Don’t Forget Export Compliance!

For years, export professionals said that exporting was simpler than importing, but I never believed them. When working with imports, you only need to consider U.S. laws. Considering the Code of Federal Regulations, the USC, HTSUS and the information published by Customs, that’s more than enough to keep track of.

Compare that with working with exports. Not only do you have to consider all of the U.S. regulations enforced by the BIS, Department of State and Commerce Department, but you also have to consider the laws of the countries where you export products. One thing that is similar is responsibility. Just as importers are responsible for the declarations made to Customs, responsibility for export compliance rests with the exporter.

Penalties - Don’t Let Them Happen to You

Export penalties are on the rise. The Bureau of Industry and Security publishes a report listing the names of parties who have violated the export laws and the amounts of the penalties. To see the list of violators, go to the BIS web site where they have a publication titled, “Don’t Let This Happen to You.”

Not only are the penalties high, there is a proposal to increase the current amounts. The table below shows the current and proposed amounts for violations of export laws. As an additional penalty, companies may be barred from exporting for a period of time.

	Current EAA Penalties	Proposed EAA Penalties
Criminal Maximum(Corporate)	$1 Million or 5 times the value of exports involved	$5 million or 10 times the value of exports involved
Civil Maximum(Corporate)	$11,000 per violation (prior to March 2006) $50,000 per violation (after March 2006 under IEEPA) $120,000 for national security violations	$500,000 per violation

How Much Does Export Compliance Cost?
Exporting is a necessity to survive in today’s global economy. Undertaking appropriate due diligence, training and export compliance measures is required to be competitive and successful. While third parties may be able to assist in compliance efforts, exporters cannot outsource liability for compliance. Even sophisticated international companies have found that failure to abide by U.S. Export Control laws and regulations can result in confiscation of goods by customs and the assessment of substantial civil and criminal penalties.

Companies involved in exporting must be fully aware of their responsibilities under the Export Administration Regulations. It is the responsibility of the exporter to be up to date on the U.S. EAR and to comply with U.S. laws governing export transactions.

So, how much does export compliance cost? With the current penalty structure at $1 million for criminal penalties and civil penalties at $50,000, the better question might be "what is the cost of non-compliance?" If you hire the right people and implement the proper procedures, the cost to maintain compliance is much less than the cost of non-compliance. That’s why it’s important to be aware of the costs and consequences of not being informed about exporting.

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