The United States exported $2.2 trillion dollars of product in 2016, making it the third largest world exporter after China and the European Union.[i] Much of this is due to the easing of export controls over the past five years by the Department of Commerce Bureau of Industry and Security (BIS) in cooperation with other federal agencies. That’s great news for US companies seeking to expand their sales beyond the domestic market.
Yet still, the BIS made it clear at their annual conference in October 2017 that the ease of doing business globally isn’t without risk, specifically in the area of enforcement. Key speakers clearly illuminated the goal of building a strong US industrial base through export incentives, while balancing that with penalty and enforcement actions for those who misuse these privileges. Here are three dominant themes exporters should be aware of:
- Export Control Reform Isn’t a One Trick Pony: Assistant Secretary of Commerce Rick Ashooh made it clear when he said, “The policies we advocate for are not for today, they are for tomorrow, for the future of our nation.” With that in mind, he advanced the idea that export control reform (ECR) is here to stay, and there will be no beginning, middle, or end for ECR. Firms must remain vigilant by educating their export teams on these changes, understanding that compliance with the rules is a must.
- Export Enforcement is Real – and Costly: Anyone who hasn’t heard that export enforcement is changing missed a crucial message of the conference. The ZTE penalty of $1.19 billion was the highest ever levied against a company for export violations. While that sum and the circumstances around the violation may appear to be an outlier for most companies, due to the egregious nature of the multiple violations, even one penalty assessed against your company for noncompliance can be quite costly. In 2017, we saw all-time high criminal fines, the longest ever prison sentence, and forfeiture dollars doubling over last year. Coupled with export violation arrests and over 2,000 warning letters issued by the government, companies need to think twice about how they manage their compliance responsibilities with export transactions.
- Education and Technology Help: The intersection of continued ECR and the government’s savvier enforcement strategy has made training and automation a must. The “Education – Automation (EA)” balance is the true formula to supporting increased sales and reducing risk. Automating denied party screening, for example, removes some of the judgement calls from daily operations and safeguards the firm in the process. Upgrade this to include export automation for recordkeeping and visibility of the entire transaction into one platform, and you have the beginning of a recipe for success.
Key takeaways from BIS were grounded in penalty cases, yet the path to success is clearly laid out. While ECR isn’t a one pony trick, your training and automation programs can’t be either; both need to adapt to catch changing requirements in these areas. Continued training will get you there; export automation will keep you there.
Suzanne M. Richer joined Amber Road in 2015 to lead the development of a Trade Advisory Practice. She is a licensed customs broker and Certified Classification Specialist. Ms. Richer has extensive experience in advising corporations on Focused Assessments, C-TPAT cargo security applications and validations, and the Importer Self-Assessment (ISA) program. She has conducted over 3,000 hours of training, and has authored 12 books on international trade.
Prior to joining Amber Road, Ms. Richer established Customs & Trade Solutions, Inc. During her eighteen years as a trade advisor, she led C-TPAT validations all over the world, and guided many firms into the coveted Tier 3 status of the program. Her work in ISA has earned many of her clients the title of Trusted Partner with Customs and Border Protection.