The 55 charges against Elite were broken out, with little explanation in the charging letter, into 13 violations followed at later dates by 42 more. Elite’s exporter customer, Equistar Chemical LP, did receive that nastygram from the BIS for, surprise, 13 violations of exporting triethanolamine without the required license (http://efoia.bis.doc.gov/exportcontrolviolations/e1007.pdf).

What apparently happened is that Equistar saw the flashing red lights in their rearview mirror after the 13th shipment. Shame on Equistar. But when they got around to doing it properly, with the required export licenses, they never bothered to tell Elite. A lot of ongoing business in forwarding is done with minimal paperwork, often just a commercial invoice. When a forwarder handles the same thing every day, they kind of expect the customer to let them know when something big has changed. My guess is that Equistar never told Elite about their new situation, or they never put the license information on those commercial invoices. Double shame on Equistar for not telling Elite. Furthermore, Equistar should have monitored the work that Elite did for them. Usually, export declaration information from forwarders, and entry documents from customs brokers, are sent to clients with the billing invoices. These typically end up filed, not in any trade compliance department, but in accounts payable. Triple shame on Equistar for not monitoring Elite.

On the other hand, Elite should have protected them self with a Power of Attorney from Equistar. Apparently, they did not, and found themselves dragged down in the mess. However, if the amount of a penalty is any indication of who might be more culpable, consider that Equistar had 13 violations for a total penalty of $39,650 while Elite suffered 55 violations for a total penalty of $156,000. You do the math.

I am in charge of corporate import and export compliance for a freight forwarder, and I’ll be the first to tell you that freight forwarders are no saints. However, we walk a fine line every day. Legally, it is the exporter’s responsibility to make all of the export determinations – Schedule B numbers and quantities, ECCNs, license authority, etc. After all, the exporters know better their products and technologies, the chemical makeup and the operating parameters, whether it contains technology originally designed for the military. Freight forwarders do not have PhDs in all the fields of aerospace, nuclear physics, chemistry and biology, certainly not with the profit margins in this business.

The freight forwarder is only supposed to pass along the information provided by the exporter in the form of the electronic export declaration filing. But the vast majority of exporters haven’t the foggiest idea what we’re talking about. If we try to push the job back onto them where it belongs, they threaten to take the business to another forwarder who will do their work for them. So we guide them as best we can. And we get those Powers of Attorney signed. And even though the POA affords us some protection from the government, we still pray that that we don’t get hit with civil litigation by some poor exporter trying to recover the export penalties he’s gotten himself into.

No, I would say that it is the exporters that are greater offenders. To wit, Northrop Grumman’s $400,000 BIS penalty last month, or ITT’s $100 Million ITAR settlement last year.

Shawn, I would welcome more export customers like you. You know your way around the regulatory environment. Better, I would love more export customers that file their own AES so we wouldn’t be put in the position of both policemen and accomplice.

Forwarders, based on personal experience with them, lack a clear understanding of export regs esp. when it comes to properly filling an AES/SED – nor do they seem to be very aware of licensing requirements.

I agree with the premise of your posting.