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Export Compliance Penalties
Recently President Bush signed
a bill into law, which will dramatically increase penalties for
export compliance violations. We
are very aware that import shipments are closely scrutinized, so
that we minimize the risk of further terrorist attacks.
It is understandable that other countries would want
increased attention to security on shipments coming into their ocean
ports and airports.
The bill, which the president signed into law in
October, increases the civil penalty for export law violations from
$50,000.00 to $250,000.00 or double the amount of the transaction.
The new law increases the criminal penalty for export law
violations to a maximum of one million dollars.
It is incumbent on everyone who exports to know the export
laws. Everyone must be
familiar with the Export Administration Regulations (EAR).
One of the most important
issues of concern is the concept of “dual use.”
Particularly these days of high tech gadgets, which are
becoming cheap and are taken for granted, could an innocent
appearing item be used by an enemy or a terrorist?
For example, global positioning systems (GPS) are being sold
to hunters, so they do not get lost in the woods.
Could this same GPS be used by an enemy or terrorist to
target a soldier, government official or civilian?
It is important that every exporter asks TWO questions.
What DOES my product do?
And what COULD my product do?
Don’t take any chances.
Surround yourself with help.
Get your forwarder involved.
Check all export regulations.
Determine if your product might require an export license.
Export licenses are issued by several government agencies.
It is critical to check them all.
If you are not absolutely certain that it is legal to export
your particular product to a particular country, submit a request to
the proper agency for an export license.
They will either issue the export license, deny the export
license and tell you that you may not ship or tell you that you may
ship without a license.
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C-TPAT
It has been nearly three
years since we discussed this subject in Foreign Insight. Customs-Trade Partnership Against Terrorism is a joint effort
by government and business to provide security in the logistics
supply chain all the way from origin to destination.
In fact, it should start with security procedures at origin
factory or warehouse and conclude with procedures at destination
factory or warehouse.
There are some plusses and
some minuses involved with implementing and maintaining a C-TPAT
program. On the plus
side you have the comfort in knowing your vendors are as compliant
with the rules and regulations as your company is.
Another plus is the secure feeling that you have done a
small part to avoid a possible terrorist attack on our country,
AND you have enhanced the safety and well-being of your own
facility and employees.
Yet another plus is the fact
that, once established as C-TPAT qualified, Customs and Border
Protection (CBP) indicates that fewer shipments will be stopped
for inspection of documents and fewer shipments will be stopped
for inspection of the cargo.
This should provide a smoother movement of your cargo with
fewer delays and downtime and less extra costs in time and
trucking for inspections.
On the minus side is the time
and cost of implementing the program and maintaining the program
to include training of personnel and ongoing training including
replacement personnel. There
is also an unconfirmed rumor that lawsuits or penalties for errors
or other problems could be more severe, because a company with
this certification is expected to not make mistakes.
Overall the benefits apparently outweigh the negatives,
since the program is gaining in participation.
One facet that almost every
article on C-TPAT includes is the requirement that top company
executives get involved in the program.
Just as Sarbanes-Oxley requires top executives to be
involved in the financial dealings of the company, so it is highly
recommended that top executives get involved in supply chain
security and specifically in the C-TPAT program.
Call your customs broker for additional suggestions and
information.
Santa
Now that we have had plenty of cold and snow for Santa
and a White Christmas and we hear very little about global warming,
could we work on a good, long mid-winter thaw?
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