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LEGAL ADVICE FOR FREIGHT FORWARDERS

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  1. LEGAL ADVICE FOR FREIGHT FORWARDERS WESCCON 2006 Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  2. The Human Factor! Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  3. Rail Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  4. Rail Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  5. Rail Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  6. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  7. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  8. Is your compliance program a train wreck? Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  9. Improper Training? Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  10. How are you Navigating exports? Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  11. Did you offer cargo insurance? Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  12. Exports are perilous! Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  13. Have your controls gone bust? Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  14. Foreign Military Sales Act • Are you exporting a dual use item?\ • If the item has dual (military-civilian) use, it is on the “Commerce Control List” (CCL) and may be licensable by the Department of Commerce pursuant to the Export Administration Regulations (EAR). • International Traffic in Arms Regulations (ITAR)? • Arms Exports Control Acts (AECA) • State Department regulation? • Department of Defense regulation? • Foreign Military Consignee? • Experienced shipper? Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  15. Failure to File Export Declaration Prior to Loading • Forwarder must have export power of attorney signed by the principal party of interest; • AES transmission; • Confirm – no fatal errors; • Provide a copy to the exporter and • Consequences. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  16. Failure to File Accurate and Valid Cargo Description Twenty-Four (24) Hours Before Lading of Cargo At Foreign Port • Routed cargo; • Is the cargo stopping at or going via a U.S. port; • “Bags” incomplete under 19 CFR 4.7a • C-TPAT = Mitigation to $500 Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  17. Violations of Export Administration Act (EAA) and/or the Export Administration Regulations (EAR) • Civil penalty $10,000 for each violation • Civil penalty $100,000 may be imposed for each violation involving national security • Exclusion from practice . . . any person acting as freight forwarder . . . Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  18. Export Control • U.S. List of Debarred Parties - Persons who have been precluded by the State Department from participating—either on a direct or indirect basis—in any transaction which requires a State Department license or State Department approval. • U.S. Denied Persons List - Persons who have been denied export privileges by the Commerce Department because they have, or are believed to have, violated the Export Administration Act or the Export Administration Regulations. • U.S. Unverified List - Names and countries of foreign persons who in the past were parties to a transaction with respect to which the Bureau of Industry and Security could not conduct a pre-license check or a post-shipment verification for reasons outside of the U.S. Government’s control. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  19. Export Control • U.S. Specially Designated Nationals and Blocked Persons Lists - Individuals and entities with which U.S. persons are precluded from dealing. The individuals and entities on the SDN List were placed there because they are associated with international narcotics or terrorism or because they are owned or controlled by, or acting for or on behalf of, the governments of countries which the U.S. considers to be hostile to U.S. foreign policy or national security objectives • Excluded Parties List System - Identifies those parties excluded throughout the U.S. Government (unless otherwise noted) from receiving Federal contracts or certain subcontracts and from certain types of Federal financial and non-financial assistance and benefits. • U.S. Embargo Reference Chart - Foreign countries against which the United States federal government has imposed controls for the export of defense articles and services. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  20. Red Flag Indicators • The customer or its address is similar to one of the parties found on the Commerce Department's [BIS's] list of denied persons. Case example. The customer or purchasing agent is reluctant to offer information about the end-use of the item. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  21. Red Flag Indicators • The product's capabilities do not fit the buyer's line of business, such as an order for sophisticated computers for a small bakery. • The item ordered is incompatible with the technical level of the country to which it is being shipped, such as semiconductor manufacturing equipment being shipped to a country that has no electronics industry. • The customer is willing to pay cash for a very expensive item when the terms of sale would normally call for financing. • The customer has little or no business background. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  22. Red Flag Indicators • The customer is unfamiliar with the product's performance characteristics but still wants the product. • Routine installation, training, or maintenance services are declined by the customer. • Delivery dates are vague, or deliveries are planned for out of the way destinations. • A freight forwarding firm is listed as the product's final destination. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  23. Red Flag Indicators • The shipping route is abnormal for the product and destination. • Packaging is inconsistent with the stated method of shipment or destination. When questioned, the buyer is evasive and especially unclear about whether the purchased product is for domestic use, for export, or for reexport. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  24. Project Shield America • U.S. Immigration and Customs Enforcement (ICE). ICE is committed to working with the business community to ensure that strategic technology and munitions items do not end up in the wrong hands. Private industry can help by: • Ensuring that orders likely to be shipped outside the United States are handled in compliance with export laws and regulations; • Ensuring that employees understand export requirements and follow appropriate licensing and screening procedures; • Ensuring that employees understand the U.S. government restricts the export of certain technical data and knowledge, whether it is provided in written, oral or visual format and • Ensuring that suspicious contacts – such as customers who insist on paying in cash or otherwise behave in a suspicious manner – are reported to ICE as quickly as possible. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  25. Mitigation • Disclosure; • Effective compliance/export controls; • No prior violations; • Good faith interpretation of regulation; • Clerical error; • Mistake of fact and • Assistance to enforcement agency. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  26. Voluntary Disclosure • Timely voluntary disclosure may be a mitigating factor; • The ITAR (127.12(b)(3) states that “It is possible that the activity in question despite voluntary disclosure might merit penalties, administrative actions, sanctions, or referrals to the Department of Justice for consideration as to whether criminal prosecution is warranted. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  27. Solutions • Documentation Review; • Training and Education for employees, BIS training; • Technology – e-mails to clients, Internet links and customer surveys and • Insurance. Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  28. Solutions • Questionnaire? • Reliance on information provided by exporter? • Licenses, permits, restrictions? • Power of attorney? • What documents are provided by the exporter? • Is any information missing? Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  29. What is your cargo doing? Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  30. Is your situation ready to explode? Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006

  31. Are your prepared to meet the challenges ahead? Presented By: Cameron W. Roberts, Esq. Irvine, California – October 2006