International Trade and Global Business

A Reader Writes about an Additional Challenge to Exporters

September 19, 2011 9:09 AM

WPG blog reader Steven Stolarz left an important and thoughtful response to the blog “Tell us How and We Will” (Here) regarding the U.S. Customs and Border Protection (CBP) agency as an alleged impediment to increasing U.S. exports.  At issue was a shipment of hair mousse that was headed to a foreign buyer until CPB thought they smelled something fishy and put a hold on the shipment.  Maybe we should have titled that blog “Tell Us How and We Will, if They’ll Let Us.”

He writes:

“Let me add another fear - uncertainty regarding the possibility of unforeseen costs and penalties imposed by the U.S. Gov't.

Our customers have had several export shipments held by US Customs, supposedly on licensing concerns. I'm not sure what US export licenses could be in play with a pallet of hair care products, but such was one example. Once the goods were released, the exporter was billed over $4000 for the cost of examining one pallet of mousse - almost as much as the value of the product itself. At no time did the government explain why the goods were held, or what might need to be done to avoid future problems. Not only is the supplier wary of becoming involved in future shipments, the BUYER has advised that they will no longer purchase products from the U.S., since shipments can apparently be held with no explanation, at the whim of completely unaccountable officials.

Exporters - along with importers and, increasingly, any other kind of business in the US - view the government as arbitrary, capricious, and vindictive. In the minds of many business owners, any activity that requires increased contact with such governmental authorities, with its unquantifiable risks and costs, is to be avoided at all costs.”

This, of course, is deeply discouraging.  Mr. Stolarz thinks that CBP believed the hair products might require an export license and, therefore, an inspection was deemed necessary.  Unless the mousse was destined to be used on the beards of Taliban insurgents or it could be proven that the shipping container was going to be dropped on innocent civilians, this was not a licensable product and shouldn’t have been held for that reason.
Does CPB, or its equivalent in other countries, make mistakes?   Undoubtedly, and as an enforcement agency, as opposed to a government export promotion agency, its officers will tell you that it’s better to be safe and within the law than sorry.  No consolation to those who suffer because of errors, but the fact that the U.S. remains the world’s biggest exporter suggests the vast majority of outbound goods are not subject to holds and fines.  In fact, physical inspection of outbound shipments, compared with inbound shipments, is relatively rare.

One way of expediting shipments though customs is to do the due diligence on your product and if it doesn’t require a license—and most consumer products don’t—write on the commercial invoice:  EAR-99, NLR (No License Required). The Customs officer may question what’s written, but it may be better than writing nothing. Watch the videos here on export regulations, including one on EAR-99. http://www.census.gov/foreign-trade/aes/exporttraining/videos/

Another issue and frequent reason for customs holds and fines is failure to file in the Automated Export System (AES and AES Direct).  The filing by you, the exporter of record, or a designated freight forwarder or shipping company (see blog post on what they do), must be made before the goods ship.  If the commercial invoice or other shipping document, such as the bill of lading, air bill or way bill don’t have the Internal Transaction Number (ITN), which is the proof of filing citation, customs officers will hold it until a filing is made or confirmed.  Fines are likely in addition to delayed shipments, and there may be storage costs until matters are sorted out.  Here are some short videos, especially under Part A, on the process and how to file in the system. http://www.census.gov/foreign-trade/aes/exporttraining/videos/

If none of the above applies to your case, CBP has a complaint process and, if there’s no satisfaction there and you believe you’ve been wronged, you can take the matter to your state’s member of Congress.  They can at least get you a detailed written explanation, at which point you’ll know why you were fined and how to avoid it in the future.

At the end of the day, there’s too much opportunity in international markets to be discouraged by a couple of bad experiences with the process.  Hang in there.  Try and work with the enforcement folks.  They have a job to do, too.

Tell A Friend / Share Report abuse

Comments (0)
Comments
Blog post currently doesn't have any comments.
Leave comment



 Security code