A while back, I talked about Blind Mules, where SENTRI card holders with expedited, supposedly trusted, Customs processing privileges on the southern border, were being targeted by drug smugglers to transport their wares. I posed the question of whether C-TPAT members might similarly be targeted for nefarious activities.
Apparently, I was correct. Click on the link below:
And I was correct before I knew it, because this story came out in 2009.
So, again, is a C-TPAT importer’s ocean container a more attractive target for a terrorist’s dirty bomb? Are you effectively monitoring your container movement from stuffing location to the pier?
Sorry, I’ve been off the grid for a while. But I came across this today that was too good not to share, so I’m back on the wagon.
Those of you familiar with filing Electronic Export Information (EEI) with the Bureau of the Census’ Automated Export System (AES) will recognize this as an error when AES finds that you have provided conflicting data. (You can click on the image to enlarge it.)
The shipment is for goods being exported on a DSP-73, which is a license issued by the State Department for the temporary export of defense articles. The Export Code is a data field that Census uses to, I don’t know, determine to exclude(?) this from trade statistics, because it will be returning, because it is a temporary export. The “error” is that the Export Code is not valid for the License Type selected.
So, Mr. Census, please tell us just when a temporary export is a temporary export, and when it’s not.
Want some import irony? On the Customs and Border Protection (CBP) website, you can download CBP Form 214, Application for Foreign-Trade Zone Admission and/or Status Designation. Better yet, just click on http://forms.cbp.gov/pdf/CBP_Form_214.pdf. It’s a two page form. Examine closely to what the entire second page of the form is dedicated.
Go to www.bis.doc.gov and you get the below screenshot. Nice.
I’m just back from the BIS Export Control Forum in Irvine, CA where they rolled this out. Too busy catching up so I haven’t had time to explore it, but I’m hearing that, once you get used to it, it’s organization is a big improvement. Can’t wait to test drive it!
From the landing page (image above), you can click on either the old site, which is still there, on the left, or the new site, technically still in beta, on the right. Import Export Geeks is going to check all the links in our training and update in due time, but since the old BIS site remains for now, all the links in our Excellent Export Basics training should be working.
They preferred him on YouTube to in-person. Because they can pause and repeat without feeling like they are wasting his time. They can go back and review something. If they’re bored, they can move ahead. They can watch at their own time, their own pace.
Self-paced learning! What a concept! Like Import Export Geeks! I love this guy!
Your friend buys a course, you earn a commission. Simple! Cool! The video shows how.
Yes, that would be a 1956 Ford Thunderbird, like the one Suzanne Somers drove in American Graffiti. The first generation T-Bird (1955-1957) was the only part of the lineage to be a two-seater roadster. It came standard with a 292 cubic inch (about 4.8 liter) 202 horsepower V8, four barrel carburetor, and dual exhaust, with an optional 312 cubic inch V8. The base convertible offered an optional, removable fiberglass hardtop with the classic porthole windows on the rear sides. Positioned to compete with the Corvette, it outsold its competitor more than 20-to-one. Total 1956 production was 15,631.
In the news recently is a Mr. Ulrich Davis, former manager of an as yet unnamed freight forwarder in the Netherlands. He pleaded guilty for conspiring to export certain acrylic adhesives and spray paint coatings from the U.S. to Iran without the required export license(s). You can read the details at the Bureau of Industry and Security (BIS) web site. Apparently that may not be all, because his initial arrest at Newark airport as he was boarding a flight to the Netherlands, included more of the same type of activity, but for aircraft attitude direction indicators, various parts for a C-130, and a fuel control unit for a Boeing 747, which you can read about here at the BIS web site. I guess the Government is still prosecuting these violations, so perhaps we haven’t heard the last of Mr. Davis.
So how did he go about this?
Mr. Davis had a customer, also as yet unnamed, and I would guess a front company for the Iranians, that procured the items from U.S. suppliers. He had his agent, a freight forwarding partner in the U.S., pick up the goods, and ship them on air waybills to the Netherlands. Once there, Davis issue new air waybills to move them on to Iran. This is what the BIS calls diversion, the illegal transshipment of goods from their alleged destination.
So why am I talking to U.S. freight forwarders?
This was what is known as a routed export transaction, routed not by the U.S. shipper, but by their foreign buyer, in this case, Mr. Davis’ customer. The U.S. shipper may or may not know that the buyer was connected with Iran, or perhaps even a known restricted party for whom the U.S. shipper failed to screen – note that the U.S. shipper is also as yet unnamed. But more importantly, in a routed export, the U.S. forwarder, as agent for the foreign consignee that’s running the show, is the exporter for Export Administration Regulations purposes. This means that the U.S. shipper is, more or less, off the hook for much of the export compliance, and that the U.S. freight forwarder has the responsibility to make the export license determination and, if a license is required, obtain that license, presumably in his own name.
If you don’t believe me, take a look at the Export Administration Regulations of the BIS at 15 CFR 758.3(b). And note further that the U.S. freight forwarder is yet another party unnamed in all of this. More heads may very well roll.
So, what’s an honest, hard-working, straight-n-narrow forwarder to do?
Understand that, in routed exports, the U.S. freight forwarder takes on considerably more responsibility, and risk. You are the exporter.
Know how to do a license determination, not just for the BIS but for the International Traffic in Arms Regulations (ITAR) and the Office of Foreign Assets Control (OFAC) as well. If a license is required, decide if you are willing and legally able to obtain that license.
Know all the parties to the transaction. If your agent in the Netherlands or wherever is vague, push harder. Then screen all of these parties again restricted parties lists. Screen all intermediate and ultimate consignees, foreign freight forwarders, and banks if under a letter of credit.
Don’t be afraid to turn the business down. The penalties can be in the hundreds of thousands of dollars.
No, we’re not blogging about cars today. But we do like the metaphor. The question has to do with the importance of a compliance manual as part of your import or export compliance program. Many “best practices” say it’s essential, but is it in all situations?
The process of actually writing a manual can be daunting. And when it comes to that all-important “management buy-in”, if management takes it seriously, it can get down-right political. It’s no wonder many importers and exporters rely on outside sources, whether an off-the-shelf canned product, or something custom drafted by a consultant or attorney. But is there a one-size-fits-all? Does that contracted help just sell you their off-the-shelf canned product?
The more comprehensive of manuals are usually just a rehash of the regulations. They are so hefty that they are never read, but sit on the top bookshelf and collect dust. Moreover, it can be a constant job to maintain them, to update them, as the regulations change. I’ve seen many that are years out of date.
A more abbreviated manual is more apt to actually be read, and easier to maintain, but really doesn’t provide much guidance. It is often just a quick fix for show.
On the other hand, experts, geeks and gurus don’t need manuals. They operate on automatic. And if they need some extra help, they turn to the actual regulations. So why not just make the regulations your manual and be done with it? And then it’s the government’s responsibility to update it. Your tax dollars at work.
Think about a really good cook. Do they follow a recipe? Or do they just automatically know when something is just right? Think about when you drive a car. Do you keep driving instructions at arms’ length? Or do just automatically know to slow down for a curve?
So, manual or automatic? I suppose it depends on the organization, its size, its diversity, its employee turnover, and whether or not there is a full time person to simply manage the manual.
It’s the tale of a SENTRI pass holder on the U.S. / Mexican border. The SENTRI program is designed for those whose daily affairs require frequent border crossings. Those qualified into SENTRI will use designated lanes at the border to receive expedited processing, and fewer inspections, from U.S. Customs and Border Protection, with the understanding that they will drive across with nothing in the trunks of their cars.
But there are still random inspections. And in this case, two bundles of marijuana were found in the trunk. The individual was arrested, detained, tried and convicted of possession with intent to distribute, and faced several years in jail.
Only he was a victim. A blind mule. He was targeted by the real drug smugglers simply because he held a SENTRI pass. Read the story for the full details.
So, could C-TPAT cargo be similarly targeted for smuggling? For terrorism? Expedited processing. Fewer inspections. And for the terrorist, the opportunity to score points against the very program designed to stop him.
But wouldn’t OFAC have something to say about it? Actually, gifts valued at $100 or less are excepted from OFAC restrictions, which should be under the $200 value limit for Presidential gifts. But I believe the President would be required to pay the duty, which for toys and models classified as 9503.00.0090 would be the Column 2 rate of duty of 70%.
This is fun. It’s a podcast from Radiolab about whether Marvel Comics X-Men action figures are human, and classified as dolls at 12% duty, or non-human, and thus classified as toys at 6.8% duty. It’s written for the layman, so us hard core Import Export Geeks will find it a little simplistic. Enjoy.
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