Shipping Solutions Newsletter

By John Goodrich email | bio

As part of my business I have the honor of leading a fair number of import and export regulatory compliance seminars. Some of my students have been rather vocal about the compliance issues they’ve experienced within their companies. As a seminar leader my job is to illuminate an issue and introduce tactical solutions the student’s company might consider implementing.

The common response to my suggestions is “Yeah but.” (This rhymes with rabbit when spoken quickly.) “Yeah, but you don’t understand the situation at my company.” The discussion then continues with some reason why the company has not moved forward with an effective import/export compliance program.

I’ve noticed a pattern in the reasons my students give. To be sure many of them describe some truly challenging barriers to implementing effective compliance measures. With all due respect to my students and their companies, the reasons given for not making the necessary investments in regulatory compliance programs boil down to nothing more than excuses.

The individual excuses are too numerous to mention for this article, but I have condensed them into a variety of categories. What excuses are you using to avoid investing in import/export compliance at your company?

Non-Compliance Excuses

1. The below the radar excuse:

“We haven’t been caught yet.”
“What are our chances of being caught?”
“We’re so small the government won’t bother with us.”

Speeding is speeding no matter how big your car or how fast you were going. Certainly the size of the traffic ticket will depend on the egregiousness of the offense and your prior record. But if you are speeding, it is only a matter of time before you and your company will be pulled over for a talk with the authorities.

2. The lemming excuse:

“Everybody else is doing it.”
“But my competitor is getting away with it.”

Forgive me, but this argument is fallacious on so many levels it is hardly worth acknowledging. Perhaps, however, you did not have the benefit of being raised by my mother, so here goes. “If everybody else were jumping off a cliff and killing themselves I suppose you would think that was a good idea, too!” Enough said.

3. The financial excuse:

“We don’t have the money.”
“If we focused all of our resources on compliance we would be out of business.”
“There’s no return on investing in compliance.”

Admittedly companies must make tough financial decisions and allocate resources effectively. Being compliant and staying in business are not mutually exclusive goals. Indeed there is an ROI argument to be made for implementing a regulatory compliance program. We will discuss this in part two of this article.

4. Failure to launch excuse:

“It’s been on our action plan for the last few years, but we simply haven’t gotten around to it yet.”
“We have had more pressing business issues that seem to get in the way of proceeding.”

So you are admitting you are lazy and ineffective after all. Shhh. I won’t tell your boss.

5. The ignorance excuse:

“We don’t know how.”
“We had no reason to know.”
“We have always done it that way.”

You wouldn’t jump into the deep end of a swimming pool without first knowing how to swim would you? It is alarming how many otherwise competent managers jump feet first into the depths of importing and exporting without first doing their research.

Two websites:

Exports—Bureau of Industry and Security.
Imports—Customs and Border Protection.

Now get online and get swimming, er… reading!

6. Passing the buck excuse:

“I’m just doing what my boss told me to do.”
“I’m just doing what my predecessor did.”
“My broker/forwarder did it.”
“The dog ate my homework.”

Sorry to say, but the buck stops with you. Fines and penalties accrue to you and your company, not to your service providers or former employees. If you are in the unfortunate situation of working for an uninformed or coercive manager, you have my sympathy. That still does not give you permission to break the law.

7. The political statement:

“The (expletive deleted) government is driving honest business people out of business with all of these (more expletives) regulations!”

Agreed, regulation imposes a certain burden on companies. For some of you that burden seems insurmountable. Unfortunately, conscientious objector has not been an effective defense when it comes to import and export regulatory compliance. If you are going to play the import/export game you have no choice but to comply with the law.

For those who feel compelled to follow the political path, there are effective means of engaging the regulators. Both Customs and Commerce, for example, maintain programs for actively soliciting advice from the trade in an effort to promulgate effective, less-burdensome regulation.

8. Corporate gridlock excuse:

“I don’t have the authority to make changes.” (See not my fault.)
“Implementing change takes so long at my company.”
“We simply can’t gain consensus at my company so nothing happens.”

This is one of the more real and dicey barriers facing companies. If you analyze your situation, you will discover that gridlock is the result of one of the other issues discussed within this article. As compliance professionals you will have to be creative in breaking down the barriers and moving your company’s compliance programs forward. The second portion of this article might help spur some ideas for you.

If you give up on this issue, you have abdicated one of your primary responsibilities. If you truly believe you can’t make a difference, it might be time to step aside and let others tackle the problem.

9. Denial:

“But we are a compliant company.”
“We didn’t mean to break the law. We’re good people.”
“It isn’t really as bad as it appears.”

As they say, denial is more than just a river in Egypt. Best intentions and ethics statements do not a compliance program make. If you do not have a business process in place for evaluating and measuring your company’s import and export compliance levels, you are at risk.

Interestingly there are many good and well-intentioned companies that run amiss of the regulations. While Customs does not actively advertise the penalties it assesses, the Commerce Department does regularly share its Major Cases List at the BIS website listed above.

Ask yourself, what would happen if your company lost its importing or exporting privileges? Perhaps the answer to that question will motivate you.

10. The whine:

“It’s hard.”
“We’ve tried that before!”
“It won’t work.”

Would you like some cheese with that wine, sir? Give me a break! Cry me a river! Can we talk? Would you like to hear about the blister on my little toe?

Yes it is difficult. If you are not up to the challenge then assign the responsibility to someone who is.

“YEAH BUT!”

There you go again with another excuse! It seems every time I debunk one of your excuses you come up with another.

Let me attempt another tack. In the second part of this article we will discuss why investing in import export regulatory compliance should be a priority for your company.

Top of Page

The Advantages of Arbitration Clauses in International Contracts

By Mary K. McCormick email | bio

Arbitration is a method of dispute resolution that has become very popular in the last 20 years or so for commercial disputes and other areas such as securities, labor, employment and construction. In the international commercial contracts area, arbitration has been a preferred method of dispute resolution for at least 30 years, but most people don’t know why or what advantages there are in using arbitration instead of going to court.

Arbitration is essentially private litigation. In contrast to one party suing the other in a court system in a particular country, arbitration is consensual; that is, the parties must both agree to submit a dispute to arbitration. This agreement to arbitrate can be done up front in the contract by inserting an arbitration clause or even entered into after a dispute begins.

There are several practical reasons for favoring arbitration over going to court. Generally speaking, it takes less time going through arbitration than going to court, although critics (especially litigators) like to point to arbitration cases that have been drawn out and expensive. Of course, the key to keeping the process timely is effective oversight and management of the process.

Arbitration is faster because there is either no up-front legal discovery (the process of document production and witness depositions) or very limited discovery. Most arbitral bodies that provide procedural rules and administration, such as the American Arbitration Association, have rules with expedited time periods for filings and responses, and make it part of their mission to provide timely dispute resolution. In addition, the award is final and binding, so there are no appeals. So, even though you are paying for the arbitrator’s time, the whole process is generally faster and less costly overall.

Arbitration is also favored because it is private—there is no official court record to be made public. If you have a dispute with another party with whom you may need to do business again, this is a major advantage.

The parties can stipulate that the arbitrator or arbitrators—usually one arbitrator for small disputes and a panel of three for large disputes—have expertise in particular areas that would be relevant to their businesses or the type of dispute. Particularly in the international contracts area, arbitration is used to bypass the fear (real or perceived) of not getting a fair hearing in another country’s courts, or fear of corruption in such courts.

One of the most important but little-known reason to use arbitration clauses in your international contracts is enforceability. Court judgments are much more difficult to enforce than arbitral awards because there are relatively few international treaties between or among countries regarding enforcement of foreign court judgments. However, 137 countries have now ratified the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention” for short).

The United States is a party to the New York Convention and ratified it in 1970. Any award entered in the U.S. is enforceable in 136 other countries, and vice versa. The U.S. also has a federal law, the United States Arbitration Act, which favors and promotes the use of arbitration by making arbitral awards enforceable within the U.S. and only challengeable for narrow reasons.

Full Disclosure: The author has been on the Panel of International Arbitrators of the American Arbitration Association since 1999.

Top of Page

Challenge

HazMat eXpress was using a typewriter to fill out air waybills. They wanted a way to move into the 21st Century with a solution that would automatically print air waybills on preprinted forms.

Solution

HazMat eXpress purchased Shipping Solutions Professional in 2005. Mike Sweeney, export and IT professional at HazMat eXpress, uses the "print data only" option in Shipping Solutions and prints the air waybills on preprinted forms. The forms have been accepted by many air carriers including KLM, Air Canada, American, Northwest and Martinair.

Company

HazMat eXpress, Addison, IL.

More Information

Read the entire HazMat eXpress Case Study at the Shipping Solutions website.

Share Your Story

If you'd like to share how Shipping Solutions has helped your company save time and money with the export documentation and compliance process, please let us know. We'll be happy to share your story with the Shipping Solutions Newsletter readers.

Top of Page