5 January 2009

Fresh start for export control

This article is extracted from the 2 January 2009 edition of “American Shipper”; it was written by Paul DiVecchio, president, DiVecchio & Associates, Northboro, Mass.

In tough economic times, the challenge of increasing revenues for international market share becomes critical for the survival of many companies. Add to this the importance for companies to establish and maintain comprehensive global export compliance programs in a highly volatile geopolitical environment.

The task for companies meeting the both aforementioned objectives is greatly complicated by export control governing agencies that have lost sight of their responsibilities in ensuring consistency and accuracy of their decision making to provide security while maintaining a pro-trade philosophy.

Companies rely on the governing agencies to provide clear and concise export control decisions so they can “predict” the right course of action in their pursuit of international opportunities.

Failing this, U.S. companies are at risk of losing business to international competitors or making the wrong compliance decisions, resulting in violations and enforcement actions.

The incoming Obama administration, with its new political appointees, is in a perfect position to breathe life into the export control governing agencies by:…

• Reassessing the agency infrastructures and creating an atmosphere of transparent decision making so that industry can have two-way dialogue with agency personnel, resulting in “predictability” necessary for compliant business actions.

• Inducing consensus-building among federal agencies to minimize interagency disputes that result in long delays for resolution.

• Advocating for proper levels of funding for agencies to more efficiently serve the business community, which then places U.S. industry in a better competitive position in the global market.

Areas of export controls the new administration must address include:

• Ending ongoing jurisdiction disputes between the State and Defense departments and Commerce as to which agency has ultimate say over the classification of products and technology….

• Clearing up prolonged export license applications delays, which result in canceled orders or denials of license applications by agencies based on speculative information rather than verifiable facts….

• Fostering an environment of due process when companies face compliance enforcement actions. For example, if a company is accused of violating the export regulations, that company and its representative should have the opportunity to meet the governing agency to negotiate in good faith. This does not occur in most cases.

• Interpreting regulations in a consistent manner….

• Allocating resources within the agencies. A complete review of the agencies as to their budget needs and the actual allocation of resources must be done to run an efficient governing organization.

This should be a top priority for the new administration. Failing this, there will continue to be low morale, many mistakes and loss of important legacy personnel.

There is optimism in the air with the new administration, but the proof is in the pudding.