Nov
25
Worst. Advice. Ever.
Posted by Clif Burns at 11:10 am on November 25, 2009
Category: General
The title of this post is not really meant to be hyperbole. The advice given in Crain’s Chicago Business in an article titled “Liars and terrorists and drug traffickers, oh my!” is without doubt the single worst piece of advice on export law that I’ve ever seen dispensed by anyone:
Further complicating matters, export control laws are regularly updated, and it’s up to business owners to stay current. That isn’t always easy. But a good place to start, experts say, is with … a freight forwarder who is regularly dealing with shipping and tariff restrictions.
To begin with, as regular readers know, the defense of “my freight forwarder did it” is the export law equivalent of “the dog ate my homework.” It’s not going to keep you from doing detention. Worse, many freight forwarders have no working knowledge of export laws and little interest in complying because DDTC and BIS usually whack the exporter not the freight forwarder in these matters.
On top of everything else, a lawyer was misquoted by the reporter.
“It’s a labor-intensive process,” says … [the] managing partner of … [a] law firm specializing in international trade law. “At the very least, you should have your freight forwarder check compliance, so if they identify a problem, they can stop the order before it ships.”
I know attorneys at the law firm in question. They are all smart people. They have people just as knowledgeable about export law as anyone else in the export bar. I am absolutely certain that the partner in question was misquoted or the statement was taken completely out of context by the reporter. (11/30 UPDATE: The attorney in question has contacted me to confirm that the quotation was inaccurate and that the reporter, although she promised to allow the attorney to review the article in question before it went to print, did not do so. Again, I absolutely believe that the attorney was misquoted and never would have said what the reporter claimed.)
Here’s some better advice: ask a Ouija Board your export compliance questions before submitting them to your freight forwarder.
Happy Thanksgiving everyone! Export Law Blog will be back to a regular schedule on Monday.
UPDATE (Early Thanksgiving Morning): I should add one qualification, based on a few comments this post has received from esteemed readers who work for freight forwarders. There is, of course, an irrebuttable presumption that any freight forwarder who is a reader of this blog would be an excellent source of export compliance information. 🙂
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6 Comments:
Cliff: Easy on us. I recognize a high percentage of forwarders do not know or do not care about Export Compliance or Itar, Bis, Ofac, DDTC, ICE, CBP or the alphabet soup. But, unfortunately, for the USPPI (here we go again) the FF is the first point of contact and any wrong advise given could lead to serious problems with the US Government. What could the USPPI do? Contact a law firm?
The only way I can see to change the state of things in the export community is to spread the word that export is not a game, that training is very important and there are blogs like Cliff’s that help you laugh at yourself.
Cliff, great article, enjoyed the humor. Although, it is scary to find “how many sources” actually do in fact encourage users to “contact their freight forwarder…
See CISCO http://www.cisco.com/web/about/doing_business/legal/global_export_trade/general_export/contract_compliance.html
“Cisco encourages customers to contact their local freight forwarder, consultant, or an attorney with knowledge of international export requirements.”
Yikes. Unless your getting weight requirements, transportation plans, packing details, etc…Like you, I’d recommend leaving the FF out of the call tree (no offense against my FF friends).
As both an enforcement type and when in private practice, I lost count of how many violations, both technical and serious substantive violations, were the product of bad advice or nonfeasance from forwarders. Worse yet, forwarders are the first to rat out their customers to the government and then point the finger at said customers, usually whining that the customer didn’t give them sufficient information – never mind the forwarder rarely asks for additional information or tests what the customer gives them. In one case, a big name forwarder did a classification for $100, which turned out to be incorrect, for which the government sought a seven figure civil penalty for years of shipments under a “false” classification.
There is a disconnect between forwarders marketing people and their operations people. Most forwarders’ marketeers solicit business on the representation that the customer can rely on the forwarder as a one-stop-shop for all their international trade needs. Most forwarders’ operations are actually high volume paper (or electron) pushing operations who hire low-wage folks with the barest education to fill out templates without any real understanding of the substantive terms. The advice they render is rarely documented in writing, and even when in writing (like a quick email) rarely accompanied by any reasoned rationale with citations to authority – an essential component of a good faith mistake defense. And when their low cost approach inevitably results in problems, rather than going back to the customer and doing a joint voluntary disclosure, most forwarders will drop a dime on their customer to keep from paying out anything themselves.
Some forwarders will, after the marketeers rope in the customer, ask customers to sign documents accepting all liability and/or warning the customer that the customer is responsible for regulatory compliance. Customers should paid heed and guard themselves accordingly.
Great article – and good points, Clif! I would just say that these days some freight forwarders do keep on top of this and if you KNOW your freight forwarder has a means to keep up-to-date on international trade regulations then yes, they would be a good person to talk to. However not all of them have this capability! Maybe it’s something more should look into!
Oof! Ouch! Cliff, Mike, be gentle. I’m the corporate compliance manager for a freight forwarder.
OK, I’ll admit that our industry doesn’t have a good reputation. When I came to this company (after working as a consultant, a computer company before that, and branch level freight forwarding before that), I hit the ceiling upon learning that our system default was EAR99/NLR. No, that should be what you’re left with after exhausting the alternatives! But I’ve made substantial improvements through formalized training and informal dialogue. I have my little champions out there as supervisors in our field offices that have become my eyes and ears. They’re learning, and they’re not afraid to come to me with questions when something smells a little fishy.
On the other hand, we have our share of shipper customers that certainly do not appreciate my medicine. It’s none of my business, or no other freight forwarder questions this. OK, fine, just have one of your corporate officers put that in writing. I don’t look good in orange jumpsuits.
Shippers? Forwarders? My departed grandfather had something on his wall that has stuck with me for years:
There’s good enough in the worst of us,
And bad enough in the best of us,
That it behooves the most of us
To talk about the rest of us.
Jim, as I said, no *(direct) offense ;). I’m confident that you, and your team do an awesome job…and you’re diligent, and knowledgeable. But quite frankly, its ultimately “our” (USPPI) job to do this work and have a firm understanding of what we are doing. If you’d like to ask your shipper/FF to “confirm”, fine. sure. But, if we have folks out there “picking up the phone” as a first step in classifying their product/comm. (or advice to do so) then holy cow, we got troubles — and much deserved ones. In the end tho, don’t take it too personal, just painting with a broad brush here.
