Trade Compliance Blog

The following is an update from Elyse Eriksson, Director of Training at the International Trade Center-SBDC, which is hosting the Import Certification seminars on Thursday and Friday. Please see below for additional information on registering for the program, whether live or in webinar format.

(See also Mary Kay, Inc. Global Import/Export Compliance Experts to Speak at Import Training Seminar)

“Diane speaks to our Import Certification program on international sourcing and purchasing. It is one of the seven modules in the series. There are actually two parts on international sourcing. The first part is presented by Robert Rusoff, an overview, from 10:30-noon and the second part, “Finding a Supplier” and “Landed Costs” are presented by Diane and Sheila from 1:00-2:30.

You can sign up on our website at www.iexportimport.com.  The format is a webinar/seminar combination format, so it is live and via webinar at the same time. The registration signs you up for either one.

The cost of each module is $60.  The recording is then available for one week after the presentation.”

Just a reminder, everyone – exporting (and importing for that matter) is a privilege and not a right.

According to the Financial Times, BAE will not be allowed to obtain any new export licenses after BAE’s settlement of bribery charges.

It [The US State Department] says it wants to establish what impact the UK armsmaker’s agreement last month with the Department of Justice will have on the enforcement of export controls of defence equipment.

The move could hamper BAE’s ability to export products with sensitive US-made content on key defence programmes.

Europe’s largest defence contractor pleaded guilty in a US district court on March 1 to charges that it conspired to defraud the US, made false statements about its anti-bribery compliance programme and violated arms control rules.

A State Department official confirmed that there was a “temporary administrative” hold on applications by BAE. “While we have resumed processing some BAE licences, other licences will continue to be delayed pending our issuance of a general policy. We anticipate this general policy will be completed soon.”

BAE’s plea agreement resulted in a $400 million dollar fine, after admitting guilt to charges that it “conspired to defraud the US, made false statements about its anti-bribery compliance programme and violated arms control rules.”

And, it is not yet clear whether the export license restrictions apply to BAE plc or its US subsidiary, BAE Systems Inc, or both. However, the DoJ has stated that the defense company’s US division was not involved in BAE’s criminal wrongdoing.

For more information, read the complete article at FT.com

The following press release is courtesy of The International Trade Center SBDC, a joint program of the Small Business Administration and the Dallas County Community Colleges system.

Register here if you’re in the Dallas area!

More Information (See Day 1, Session 2)

The International Trade Center’s award winning Global Market Series-Import Training welcomes experts Diane Divin and Sheila Pratt, both of Mary Kay, Inc. to speak on topics regarding International Sourcing and Purchasing, also available via webinar

Mar 09, 2010 – The Global Market Series-Import Certification, an award winning series presented by industry experts and certified by the Institute for Supply Management, Dallas, will be available by webinar/seminar for the first time and will feature Diane Divin, Manager, Global Import/Export Administration and Sheila Pratt, Graduate Gemologist, Promotional Procurement, both of Mary Kay, Inc. on March 11th, 2010.

Diane Divin has been the Manager of Global Import/Export for the Mary Kay Corporation for 15 years. She structures Mary Kay Inc.’s  global Import/Export programs, internal website and training procedures.  She initiates and oversees international trade software systems and manages the global Import/Export team.  This team oversees all imports/exports globally, from raw materials to finished goods and from cosmetics to equipment and technology, between 40 countries. She is a member of multiple international trade organizations and has spoken at conferences from Washington DC to San Francisco.  In 2001, along with 24 other women, she was featured in an article in the Journal of Commerce, on successful women around the world in the field of International Trade and Commerce.

Sheila Pratt has worked with Mary Kay Inc. for 6 years. She handles all purchasing, custom designing and sources both fine and costume jewelry for Mary Kay Inc. world wide.   She also provides gemological consultation in regard to the importing of jewelry products from primarily China, Taiwan, Italy, Brazil, and Mexico for Mary Kay U.S. and international subsidiaries. She also spent 14 years with J.C. Penney Corporate purchasing offices in Plano TX. handling the purchasing and importing of fine jewelry as well as women’s accessories products.   Sheila has also worked with the international fine jewelry companies Cartier and Fred Joaillier assisting with carnets of high end jewelry products.   She has worked in the jewelry industry for 25 years.

The Import seminar series welcomes other leading industry experts on related topics including:

• how to establish a decision making process to compare outsourcing options;
• how to determine landed costs;
• the key components and best practices in international supply chain management;
• how the use of an FTZ might work for your company or product;
• the role of a customs broker and freight forwarder;
• the most common international payment mechanisms;
• the legal agreements and forms used in an import purchase transaction
• and C-TPAT and other current compliance topics.

The complete Import Session Series dates are March 11, 18 and 25, 2010.

Times: 8am-noon & 1:00-2:30 pm.
Location: by webinar or in person at Bill J. Priest Institute, 1402 Corinth St., Dallas, TX 75215

Contact: 214-747-1300 or Elyse Eriksson, Director of Training, eeriksson@dcccd.edu

• Registration
• More Information (see Day 1, Session 2)

# # #

The International Trade Center-SBDC, Dallas, TX, provides counseling and training on international trade issues,importing and exporting. Services include: free one-on-one counseling, free online counseling, free market research and low cost training. The International Trade Center is a proud member of the North Texas Small Business Development Center Network.

The US government has announced its support of banning the trade of bluefin tuna. The fish has long been highly valued as a sushi delicacy. However, due to its popularity, the bluefin tuna population in the Atlantic has been dwindling.

In less than 2 weeks, 175 countries will be sending representatives to weigh in on the trade status of bluefin along with many other endangered species. While meeting in Doha, Qatar, these countries will be voting on changes to CITES, the Convention on International Trade in Endangered Species of Wild Fauna and Flora. Monaco was the first country to propose the ban of bluefin under Appendix I of CITES.

According to the Washington Post,

Image by Kawanet

Tom Strickland, the Interior Department’s assistant secretary for fish and wildlife and parks, said in an interview that the administration wanted to see whether the international fishing body charged with overseeing the species could impose sufficient limits on its own and concluded that it could not.

“The regulatory mechanisms that have been relied upon have failed to do the job,” said Strickland, who will lead the U.S. delegation to the CITES world conference March 13 to 25. “We are literally at a moment where if we don’t get this right, we could see this very, very special species really at risk for survival.”

The EU will be deciding its stance on a bluefin ban in the next week, while Japan has openly opposed a ban as it is the world’s largest consumer of the fish.

For sushi lovers, a ban could mean an end to their favorite flavor. However, for the species, this ban could save it from complete extinction.

Read more at the Washington Post.

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U.S. Wine company E. & J. Gallo has triumphed over local French wine producers after discovering that these exporters were intentionally mislabeling their wine in order to command a higher price when selling to Gallo.

In 2008, French customs found that during three years some 13.5 million liters, or about 3.6 million gallons, of mislabeled wine had been sold to Gallo.

The producers and traders were accused of deliberately mislabeling the wine with a more expensive variety of grape.

The producers and traders in France were claiming their “ordinary” wines were in fact

Photo Courtesy Robert S. Donovan

PinotNoir – giving them an extra profit of around 43 euro per liter.

According to SmartMoney’s article on the case, French customs officials figured outthe scam once they realized that the amount of Pinot Noir being sold to Gallo exceeded the amount produced in the entire region.

The author, Ryan Sager, goes on to ask, “But would anyone have figured it out otherwise?  The scheme ran for years. But, as one French winemaker’s lawyer sniffed to the BBC: “Not a single American consumer complained.” Sager continues to analyze recent studies comparing enjoyment of wine to price – very interesting article, especially for wine lovers.

So, what is the penalty for this misrepresentation? The court in Ducasse, France, which decided the case, gave the following punishments:

• Claude Courset of the Ducasse wine traders was given a six-month suspended prison sentence and has to pay a fine of 45,000 euros. The prosecutor had asked for a tough prison sentence.
• Five other people were sentenced to fines of between 3,000 and 6,000 euros and the remaining six for less than that.
• The Sieur d’Arques trading firm of Limoux was ordered to pay 180,000 euros in penalties.

A spokesperson for E. & J. Gallo stated, “We are deeply disappointed to learn today that our supplier Sieru d’Arques has been found guilty of selling falsely labeled French Pinot Noir as recently as March of 2008.”

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The Bureau of Industry & Security (BIS) has posted a detailed guideline manual regarding their tips for establishing an export management program.

Read the 145-page PDF here: COMPLIANCE GUIDELINES: HOW TO DEVELOP AN EFFECTIVE EXPORT MANAGEMENT AND COMPLIANCE PROGRAM AND MANUAL

I do not have time to read through the manual in detail at the moment, but from a brief lookover it appears to have some great tips for getting management onboard during a compliance project, how to contact BIS if you have export questions, key points for export compliance training, and information on recordkeeping.

It’s a very valuable document for trade compliance professionals – probably useful to save to your desktop for quick reference!

If you are more of a auditory learner, check out the below webinar for more tips on establishing (or enhancing) your export compliance program.

Webinar: Key Strategies for Establishing an Export Management System:

Small to medium-sized companies represent 97% of all US exporters, but don’t always have the resources to keep up with the constantly changing landscape of export regulations and cannot afford the business risks of non-compliance.

This webinar, hosted by World Trade Magazine, addresses key findings from an industry survey on how companies manage export compliance and highlights a number of best practices for your company to consider when implementing an export management system.

The Boston Business Journal reports on the case of a customs broker intentionally misleading a Danish company into paying customs duties on duty-free items.

Gregory Manuelian, the customs broker, was sentenced today to 24 months in prison, followed by 3 years of supervised release. The company, B-K Medical systems, is a Danish subsidiary of Analogic Corporation. They discovered the scheme in 2006 – after Manuelian had defrauded the company over time out of $1.2 million.

How did he do it? Lying about Trade Compliance! (The horror!)

The Boston Business Journal gives a good overview in layman’s terms:

During the course of Manuelian’s fraud, the U.S. Attorney’s Office said, B-K reimbursed him for invoices he faxed to the Massachusetts company, which showed money owed on duties and brokerage fees. However, in 2006 the U.S. Department of Commerce had begun to eliminate the duties on the very type of medical equipment that B-K imports and, by 2009, those goods were completely duty free.

To legitimize his customs forms, Manuelian mailed fake customs forms to B-K that showed customs fees of 5.3 percent of the medical equipment’s value. The amounts of Manuelian’s invoices ranged from $1,000 to $9,000, according to the U.S. Attorney’s Office.

But, I know all you trade compliance pros want to know the real details, so here is some elaboration from the Department of Justice (Massachusetts) release announcing Manuelian’s charges in 2005- before today’s announcement of his conviction.

After 1999, the U.S. Government phased out duties on the medical equipment that B-K imported, but MANUELIAN continued to represent to B-K that he was paying duties on B-K’s behalf. In fact, he paid no such duties. MANUELIAN provided B-K with bogus forms showing that a duty was owed on the medical equipment, usually equal to 5.3% of their import value.

The bogus Customs Forms 7501 that MANUELIAN prepared often described the medical equipment as “electric cables,” which were components of the equipment. According to the Indictment, MANUELIAN further concealed his fraud by falsely reporting to B-K personnel that, by characterizing the goods in such fashion, B-K would qualify for a duty lower than that which applied to medical equipment.

It is alleged that, through these misrepresentations, MANUELIAN repeatedly induced B-K to reimburse Marquis Clearance for duties that Marquis Clearance never actually paid, in amounts ranging from $1000 to $9000. It is also alleged that over the course of his scheme, MANUELIAN submitted over three hundred fraudulent invoices to B-K, which induced B-K to pay a total of over $1.1 million to Marquis Clearance.

If convicted on these charges, MANUELIAN

Manuelian faced up to 20 years imprisonment, to be followed by three years of supervised release and a $250,000 fine on each of the wire fraud counts, and 5 years imprisonment, 3 years supervised release and a $250,000 fine on each of the forged customs document counts. He ended up receiving 2 years imprisonment and 3 years supervised release.

Hmm, I get the feeling there’s a lesson here. He intentionally classified the items correctly when submitting to CBP but then gave the company falsified documents listing the incorrect classifications, so that the duty charges would appear to be 5.3% of the items’ value. If the company had a way to electronically submit these records, receiving an actual copy of what the broker submitted, this would have been discovered immediately. Or, at the very least, they should have an expert double-check their broker’s work (which may be how the fraud was discovered.)

White Paper: Automating Import Compliance

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Although I’m not an ICPA (International Compliance Professionals Association) member, I am an animal lover and a coworker passed along the recent emails about the work ICPA is doing to rescue a puppy from Afghanistan. Special thanks to the ICPA for sharing this story with its members. Hopefully by posting this online, I can help reach their fund-raising goal.

The Story of Recon: http://puppy.earthserve.com

Recon is a rescued stray from Kabul, Afghanistan. Life as a stray is especially hard there, as the local culture does not welcome animals into the home and strays are left to fend for themselves.

Recon was taken in by his new family – a platoon of US Soldiers stationed in the area as part of Operation Enduring Freedom. After withstanding injuries & homesickness, these guys needed some comfort and Recon provided just that.

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STRTrade published this helpful summary article encouraging exporters looking to increase their sales to also remain compliant with international trade regulations, especially in relation to the new National Export Initiative:

FINDING A WILLING BUYER ONLY ONE PART OF THE EXPORT PROCESS:  Exporters Looking to Boost Business Need

The Obama administration is launching a government-wide effort to double U.S. exports over the next five years as part of a plan to increase domestic employment and boost the U.S. economy. However, companies looking to take advantage of the new National Export Initiative to break into new markets should be aware that shipping goods overseas comes with potential perils as well as opportunities.

As part of the NEI, the federal government plans to increase its trade advocacy efforts, including educating U.S. companies about opportunities overseas, directly connecting them with new customers and advocating more forcefully for their interests. The NEI will also include a focus on improving access to export financing and helping to remove barriers that prevent U.S. companies from getting access to foreign markets. Only a very small percentage of U.S. companies currently export their products, and of those that do, 58% export to only one country. The Obama administration is looking to increase these figures in the expectation that doing so will also increase employment.

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