President Obama’s videotaped remarks will be delivered to the Department of Commerce tomorrow, during their annual export control conference. He will outline the foundation of our new export control system, “including what we control, how we control it, how we enforce those controls and how we manage our controls.” The goal in reforming our current system is to strengthen national security by focusing on controlling the most critical products and technologies.
The current export control system is entirely too complicated. According to this GovNews article, last year’s inter-agency review of the system resulted in the following observations:
• The current system operates under two different control lists with fundamentally different approaches to defining controlled products, administered by two different departments. This has caused significant ambiguity, confusion and jurisdictional disputes, delaying clear license determinations for months and, in some cases, years.
• There are three different primary licensing agencies, each applying their own policies. None sees the others’ licenses, and each operates under unique procedures and definitions, leading to gaps in the system and disparate licensing requirements for nearly identical products.
• A multitude of agencies with overlapping and duplicative authorities currently enforce our export controls, creating redundancies and jeopardizing each other’s cases.
• All these agencies operate on a number of separate information technology (IT) systems, none of which is accessible to other licensing or enforcement agencies or easily compatible with the other systems, resulting in the U.S. Government not having the capability of knowing what it has approved for export and, more significantly, what it has denied.
Under President Obama’s plan, agencies will define new criteria to determine what items need to be controlled. The criteria will be used to revise lists of munitions and dual use items. The goal of the revisions is to make sure the lists meet the following criteria:
• are “tiered” to distinguish the types of items that should be subject to stricter or more permissive levels of control for different destinations, end-uses, and end-users
• create a “bright line” between the two current control lists to clarify jurisdictional determinations and reduce government and industry uncertainty about whether particular items are subject to the control of the State Department or the Commerce Department
• are structurally aligned so that they potentially can be combined into a single list of controlled items.
Once a controlled item is assigned to a tier, a corresponding license will be applied. Restructuring control lists and harmonized licensing policies based on tier will revolutionize our export control system. This means export enforcement will have to be stepped up. It is said that “the President will…sign an executive order establishing an Export Enforcement Coordination Center that will coordinate and strengthen the U.S. Government’s enforcement efforts – and eliminate gaps and duplication – across all relevant departments and agencies.”
This article goes into detail about the proposed revisions and is definitely worth a read. The President’s plan sounds great in theory – I guess we’ll soon see how it plays out in reality.
According to our export compliance research, 14.6% of compliance professionals believe that their company’s executive management is not aware of trade compliance. Global trade regulations are more complex than ever, and your company is required to be compliant. If it isn’t, major fines (and even prison time) can result. So, how do you get executives in your company to support your compliance initiatives?
Join American Shipper and Management Dynamics for an upcoming educational webinar, “Bringing Compliance into the Boardroom.” The webinar will feature a panel of global trade experts that will discuss how to get your voice heard when speaking to c-level executives. This 60 minute roundtable discussion will take place on September 15, 2010 at 2PM ET, and will feature the following expert panelists:
- Beth Peterson, President of BPE
- Nathan Pieri, SVP of Marketing & Product Management for Management Dynamics
- Virginia Thompson, Director of Import/Export Operations and Int. Trade Compliance for Crate and Barrell
The panel will discuss the best strategies for compliance professionals to get executive level cooperation and sponsorship of their initiatives. Their focus will include:
- The pain points of each member in the boardroom and how they relate to compliance issues (and key messaging to use when speaking to each board member)
- Tools to use in your presentation, such as quantifying compliance and its effect on the bottom line
- How automation can contribute to your efforts by adding value and saving money
Best of all? It’s FREE! Follow this link to register.
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Dustin Hoffman received excellent advice in the movie The Graduate: “Just one word…plastics.” Every recent college graduate is looking for something similar – that one piece of advice that will provide them will all the answers, and make the future they’ve dreamed of one step closer to reality. I hate to disappoint, but my advice probably won’t be the key to your future. It will, however, at least give you something to think about it. I’ve got one word you: trade.
With the way the economy has been going the past few years, it was no surprise when the Commerce Department recently reported that the trade deficit had jumped to nearly $50 billion. However, rather than signaling a double-dip recession, many are viewing this as quite the opposite – an economic expansion. According to a recent Slate article, exports were 5% higher in June than they were in December of 2009, with imports up 10.5%. This should be music to our ears.
The rising volume of trade—more goods and services shuttling in and out of the United States—is good news for many sectors. Companies engaged in shipping, trucking, rail freight, delivery, and logistics have all been reporting better than expected results. The rising numbers signify growing vitality in foreign markets—when we import more stuff, it puts more cash in the hands of people around the world, and U.S. exports are rising because more foreigners have the ability to buy the things we produce and market. The rising tide of trade is also good news for people who work in trade-sensitive businesses, especially those that produce commodities for which global demand sets the price—agricultural goods, mining, metals, oil.
While the number of U.S. imports is currently much higher than that of exports, U.S. exporters are becoming more involved with each passing month. Programs like The National Export Initiative will surely help even out the trade deficit over the next five years. However, to ensure change in the immediate future, U.S. companies have to start thinking outside the box. It’s no longer enough to simply sell to fellow Americans – we must expand our horizons to the global market. Slate puts it best:
Companies and individuals who don’t have a strategy to export more, or to get more involved in foreign markets, or to play a role in global trade, are shutting themselves out of the lion’s share of economic opportunity in our world.
Now, go forth and prosper…and enjoy having this delightful song stuck in your head the rest of the day!
A Federal Register notice published on Wednesday announced that the U.S. State Department has proposed to amend the International Traffic in Arms Regulations (ITAR). Their plan is to “update policies regarding end-user employment of dual nationals and third-country nationals,” according to an American Shipper article. The article went on to explain:
President Obama’s Task Force on Export Control Reform warned that the current requirement for the provision of additional information within a license to cover dual national and third-country national foreign employees has ‘created a tremendous administrative burden on approved end-users and has evolved into a human rights issue, which has become a focus of contention between the U.S. and allies and friends without a commensurate gain in national security.’
The State Department feels that most violations involving items on the U.S. Munitions List (USML) occur outside the scope of approved licenses rather than within foreign organizations. The proposed amendment would place responsibility on the foreign company, government, or international organization because they will operate with the understanding that, by accepting a USML item, they must comply with US laws and regulations to prevent the “diversion” of U.S. defense articles and technology. According to the State Department,
This change, by no means, reduces the due diligence requirements of the applicant to ensure, to the best of their ability, that the end-use and end-user are consistent with the approved authorization.
Comments regarding the proposed rule are due to the State Department by September 10th. My advice to exporters? Check out End-Use Manager. Better safe than sorry!
I can’t tell you how many times people come to our website with product classification questions. I found a webinar that just might be able to help. On August 17, Deborah Stern will give a presentation entitled, “Isn’t a Part of a Part Still a Part?! The Challenges of Classifying Parts and Accessories under the HTSUS.”
Here’s a description of the webinar:
When it comes to classifying goods as “parts” or “parts and accessories,” it’s not enough to know the General Rules of Interpretation. Importers are expected to weave through a web of court decisions (among them the recent decision by the Court of Appeals for the Federal Circuit in Honda of America Mfg. Inc. v. U.S. finding that oil bolts having a specific function are still considered “parts of general use”) and Customs rulings, many of which seem to be conflicting, in order to determine whether their component is classified as a part, an accessory, by its constituent material, or as something else.
This webinar will provide user-friendly rules and reference tools on the following topics to help you weave through that classification web, and will include interactive Q&A:
- “Parts” and “Accessories” Definitions and Distinctions
- Applying Additional US Rule 1(c)
- Common “Parts and Accessories” Pitfalls and How to Avoid Them
- Quick Reference Guide to Classifying Parts, Accessories, and Everything Else
It sounds like the presenter, Deborah B. Stern, Esq., really knows her stuff. She advises domestic and multinational clients on both U.S. and foreign customs compliance and other trade matters. Her practice concentrates on tariff classification, seizures and penalties, country of origin, valuation, trademark infringement, broker compliance, and preferential duty programs. The webinar costs $75, but the knowledge and tips this former CBP attorney will provide could save you countless hours of headache-inducing frustration. Follow this link to sign up.
Are you attending this year’s BIS Update Conference, Aug. 31 – Sept. 2 in Washington, DC? If so, Management Dynamics invites you to join us for a Meet and Greet Reception at Gordon Biersch (just a few blocks from the Hyatt), on Wednesday Sept. 1 at 7pm. We’ll be serving cocktails and heavy hors d’oeuvres.
If you’re interested in attending, RSVP via our event page on LinkedIn, or send an email to emilythornton@managementdynamics.com. We hope to see you there!
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