I have always advised clients that export compliance equals good risk management. Furthermore, compliance functions should be viewed as value adds rather than as a cost center. Whether or not a formal ECP (Export Compliance Program) is implemented, there are a number of best practices that are essential for any company involved in international trade.

As noted in recent posts, compliance is often a “back burner” project for several reasons including: Don’t know where to start, lack of C-level commitment, reluctance to allocate resources, too small to worry about compliance, no previous problems, or just plain inertia.

While the ROI for export compliance will vary for individual firms, we can identify an overall value proposition easily surpassing the costs involved in implementing a program.

Risk Management– avoid the cost of fines and penalties which can reach $1 Million for criminal violations. Think of compliance as insurance.

Save Time/Save Money– export compliance means less re-work or follow up of requests for information from customers, government agencies, or forwarders.

Make Money/ Grow the Business- basic competence in exporting enables expansion to international markets. Compliance problems will cause customs delays and be an impediment to growth.

Enhance the Brand– similar to ISO certification and C-TPAT, an ECP demonstrates professionalism. Show customers and prospective customers that you know what you are doing.

Let’s get started!

Contact mitch@adhoclogistics.com for help with export compliance.

I recently posted about common self-imposed roadblocks to implementing an ECP (Export Compliance Program). The process certainly starts with management commitment. As noted CBP and BIS are ramping up enforcement activities. Potential clients admit that they have allowed compliance to fall through the cracks or, after some initial steps, moved it to the “back burner”. The reasons for this are usually other priorities, cost, insufficient staffing, or belief that the business is too small.

One of my first questions for the client is “Who is responsible for compliance in the organization?” If they rely on their Customs Broker or LSP (Logistics Service Provider) I advise that these providers are good resources but that the client, as IOR (Importer of Record) or EOR (Exporter of Record), bears ultimate responsibility for compliance.

Sometimes compliance has been assigned to the shipping department or to an administrative staffer. While I can help with best practices and training, this is a poor arrangement. Compliance must be a front end process starting with order entry. Shippers are under pressure to get orders out the door. Administrative staffers have multiple responsibilities and may lack specific knowledge.

In house compliance professionals are often given responsibility without authority. Further, they may be at mid or lower management levels, or in the wrong chain of command. With or without a formal ECP (Export Compliance Program), compliance professionals must have the authority to place holds on questionable exports without being overruled by sales, finance, or supply chain. Well written protocols for resolving issues and releasing holds require C-level or legal approval.

All of the above illustrates the importance of compliance independence. This may mean reporting to the CEO, COO, or legal department in order to remove pressure from other groups.

So once again; “Who’s responsible?”

Contact mitch@adhoclogistics.com for immediate assistance.

If you are scheduled to sit for the CBLE (Customs Broker License Exam) on May 1st your preparations have most likely included practice exams as well as a deep dive into the HTS tariff and customs regulations. Not to mention blood, sweat, and tears.

Let me suggest also reviewing the notifications on the CBP website so that you don’t have an unexpected complication on exam day. The notifications include details about Covid restrictions, reference materials allowed, and ID/Proof of Citizenship requirements. There are separate sections for remote and in-person test takers.

You will find the info under this link:

https://www.cbp.gov/trade/programs-administration/customs-brokers/license-examination-notice-examination/cble-registration-information

Look for the heading It’s Exam Day !

Best of luck on May 1st !

The value of an Export Compliance Program (ECP) has been well documented in this previous Passages post.

https://www.shippingsolutions.com/blog/your-company-needs-an-export-management-and-compliance-program-emcp

Exporters, what has prevented you from implementing an Export Compliance Program? Here are the most common self-imposed roadblocks:

• Inertia- initial steps are taken to develop an Export Compliance Program but progress stalls as more urgent tasks need attention.
• Management believes that the company is too small or does not export enough to need a formal ECP.
• Lack of upper management commitment and willingness to put in the time.
• Management is unwilling to spend the money or devote resources to create an ECP.
• Compliance is managed at lower levels with limited authority to get the project done.
• Reliance on Logistics Service Providers for compliance. While LSPs are valuable business partners, the exporter is ultimately responsible for compliance.

An effective Export Compliance Program includes these elements: Management Commitment, Risk Assessment, Export Authorization (Agency Jurisdiction), Record Keeping, Training, Audits, Handling Export Violations (Corrective Action), and Build and Maintain an ECP Manual.

The most essential element, by far, is Management Commitment. C-Level executives must allocate resources, communicate the importance of an ECP throughout the organization, and hold everyone accountable. Without strong management commitment and involvement, you will end up with a weak program.

In addition to C-level commitment, compliance professionals know that an effective ECP must also include sufficient funding, well defined and documented responsibilities, on-going training, and internal audits. Weak ECPs lack some of these elements and are simply window dressing or paper programs.

 In some cases, exporters may be under pressure to put a program in place quickly, with the focus on creating the ECP manual. This approach ignores the foundation needed for an effective program. The likely result will be a glossy manual that will sit on the shelf and have negligible impact on operations.

In-house compliance professionals are often given responsibility without authority. Further, they may be at mid or lower management levels or in the wrong chain of command. With or without a formal ECP, compliance professionals must have the authority to place holds on questionable exports without being overruled by sales, finance, or supply chain. Written protocols for resolving issues and releasing holds require C-level or legal approval.

All of the above illustrates the importance of compliance independence. This may mean reporting to the CEO, COO, or legal department in order to remove pressure from other groups.

Finally, do not self-blind on export compliance. It is time to get started.

In previous posts we have noted 3 common causes of customs delays: vague or incomplete descriptions, questionable valuations, and lack of IOR contact info on commercial invoices. These are the easy fixes. The real complexity in international trade is due to the many different regulations applying to destination countries.

Customs delays in other countries are problematic for exporters, requiring a lot of time and effort to resolve. Best practices in exporting include due diligence and research when shipping to a country for the first time. The Country Commercial Guides published by the International Trade Administration are an excellent no cost starting point. Here is the link:

https://www.trade.gov/ccg-landing-page

Contact mitch@adhoclogistics.com for assistance.