Do NOT miss these two unique US Commercial Service and District Export Council sponsored low-cost and high-quality workshops in Southern California titled: “Challenges Facing Empowered Officials and Trade Compliance Professionals.”
These unique programs will much better prepare, educate and train you and your organization to be ready for a wide-range of real world situations, consequences and other adverse outcomes in the currently invigorated enforcement environment.
The agenda for these unique practical-application local/regionally-oriented half-day workshops includes: Legal / Export Administration Regulations and International Traffic in Arms Regulations Requirements and Other Concerns; What the Regulations Don’t Say and How to Prepare for What’s Ahead; Hands-on Interactive Case Studies and Lessons Learned; the President’s Export Control Reforms: Impact & Implications; and afternoon free one-hour sessions with the presenters to discuss your issues of interest
For more details and online registration including ICPA member discounts go to:
Los Angeles: http://www.buyusa.gov/pacificsouth/compliance.html
San Diego: http://www.regonline.com/trade_compliance_workshop
Saturday, October 30, 2010
Sunday, October 24, 2010
Incoterms® 2010 Simplified
Incoterms® is a registered trademark of the International Chamber of Commerce (ICC), Paris, France.
The 11 new Incoterms® go into effect on January 01, 2011
RULES FOR ANY MODE OR MODES OF TRANSPORT
EXW
Ex Works (named place of delivery)
FCA
Free Carrier (named place of delivery)
CPT
Carriage Paid To (named place of destination)
CIP
Carriage And Insurance Paid To (named place of destination)
DAT
Delivered At Terminal (named terminal at port or place of destination)
DAP
Delivered At Place (named place of destination)
DDP
Delivered Duty Paid (named place of destination)
RULES FOR SEA AND INLAND WATERWAY TRANSPORT
FAS
Free Alongside Ship (named port of shipment)
FOB
Free On Board (named port of shipment)
CFR
Cost And Freight (named port of destination)
CIF
Cost, Insurance and Freight (named port of destination)
Incoterms® define the responsibilities of buyers and sellers for the domestic and international delivery of goods and determine how costs and risks are allocated.
The words, “importer” and exporter” have been used instead of “buyer” and “seller” that relate more closely with international (cross-border) trade.
1.
EXW
Ex Works (named place of delivery)
Exporter places goods at their premises at importer’s disposal, i.e. works, factory or warehouse. For example: EXW Street Address, City, Country or EXW City, Country if the named address has been specified in the contract of sale.
Exporter has limited obligations to provide export information and is not obliged to load the goods on any conveyance. Moreover, importer has to organize export clearance from the country of shipment.
It should not be assumed that export formalities such as licenses, authorizations and security-related information are the responsibility of the importer. The exporter must provide, at importer’s request, risk and expense, assistance in these export formalities.
2.
FCA
Free Carrier (named place of delivery)
Exporter delivers the goods to the carrier or another person nominated by importer at the exporter’s premises or another named place. For example: FCA Street Address of Forwarder/Consolidator, City, Country.
Exporter is required to clear the goods for export.
Delivery is said to have taken place when the exporter places the goods at the named place. It is then up to the importer to arrange for further means of transport.
Transfer of risk for loss or damage from exporter to importer takes place when said delivery has taken place in said manner.
3.
CPT
Carriage Paid To (named place of destination)
Exporter delivers the goods to the carrier or another person nominated by them at an agreed place and pays the costs to ship the goods to the named place of destination. For example: CPT Destination City.
Exporter is required to clear the goods for export.
The agreed place of delivery is where the risk passes to the importer. The costs of transportation to the destination place (named city) are borne by the exporter but the risk for damage or loss to the goods passes when delivery is made at the agreed place. The agreed place may be the carrier’s or the nominated person’s premises, the airport or port terminal warehouse or any other place, as agreed to in the contract of sale.
Several carriers may be used to transport the goods to its destination.
Example:
- Goods transported from factory address by a trucking company (first carrier)
- Then from the trucking company’s address to a rail yard by a another trucking company (second carrier)
- Then from the rail yard to the port rail yard by rail (third carrier)
- Then from the port rail yard to a dock by another trucking company (fourth carrier)
- Finally by vessel to the final destination (fifth carrier)
4.
CIP
Carriage And Insurance Paid To (named place of destination)
Exporter delivers the goods to the carrier or another person nominated by them at an agreed place and also contracts for insurance cover against risk of loss or damage to the goods during the carriage in addition to paying the costs to ship the goods to the destination. For example: CIP Destination City.
CIP can be considered similar to CPT with insurance cover added.
Exporter is required to clear the goods for export.
5.
DAT
Delivered At Terminal (named terminal at port or place of destination)
Exporter delivers the goods after unloading from the arriving vessel or other means of transport and places them at the disposal of the importer at a named terminal at a named port. For example: Port name, Terminal number.
Terminal could also mean a port warehouse, container yard, rail station or air cargo terminal.
Exporter bears all risks and costs involved up to unloading the goods at the named terminal.
For LCL (Loose Container Load) cargo, it would be the obligation of the exporter to have the LCL cargo unloaded from the container and placed in their NVOCC (Non-Vessel Operation Common Carrier) or freight forwarders warehouse at the disposal of the importer. The exporter bears all the costs up to this point. It is then the obligation of the importer to arrange for pick-up.
6.
DAP
Delivered At Place (named place of destination)
Delivery takes place at a named destination and when the goods have been placed at the disposal of the importer but have not yet been unloaded from the arriving vehicle. For example DAP City name.
In this case, the street address of the importer could also be included or indicated separately in the contract of sale as the named place of destination or any agreed to point.
Risks and costs up to the named address and prior to the time the goods are unloaded are the exporter’s responsibility.
7.
DDP
Delivered Duty Paid (named place of destination)
Exporter places the goods at the disposal of the importer with all import duties and taxes paid. The exporter is also responsible for all costs associated with importing the goods and assumes risk for damage to or loss of the goods up to the named place of destination. For example: DDP City name. Street address of the importer could also be included or indicated separately in the contract of sale as the named place of destination.
8.
FAS
Free Alongside Ship (named port of shipment)
Exporter places the goods alongside the vessel nominated by the importer at a named port of shipment. For example: FAS Port name.
For exporters who ship goods in containers, placing a container alongside a vessel is most likely not possible because containers are usually first sent to a terminal or loaded at a NVOCC’s warehouse before being loaded onto the vessel. It is therefore advisable to use FCA in these cases. FAS is usually used for bulk cargo.
Risk of loss of and damage to the goods up to the port is the exporter’s responsibility and the importer then assumes risk and bears all costs thereafter.
9.
FOB
Free On Board (named port of shipment)
Exporter is required to deliver the goods on board a vessel. For example: FOB Port name.
This is sometimes not possible for exporters who ship goods in containers because containers are usually first sent to a terminal or loaded at a NVOCC’s warehouse before being loaded onto the vessel.
Risk of loss of and damage to the goods is the exporter’s responsibility up to when the goods are on board the vessel.
FOB is good to use for bulk cargo.
The point of delivery here is the named port.
Usually the exporter hands over a loaded, ready-to-ship container to the carrier at a warehouse or terminal (named place) before being loaded onto the vessel. This then cannot be an appropriate FOB transaction which states Free On Board. In the case of container shipments, it is advisable to use FCA.
10.
CFR
Cost And Freight (named port of destination)
Exporter delivers the goods on board a vessel and pays the costs and freight necessary to bring the goods to the named port of destination. For example: CFR Port name.
The point of delivery here is when the goods are on board the vessel at the shipment port.
Therefore, the exporter’s obligation for loss or damage to the goods is to this point of delivery. It is not up to the port of destination.
Here, the risk passes at the port of shipment even though the freight costs have been paid up to the port of destination. Point to bear in mind is that with CFR terms the destination port is known but not necessarily the origin port. It is entirely likely that the exporter may opt to ship from different ports each time. In all cases, risk passes to the importer at the port of shipment.
Similarly as with FOB, CFR cannot be an appropriate term to use for container shipments because containers are handed over to the carrier at a warehouse or terminal (named place) before being loaded onto the vessel. In this case, it is advisable to use CPT.
11.
CIF
Cost, Insurance and Freight (named port of destination)
Exporter delivers the goods on board a vessel and pays the costs and freight necessary to bring the goods to the named port of destination as well as covers insurance for risk of loss of or damage to the goods during carriage. For example: CIF Port name.
The point of delivery here is when the goods are on board the vessel at the shipment port.
The exporter’s obligation for loss or damage to the goods is to this point and not up to the port of destination.
The two critical points of when the risk passes from the exporter and the incurred costs are the same as in CFR.
Similarly, too, because of container shipments which are handed over to the carrier before being loaded onto the vessel, CIF is not an appropriate term to use. In this case, it is advisable to use CIP.
Incoterms® is a registered trademark of the International Chamber of Commerce (ICC), Paris, France.
The 11 new Incoterms® go into effect on January 01, 2011
RULES FOR ANY MODE OR MODES OF TRANSPORT
EXW
Ex Works (named place of delivery)
FCA
Free Carrier (named place of delivery)
CPT
Carriage Paid To (named place of destination)
CIP
Carriage And Insurance Paid To (named place of destination)
DAT
Delivered At Terminal (named terminal at port or place of destination)
DAP
Delivered At Place (named place of destination)
DDP
Delivered Duty Paid (named place of destination)
RULES FOR SEA AND INLAND WATERWAY TRANSPORT
FAS
Free Alongside Ship (named port of shipment)
FOB
Free On Board (named port of shipment)
CFR
Cost And Freight (named port of destination)
CIF
Cost, Insurance and Freight (named port of destination)
Incoterms® define the responsibilities of buyers and sellers for the domestic and international delivery of goods and determine how costs and risks are allocated.
The words, “importer” and exporter” have been used instead of “buyer” and “seller” that relate more closely with international (cross-border) trade.
1.
EXW
Ex Works (named place of delivery)
Exporter places goods at their premises at importer’s disposal, i.e. works, factory or warehouse. For example: EXW Street Address, City, Country or EXW City, Country if the named address has been specified in the contract of sale.
Exporter has limited obligations to provide export information and is not obliged to load the goods on any conveyance. Moreover, importer has to organize export clearance from the country of shipment.
It should not be assumed that export formalities such as licenses, authorizations and security-related information are the responsibility of the importer. The exporter must provide, at importer’s request, risk and expense, assistance in these export formalities.
2.
FCA
Free Carrier (named place of delivery)
Exporter delivers the goods to the carrier or another person nominated by importer at the exporter’s premises or another named place. For example: FCA Street Address of Forwarder/Consolidator, City, Country.
Exporter is required to clear the goods for export.
Delivery is said to have taken place when the exporter places the goods at the named place. It is then up to the importer to arrange for further means of transport.
Transfer of risk for loss or damage from exporter to importer takes place when said delivery has taken place in said manner.
3.
CPT
Carriage Paid To (named place of destination)
Exporter delivers the goods to the carrier or another person nominated by them at an agreed place and pays the costs to ship the goods to the named place of destination. For example: CPT Destination City.
Exporter is required to clear the goods for export.
The agreed place of delivery is where the risk passes to the importer. The costs of transportation to the destination place (named city) are borne by the exporter but the risk for damage or loss to the goods passes when delivery is made at the agreed place. The agreed place may be the carrier’s or the nominated person’s premises, the airport or port terminal warehouse or any other place, as agreed to in the contract of sale.
Several carriers may be used to transport the goods to its destination.
Example:
- Goods transported from factory address by a trucking company (first carrier)
- Then from the trucking company’s address to a rail yard by a another trucking company (second carrier)
- Then from the rail yard to the port rail yard by rail (third carrier)
- Then from the port rail yard to a dock by another trucking company (fourth carrier)
- Finally by vessel to the final destination (fifth carrier)
4.
CIP
Carriage And Insurance Paid To (named place of destination)
Exporter delivers the goods to the carrier or another person nominated by them at an agreed place and also contracts for insurance cover against risk of loss or damage to the goods during the carriage in addition to paying the costs to ship the goods to the destination. For example: CIP Destination City.
CIP can be considered similar to CPT with insurance cover added.
Exporter is required to clear the goods for export.
5.
DAT
Delivered At Terminal (named terminal at port or place of destination)
Exporter delivers the goods after unloading from the arriving vessel or other means of transport and places them at the disposal of the importer at a named terminal at a named port. For example: Port name, Terminal number.
Terminal could also mean a port warehouse, container yard, rail station or air cargo terminal.
Exporter bears all risks and costs involved up to unloading the goods at the named terminal.
For LCL (Loose Container Load) cargo, it would be the obligation of the exporter to have the LCL cargo unloaded from the container and placed in their NVOCC (Non-Vessel Operation Common Carrier) or freight forwarders warehouse at the disposal of the importer. The exporter bears all the costs up to this point. It is then the obligation of the importer to arrange for pick-up.
6.
DAP
Delivered At Place (named place of destination)
Delivery takes place at a named destination and when the goods have been placed at the disposal of the importer but have not yet been unloaded from the arriving vehicle. For example DAP City name.
In this case, the street address of the importer could also be included or indicated separately in the contract of sale as the named place of destination or any agreed to point.
Risks and costs up to the named address and prior to the time the goods are unloaded are the exporter’s responsibility.
7.
DDP
Delivered Duty Paid (named place of destination)
Exporter places the goods at the disposal of the importer with all import duties and taxes paid. The exporter is also responsible for all costs associated with importing the goods and assumes risk for damage to or loss of the goods up to the named place of destination. For example: DDP City name. Street address of the importer could also be included or indicated separately in the contract of sale as the named place of destination.
8.
FAS
Free Alongside Ship (named port of shipment)
Exporter places the goods alongside the vessel nominated by the importer at a named port of shipment. For example: FAS Port name.
For exporters who ship goods in containers, placing a container alongside a vessel is most likely not possible because containers are usually first sent to a terminal or loaded at a NVOCC’s warehouse before being loaded onto the vessel. It is therefore advisable to use FCA in these cases. FAS is usually used for bulk cargo.
Risk of loss of and damage to the goods up to the port is the exporter’s responsibility and the importer then assumes risk and bears all costs thereafter.
9.
FOB
Free On Board (named port of shipment)
Exporter is required to deliver the goods on board a vessel. For example: FOB Port name.
This is sometimes not possible for exporters who ship goods in containers because containers are usually first sent to a terminal or loaded at a NVOCC’s warehouse before being loaded onto the vessel.
Risk of loss of and damage to the goods is the exporter’s responsibility up to when the goods are on board the vessel.
FOB is good to use for bulk cargo.
The point of delivery here is the named port.
Usually the exporter hands over a loaded, ready-to-ship container to the carrier at a warehouse or terminal (named place) before being loaded onto the vessel. This then cannot be an appropriate FOB transaction which states Free On Board. In the case of container shipments, it is advisable to use FCA.
10.
CFR
Cost And Freight (named port of destination)
Exporter delivers the goods on board a vessel and pays the costs and freight necessary to bring the goods to the named port of destination. For example: CFR Port name.
The point of delivery here is when the goods are on board the vessel at the shipment port.
Therefore, the exporter’s obligation for loss or damage to the goods is to this point of delivery. It is not up to the port of destination.
Here, the risk passes at the port of shipment even though the freight costs have been paid up to the port of destination. Point to bear in mind is that with CFR terms the destination port is known but not necessarily the origin port. It is entirely likely that the exporter may opt to ship from different ports each time. In all cases, risk passes to the importer at the port of shipment.
Similarly as with FOB, CFR cannot be an appropriate term to use for container shipments because containers are handed over to the carrier at a warehouse or terminal (named place) before being loaded onto the vessel. In this case, it is advisable to use CPT.
11.
CIF
Cost, Insurance and Freight (named port of destination)
Exporter delivers the goods on board a vessel and pays the costs and freight necessary to bring the goods to the named port of destination as well as covers insurance for risk of loss of or damage to the goods during carriage. For example: CIF Port name.
The point of delivery here is when the goods are on board the vessel at the shipment port.
The exporter’s obligation for loss or damage to the goods is to this point and not up to the port of destination.
The two critical points of when the risk passes from the exporter and the incurred costs are the same as in CFR.
Similarly, too, because of container shipments which are handed over to the carrier before being loaded onto the vessel, CIF is not an appropriate term to use. In this case, it is advisable to use CIP.
Friday, October 8, 2010
Meeting to Discuss Harmonizing Trade Compliance Best Practices, Standards, Benchmarking and Related Education & Training…
On Wednesday, October 27th, seasoned trade compliance professionals are getting together in Washington DC for an “Exploratory Discussion on Trade Compliance Standards.” The session is hosted by the law firm of Baker & McKenzie LLP in cooperation with The Export Practitioner, University of Georgia and National Foreign Trade Council, Inc.
The purpose of the meeting is to discuss consistency and harmonization of best practices, benchmarking and trade compliance standards including related education, training and certification issues. Initial focus is on exports, but international trade is the overarching subject.
The August article in The Export Practitioner “Certificate vs. Certification: Buyer Beware!” energized and educated the constituency, generated a great deal of lively as well as informative discussion and received significant attention from a wide-range of practitioners and vendors alike. That and ongoing inconsistencies in best practices and a lack of consistent standards prompted this meeting.
Already invited representatives from industry, academia, the research & development community, consulting and law firms along with ICPA and District Export Council members and others from the public and private sectors will consider past history, present concerns, address specific actions and the way ahead.
Participants see this as a timely and unique opportunity to make a significant difference and move trade compliance best practices, harmonization, benchmarking and universal standards forward with greater clarity, depth and fidelity than ever before. Hopefully, fundamental export control reform will be a catalyst for significant progress in this arena. Unfortunately much of what needs to be done is long overdue.
The purpose of the meeting is to discuss consistency and harmonization of best practices, benchmarking and trade compliance standards including related education, training and certification issues. Initial focus is on exports, but international trade is the overarching subject.
The August article in The Export Practitioner “Certificate vs. Certification: Buyer Beware!” energized and educated the constituency, generated a great deal of lively as well as informative discussion and received significant attention from a wide-range of practitioners and vendors alike. That and ongoing inconsistencies in best practices and a lack of consistent standards prompted this meeting.
Already invited representatives from industry, academia, the research & development community, consulting and law firms along with ICPA and District Export Council members and others from the public and private sectors will consider past history, present concerns, address specific actions and the way ahead.
Participants see this as a timely and unique opportunity to make a significant difference and move trade compliance best practices, harmonization, benchmarking and universal standards forward with greater clarity, depth and fidelity than ever before. Hopefully, fundamental export control reform will be a catalyst for significant progress in this arena. Unfortunately much of what needs to be done is long overdue.
Thursday, September 23, 2010
November 8th and 10th Workshops on “Challenges Facing Empowered Officials (EOs) and Trade Compliance Professionals”
There are two upcoming, unique, low cost, high-quality workshops in Southern California focused on individual and organizational exposure, liability and risk and key regulatory requirements, difficult problems and potentially devastating consequences that can have lasting dramatic impact.
These workshops are a MUST ATTEND if you are in any way involved in international trade compliance and want to be better prepared for a wide-range of possibilities. In particular, if you are an EO, responsible authority or trade compliance practitioner at any level, you do not want to miss this timely opportunity for hands-on, practical application case study-based education and training.
The programs also include first come/first served no-cost one-hour afternoon sessions to discuss your issues of interest with presenters.
For more details and online registration including an ICPA member discount go to:
LA: http://www.buyusa.gov/pacificsouth/compliance.html
San Diego: http://www.regonline.com/trade_compliance_workshop
One page flyers for both events are also available on my LinkedIn profile in the “View Full Profile” mode at http://www.linkedin.com/in/johnpriecko/.
If you have questions you are also welcome to contact me directly at 703-895-1110 or jpriecko@comcast.net
These workshops are a MUST ATTEND if you are in any way involved in international trade compliance and want to be better prepared for a wide-range of possibilities. In particular, if you are an EO, responsible authority or trade compliance practitioner at any level, you do not want to miss this timely opportunity for hands-on, practical application case study-based education and training.
The programs also include first come/first served no-cost one-hour afternoon sessions to discuss your issues of interest with presenters.
For more details and online registration including an ICPA member discount go to:
LA: http://www.buyusa.gov/pacificsouth/compliance.html
San Diego: http://www.regonline.com/trade_compliance_workshop
One page flyers for both events are also available on my LinkedIn profile in the “View Full Profile” mode at http://www.linkedin.com/in/johnpriecko/.
If you have questions you are also welcome to contact me directly at 703-895-1110 or jpriecko@comcast.net
Wednesday, September 15, 2010
Overview and One-Page Summary of the State Department’s Settlement with Xe Services LLC
As anticipated, following the State Department's Directorate of Defense Trade Controls (DDTC) settlement with AAR International, Inc. (AAR) in mid-July, DDTC settled about a month later with Xe Services LLC (Formerly Blackwater Worldwide), the seller and party responsible for the alleged violations of Presidential Airways, Inc, and numerous other alleged violations. Xe sold Presidential Airways, Inc. to AAR in April 2010 for $200 million.
A one-page summary of the Xe Services LLC Proposed Charging Letter, Consent Agreement and Order that addresses the 288 alleged violations of the Arms Export Control Act and International Traffic in Arms Regulations (ITAR) is available at
http://www.scribd.com/Xe-Services-081810-Settlement-Summary-090610/d/37482307. It consolidates 67 pages of material into a concise and consistent format that’s particularly useful for C-level executives and trade compliance professional’s education/training at all levels.
A unique aspect of the case is that while many of the alleged violations described were clearly knowing and willful, there’s no mention of that anywhere in the settlement documents. In fact, the words “knowing” and/or “willful” are nowhere to be found. That’s interesting in many respects including prior settlement precedents where there were knowing and willful violations and the State Department went out of their way to emphasize the ITAR Parts 127.1(d) and 127.3 violations.
Additionally, it’s interesting to note that Erik Prince, Blackwater’s founder and owner, has moved to Abu Dhabi and has the company up for sale. In closely reading the complete settlement summary and based on other research, it’s clear Blackwater had extensive, ongoing, serious and systemic compliance problems. The nature, multitude and significance of the repeated failures to comply reflect a culture of non-compliance from the top down.
In that regard, in April 2010, the Department of Justice indicted 5 senior Blackwater employees for conspiring to violate federal statutes, filing false forms, unlawful possession of automatic weapons, unregistered firearms and obstruction of justice. Sources indicate enforcement and other related actions continue.
If you are a trade compliance professional, you are encouraged to read the entire Xe Services LLC settlement package. It provides a wealth of valuable information. Monitoring various U.S. Government enforcement and compliance resources should be an integral part of any trade compliance professional’s reading and an essential element in any comprehensive Trade Compliance Program. One-page summaries like these help get the word out in a bite-size way and allow readers to quickly digest and compare individual cases.
*Mr. Priecko is the President and Managing Partner of Trade Compliance Solutions, a network of experienced compliance-related professionals. He is a trade compliance veteran with more than 15 years of experience. He can be reached at 703-895-1110 or jpriecko@comcast.net.
A one-page summary of the Xe Services LLC Proposed Charging Letter, Consent Agreement and Order that addresses the 288 alleged violations of the Arms Export Control Act and International Traffic in Arms Regulations (ITAR) is available at
http://www.scribd.com/Xe-Services-081810-Settlement-Summary-090610/d/37482307. It consolidates 67 pages of material into a concise and consistent format that’s particularly useful for C-level executives and trade compliance professional’s education/training at all levels.
A unique aspect of the case is that while many of the alleged violations described were clearly knowing and willful, there’s no mention of that anywhere in the settlement documents. In fact, the words “knowing” and/or “willful” are nowhere to be found. That’s interesting in many respects including prior settlement precedents where there were knowing and willful violations and the State Department went out of their way to emphasize the ITAR Parts 127.1(d) and 127.3 violations.
Additionally, it’s interesting to note that Erik Prince, Blackwater’s founder and owner, has moved to Abu Dhabi and has the company up for sale. In closely reading the complete settlement summary and based on other research, it’s clear Blackwater had extensive, ongoing, serious and systemic compliance problems. The nature, multitude and significance of the repeated failures to comply reflect a culture of non-compliance from the top down.
In that regard, in April 2010, the Department of Justice indicted 5 senior Blackwater employees for conspiring to violate federal statutes, filing false forms, unlawful possession of automatic weapons, unregistered firearms and obstruction of justice. Sources indicate enforcement and other related actions continue.
If you are a trade compliance professional, you are encouraged to read the entire Xe Services LLC settlement package. It provides a wealth of valuable information. Monitoring various U.S. Government enforcement and compliance resources should be an integral part of any trade compliance professional’s reading and an essential element in any comprehensive Trade Compliance Program. One-page summaries like these help get the word out in a bite-size way and allow readers to quickly digest and compare individual cases.
*Mr. Priecko is the President and Managing Partner of Trade Compliance Solutions, a network of experienced compliance-related professionals. He is a trade compliance veteran with more than 15 years of experience. He can be reached at 703-895-1110 or jpriecko@comcast.net.
Friday, September 10, 2010
The BIG News at Last Week's 2010 Update Conference on Export Controls and Policy Was Not President Obama’s Comments
Although it was precedent setting and reassuring to hear the President of the United States talk about and avidly support needed and long overdue export control reforms and use a variety of terms known to trade and export control practitioners (i.e. control lists, jurisdiction, licensing policies, transparency…), the news with immediate and significant impact that you may have missed is the pronounced shift in enforcement to focus on individual accountability.
Note, Under Secretary for Industry and Security Eric Hirschhorn’s opening remarks: ”But--and this is an important but--we are planning increased efforts against individuals who flout the rules and against companies whose inadequate internal compliance programs tell us that they are indifferent to whether they follow the rules.”
And Assistant Secretary for Export Enforcement David Mills’ expanding comments: “But, we will also be taking a harder line in other circumstances involving willful misconduct. While we have typically sought penalties against companies more so than individual employees, as Under Secretary Hirschhorn pointed out yesterday, this is about to change. Going forward, when a violation is a deliberate action of an individual, we will consider seeking penalties against that individual - including the denial of export privileges, fines and imprisonment. The same will hold true for a supervisor who is complicit in these deliberate violations by subordinates.”
The Commerce Department case against Carol Wilkins at RF Micro Devices may have been an early indicator of this direction. Stay tuned here on upcoming settlements and investigations across the US Government to see how this plays out and whether it is a much more extensive initiative. In light of the overall enforcement direction in conjunction with export control reform, I would not be surprised. For example, let’s watch what happens to the 5 indicted senior managers at Blackwater who are on the block at the Department of Justice for knowing and willful violations?
In balance, it appears that accountability and responsibility will now more equitably fall on both the organization and individual. Will that combination have a greater impact on compliance and send a clearer message about corporate and individual exposure, liability, risk and the consequences of intentional wrongdoing? Will it also be a much more effective deterrent?
As food for thought: What impact will this change have on you, your trade compliance team, senior management, engineers, marketing/business develop types and others in your organization? What action will you take to ensure this message gets out?
*Mr. Priecko is the President and Managing Partner of Trade Compliance Solutions, a network of experienced compliance-related professionals. He is a trade compliance veteran with more than 15 years of experience. He can be reached at 703-895-1110 or jpriecko@comcast.net.
Note, Under Secretary for Industry and Security Eric Hirschhorn’s opening remarks: ”But--and this is an important but--we are planning increased efforts against individuals who flout the rules and against companies whose inadequate internal compliance programs tell us that they are indifferent to whether they follow the rules.”
And Assistant Secretary for Export Enforcement David Mills’ expanding comments: “But, we will also be taking a harder line in other circumstances involving willful misconduct. While we have typically sought penalties against companies more so than individual employees, as Under Secretary Hirschhorn pointed out yesterday, this is about to change. Going forward, when a violation is a deliberate action of an individual, we will consider seeking penalties against that individual - including the denial of export privileges, fines and imprisonment. The same will hold true for a supervisor who is complicit in these deliberate violations by subordinates.”
The Commerce Department case against Carol Wilkins at RF Micro Devices may have been an early indicator of this direction. Stay tuned here on upcoming settlements and investigations across the US Government to see how this plays out and whether it is a much more extensive initiative. In light of the overall enforcement direction in conjunction with export control reform, I would not be surprised. For example, let’s watch what happens to the 5 indicted senior managers at Blackwater who are on the block at the Department of Justice for knowing and willful violations?
In balance, it appears that accountability and responsibility will now more equitably fall on both the organization and individual. Will that combination have a greater impact on compliance and send a clearer message about corporate and individual exposure, liability, risk and the consequences of intentional wrongdoing? Will it also be a much more effective deterrent?
As food for thought: What impact will this change have on you, your trade compliance team, senior management, engineers, marketing/business develop types and others in your organization? What action will you take to ensure this message gets out?
*Mr. Priecko is the President and Managing Partner of Trade Compliance Solutions, a network of experienced compliance-related professionals. He is a trade compliance veteran with more than 15 years of experience. He can be reached at 703-895-1110 or jpriecko@comcast.net.
Monday, September 6, 2010
CBP Import Compliance Statistics
Despite the vast quantity of trade information we see every day, we rarely find information about what is happening to the import community as a whole; however, CBP recently released statistical highlights Mid-Fiscal Year 2010 (and 2009). Most interesting is the enforcement data provided below:
- During the first six months of fiscal year 2009, U.S. imports rapidly declined, however, seasonal patterns resumed by mid-year 2010, resulting in a moderate recovery.
- Imports are now at levels last seen in fiscal year 2006. Continued stability and modest growth are projected for fiscal year 2010.
- In fiscal year 2009, the total value of imports processed by U.S. Customs and Border Protection was slightly more than $1.7 trillion, a 25 percent decrease from the previous year. By year end 2010, however, it is projected that the value of imports will increase 6 percent, totaling $1.8 trillion.
- During the first six months of fiscal year 2010, CBP collected $15 billion in revenue. It is projected that $31 billion will be collected by year end.
- Consistent with recent years, only 29 percent of imported goods were dutiable. The remaining goods were duty free or free under tariff preference programs. (About 49% are unconditionally duty free and 22% are unconditionally duty free.)
- A total of $130 million in antidumping/countervailing duties were collected during the first half of fiscal year 2010, down slightly from the same period last year.
- After the Revenue Gap (projected vs. collected) declined for five consecutive years, preliminary measurements indicate that the level of uncollected duties rose to 1.4 percent, which is roughly equivalent to levels reported in fiscal year 2007.
- Based on a random sampling, 98.6 percent of the fiscal year 2010 imports were materially compliant with all U.S. trade laws and regulations. This compliance rate is slightly higher than recent years (This means that 2.4% of all import transactions are non-compliant.)
- Entry volume at the mid-point of fiscal year 2010 is 13 million. By year end, 27 million entries are expected, an increase of 5 percent from fiscal year 2009.
- China surpassed Canada as the United States’ top source of imports in fiscal year 2009, and is projected to maintain its lead through fiscal year 2011.
- In 2009 the global downturn was evident by the decline of commercial imports. The preliminary total for year end import value was at $1.7 trillion, a decline of 25 percent or $600 billion from the all time high of $2.3 trillion in FY 2008. Preliminary data for other key indicators were also lower, including revenue collections, down by 15 percent, and entries filed, were down 15 percent. At the close of FY09 most indicators show that imports stabilized to levels seen in FY05.
Commercial trade enforcement actions
- Through the end of FY09, CBP initiated more than 18,000 trade enforcement seizures valued at more than $300 million, which is comparable to FY08 enforcement levels. These include violations of intellectual property rights (IPR) having a preliminary count of 14,841 seizures with a total domestic value of $260.7 million.
- Textile quota seizures declined this year with a change in the laws eliminating quotas from China, however, import safety related seizures maintained FY08 levels at about 2,600 total seizures.
- Through the end of FY09, CBP initiated 488 commercial fraud penalties, compared to 453 in FY08, assessed at $98 million. Audits continue to be an effective tool for CBP in addressing larger importers beyond transaction by transaction reviews, with 345 completed audits, and collections of $24.9 million in revenue.
- CBP trade efforts strike a balance between facilitation and trade enforcement. Compliance levels in FY08 and preliminary levels for FY09 are at 98.6 percent and 98.5 percent respectively. This provides CBP with a measure of confidence that most imports into the U.S. are materially compliant for trade purposes, and provides a basis for partnership programs such as Importer Self-Assessment (ISA). ISA members are vetted carefully, and are considered to be among the most highly compliant importers, and are accorded benefits such as an increased level of cargo facilitation. The ISA program has grown by more than 10 percent this year, to 194 importers.
- The number of seizures for intellectual property rights (IPR) violations declined by one percent from 14,992 in FY08 to 14, 841 in FY09. The domestic value of goods seized decreased by four percent to $260.7 million from $272.7 million. China continued to be the top trading partner for IPR seizures in FY09 with a domestic value of $204.7 million, accounting for 79 percent of the total value seized. Footwear was the top commodity seized in FY09 with a domestic value of $99.7 million, which accounted for 38 percent of the entire value of infringing goods. The category of jewelry appeared on the top commodities list for the first time, accounting for 4 percent of the total value of IPR seizures by domestic value.
- Regulatory Audit completed 345 audits of importers and other parties involved in the process of importing goods in FY 2009 and had another 233 audits in progress. Regulatory Audit identified approximately $61.8 million in recommended recoveries, including user fees, and collected about $26.5 million in revenue.
For more information, charts and tables, go to: http://www.cbp.gov/linkhandler/cgov/trade/trade_programs/trade_trends/itt.ctt/itt.pdf
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