UPS ACE Export Webinar March 31, 2016

AES Export meets ACE

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Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

Before we discuss export . . .

Quick update on the continued ACE import migration

ACE Submission Rate =

(ACE Volume / ACE + ACS Total Volume)

75% 74% 74%76%

78% 79% 78%80%

82% 83% 84% 83%

16%19%

23% 24%28%

30%32%

34%36%

38% 39%

54%

9-Jan 16-Jan 23-Jan 30-Jan 6-Feb 13-Feb 20-Feb 27-Feb 5-Mar 12-Mar 19-Mar Mar (Est)

ACE Entry Summaries (% of Total) ACE Cargo Releases (% of Total)Source: www.cbp.gov/trade/automated

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

US exports continue to close in on US imports

Quarterly data; seasonally adjusted

Source: US Census

0

50

100

150

200

250B

illio

ns

Imports of Goods: General Merchandise: Industrial supplies and materials, Millions of Dollars, Quarterly, Seasonally Adjusted

Exports of Goods: General Merchandise: Industrial supplies and materials, Millions of Dollars, Quarterly, Seasonally Adjusted

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

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The consequences of non-compliance can be costly

Recent enforcement actions for violations have resulted in significant fines and sanctions to exporters.

Corporate violations

2010 penalty of $3.75 million (1)

2012 penalty of $370,000 (2)

2012 penalty of $75 million (3)

2013 penalty of $8 million (4)

2014 penalty of $10 million (5)

2015 penalty of $275,000 (6)

Individual sanctions

42 months prison sentence, five years supervised release,

$500 assessment, $1,000 criminal fine (7)

Administrative debarment and prohibited from participating in ITAR export activities for three years (8)

Sources:(1) http://www.millerchevalier.com/Publications/MillerChevalierPublications?find=47302 (2) http://www.exportlawblog.com/archives/3755 (3) http://www.justice.gov/opa/pr/united-technologies-subsidiary-pleads-guilty-criminal-charges-helping-china-develop-new

(4) http://www.state.gov/r/pa/prs/ps/2013/04/208655.htm (5) http://www.state.gov/r/pa/prs/ps/2014/06/227845.htm (6) http://www.exportlawblog.com/archives/6680

(7) https://www.bis.doc.gov/index.php/forms-documents/doc_view/872-amplifier-research-us-edits-final (8) http://www.state.gov/t/pm/rls/othr/misc/218216.htm

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

Export Compliance 2.0

• Panelist

• Chris Bonham, LCB

• Export Compliance Specialist

• Panelist

• Rob Gonzalez, LCB

• Export Operations Manager

• Panelist

• Ron Shepherd, LCB

• UPS Trade Management

Services, Global Operations

Manager

• Host

• Greg Maddaleni, LCB

• Customs Brokerage Manager

Presenters

AES Export meets ACE

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

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ACE Export 2.0

Agenda

Export compliance?

• How to define it in today’s regulatory environment

Recent developments

• Export Compliance Reform

• ACE Export

Solutions and Implications

Q & A

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

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What is export compliance?

Definition:

Awareness and adherence to all regulations covering exports from the US (exporter is 100% liable)

• Who oversees it? Three Main Agencies

US Customs (CBP)

• Enforcement

Commerce Department (DOC) / Census/ BIS (“CCL”)

• Statistical filing

• Schedule “b”

• >$2,500 in value

• “Dual use”

• CCL – civil and military

• ECCN number

• 600 series

State Department

• ITAR

• Munitions list

• Specific export license

• Fish & Wildlife

o CITES

• FDA

• USDA – Agriculture

• Plants and plant products

• DEA (Drug Enforcement Agency)

o Controlled substances

• Department of Energy

o Including Nuclear Regulatory Commission

Agencies

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

Export Item “X”

Denied party/country?

Decision process for an export shipment

License required?

Value requirement?

EEI filing

Screening

EAR/CCL/ITAR Classification

Valuation per Schedule B

(>$2,500)

Revised information update

Resolution

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

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Export agencies tied into the ACE data mart

Access will NOT be limited to export transactions

• Seven departments (covering 21 agencies) who cover export compliance will have access to ACE datamart

One common data

mart available to all

agencies

DEA

FWS

CDC

FDA

EPA

FCC

ITC

NRC

Etc..

ACE

Data

Mart

CBP

APHIS

FAS

FSIS

BIS

FTZB

NMFS

ATF

DEA

Common access

across 47 agencies

Seven

departments

(21 agencies)

with export

oversight

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

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Detecting unusual or inconsistent historical patterns

Identify error frequency

See repeats of same error

5 year statute of limitations

Identify patterns of negligence, gross negligence or even fraud

• PGA’s will be able to evaluate an exporters’ entries over a period of time

T1

ACE

Data

Mart

ACE

Data

Mart

ACE

Data

Mart

ACE

Data

Mart

ACE

Data

Mart

T2 T3 T4T5

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and

reflects prevailing conditions and our opinions and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public

sources or which was otherwise reviewed by us. SCS accepts no liability for the content of this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

New ACE – AES Portal

• Replaces existing AES Direct portal

• Functionality parallels existing portal

• Profiles/templates need to be reconstructed in the new platform

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Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

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The ACE implications

Ability to search and query transactions

Ability to identify repeat mistakes made over 5 years

In other words, ability for authorities to do their job better

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

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EEI filings management

Where each EEI filing that is not updated customer is at risk of $10,000 fine per misfiling

Exporter Flight #1

Export filing

Shmts

information

$2,500+ #1

Re-route #1

DestinationForwarder #1

Consultant/

Managed Services

Provider

Export parts

& screening

database

DOC

State Dept

Flight #2

Re-route #2

DestinationForwarder #2

$2,500+ #2

B A

C

Export filingExport

filing

Export

filing

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

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Managing licenses & security screening

Options for managing these processes to avoid fines or loss of export privileges

Multiple infractions risk

multiple penalties

Security

Screening

Consultant/

Managed Services

Provider

Export parts

& screening

database

License &

denied party

determination

License

tracking

License &

submission

Exporter Forwarder Flight #1 Destination

DOC

State Dept

B

A

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

Export reporting with ACE

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• Shipper establishing a “best practice”

• Shipper has ability to audit their filings no matter who filed them

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and

reflects prevailing conditions and our opinions and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public

sources or which was otherwise reviewed by us. SCS accepts no liability for the content of this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

Key Points

• ACE

• Export data availability to the trade and to partner government agencies

• ACE – AES portal

• EEI filing

• Risks from ACE data impact

• Solution options (to mitigate risk): forwarder, exporter and 3PL options

• Export classification and license management

• Risks from ACE data impact

• Solution options: exporter vs. managed services provider

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Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

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Questions and answers

Export solutions: UPS Customs Brokerage and UPS TMS

UPS Trade Management Services

• Export Classification

• Licensing review

• License tracking

• Screening

• Independent audit of EEI filings

• Compliance training

• Export manual creation and maintenance

UPS Customs Brokerage - EEI Filing Service

• Centralized filing

• All modes / all carriers

• EEI filing re-work / re-route

• Export documentation creation

• Commercial invoice

• Shipper’s letter of instruction

• Packing list

• Bill of lading

• Recordkeeping / record retention

Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. The information provided here is based on information obtained from government, industry, and other public sources and reflects prevailing conditions and our opinions

and views as of this date, all of which are accordingly subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by us. SCS accepts no liability for the content of

this presentation, or for the consequences of any actions taken on the basis of the information provided.

© 2016 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown and photos are trademarks of United Parcel Service of America, Inc. All rights reserved.

ACE and export compliance

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• ACE includes better export data and better government export data mining

• Ways for your company to prepare

• UPS Trade Management Services ACE Export compliance questionnaire

• Ask today upon checking out

• Contact your UPS sales executive

• Upcoming webinar topics:

• April 26: Europe’s Union Commercial Code (UCC) – how it may impact you

• May 19: Continued ACE implementation – upcoming milestones and deadlines

• June: TPP (date to be announced shortly)

Thank you

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