and the ITAR exemption citation is "exempt under 22CFR126.5". It should also be noted that the use of a DSP-83 (Non Transfer and Use Certificate) is required to support ITAR export licenses to Canada UNLESS the consignee is a Canadian Government entity. In summary, it is important to be aware of the details of the Canadian Exemption statutes as described and implemented by both the U.S. Census Bureau through 15 CFR Part 30 and, for those of you that export defense articles; the State Department provisions of 22 CFR Part 126.5. Further clarification and FAQs regarding the ITAR provisions are available online at www.pmdtc.org under "Exports to Canada". Remember, as the exporter of record it is your responsibility to be aware of and implement the appropriate internal procedures necessary to make sure your export documentation is accurate. For more on this and other export/import issues visit our website at: www.acustomsbroker.com. Be sure to check out the avoiding customs trouble section too. If you have questions on current or pending export regulations, compliance or customs issues please feel free to contact me directly. James R. Loux Founder & President Allegheny Brokerage Company, Inc. jloux@acustomsbroker.com www.acustomsbroker.com