The last two places you ever want your name to appear.

Companies who import or export are governed by regulatory regimes which grow more complex by the day.  Because many companies do not open their doors as an importer or an exporter specifically, they make the transition there.  Perhaps they were purchasing domestically and pricing pressure caused them to look overseas.  Perhaps they looked at the National Export Initiative as a means to find new business and expand their client base beyond the US shores.

But what happens when something goes wrong?  With the passage of the CPSIA in 2008, the Consumer Product Safety Commission has grown more forceful in regulating imports as well as the mechanism of initiating a product recall.  This is the first of our two "places you never want your name to appear."  A product recall is something that requires a two-pronged strategy of damage control and positive spin.  The most recent recall belongs to Graco, who have the expense and publicity of dealing with two million problematic strollers.

The lesson is that while there's no way to one hundred percent insulate from such a thing, the question becomes what can a company do concurrently with the recall to insure that their brand isn't irreparably damaged.

The second place to avoid appearing is on the list of companies who have pleaded guilty to an export violation and paid some sort of criminal or civil penalty for it. The Bureau of Industry and Security is rather proud of the people they get to pay up and loves to issue press releases about them all.  


Staying off the radar screen of these agencies requires advanced planning, due diligence, written compliance instructions and the buy-in from top management.  It is everyone's responsibility to understand that much like weighing the risks of when to disclosure on a Customs matter, hard questions must be asked about when is it appropriate to come forward in advance or be dragged reluctantly and belatedly in front of the public at the risk of reputation and brand.

Immigration & Customs Enforcement News

There are people who look at Express Couriers (you know them by their colors, for liability reasons we probably shouldn't name them here) as a means to get all manner of goods into the country without having to undergo Customs scrutiny.

While these facilities and the arrangements they have made with CBP do in some ways seem to be less targeted than standard methods of cargo movement, individuals and companies who think they have carte blanche to move things without fear of reprisal or accountability should take a look at the press release from ICE.

They do look for counterfeit drugs, CD's, DVD's and other items because of their belief that it both infringes on the copyright holder and also could do the recipient harm (in the case of illegal or counterfeit drugs or medicines).

ICE is most associated with the "Immigration" part of their name responsible for deportations and other more public faces of CBP, but they still play a role in trade nonetheless.

Insurers revising coverage to sanctioned countries

We received the following today from the World Cargo Alliance, the forwarders group to which we belong:

Sanctions Beginning to Affect Insurance Coverage

In response to growing pressure from various countries and political organizations around the world, insurers (including Lloyds of London), are amending their policies to exclude coverage where providing such may violate imposed economic sanctions. This exclusion is already in place in new commercial insurance policies and will be added to existing policies via endorsement by the end of 2010.

The new “Sanction Limitation and Exclusion Clause” reads as follows:

NO (RE)INSURER SHALL BE DEEMED TO PROVIDE COVER AND NO (RE)INSURER SHALL BE LIABLE
TO PAY ANY CLAIM OR PROVIDE ANY BENEFIT HEREUNDER TO THE EXTENT THAT THE PROVISION
OF SUCH COVER, PAYMENT OF SUCH CLAIM OR PROVISION OF SUCH BENEFIT WOULD EXPOSE
THAT (RE)INSURER TO ANY SANCTION, PROHIBITION OR RESTRICTION UNDER UNITED NATIONS
RESOLUTIONS OR THE TRADE OR ECONOMIC SANCTIONS, LAWS OR REGULATIONS OF THE EUROPEAN UNION, UNITED KINGDOM OR UNITED STATES OF AMERICA.

The severity of the punishment for violating sanctions coupled with the broad nature of this new insurance clause places extra emphasis on the insured to verify that none of their operations are in violation. The responsibility to ensure compliance lies solely with the insured and all precautions should be taken to do so.