Changes in Export Rules and Enforcement
Host: More small and mid-sized firms are finding that exporting is boosting revenues, but many entrepreneurs are concerned with the logistics of shipping and ignoring the rising export penalties. With us today is David Noah. David, welcome.
David Noah: Thank you.
Host: David is a nationally recognized export management authority and he’s here to offer insights and tips on changes in export rules and enforcement. David’s the founder and President of Shipping Solutions, a developer of export software.
David, what are some of the big changes small business owners should know about export penalties?
David Noah: Well, the big change is that in October of 2007, President Bush signed a bill in the law that increased penalties for export violations from $50,000.00 per violation, to $250,000.00 per violation for civil penalties and up to a million dollars per violation for criminal penalties.
Host: Now what government entity is in charged of investigating and enforcing these penalties?
David Noah: Well, the US Department of Commerce is responsible for most export deregulations and their office of Export Enforcement is the big enforcement agency within that department.
Host: Those are the guys you don’t want to have knocking on your door, right?
David Noah: That’s right. They show up with guns and badges.
Host: So David, do companies ever turn themselves in, you know realized that they’ve done something wrong and pull up their hand and say, “Ah! I messed up.”
David Noah: Absolutely. Good companies will do that, a good company will periodically audit their own export transaction and if they do find violation, they’ll self report and then it goes a long way against reducing amount of penalties that a company will have to pay.
Host: So the government, will much like many criminal cases if you come forward and confess your crime, they’re going to go easier on them.
David Noah: That’s right, they call that a strong mitigating factor.
Host: Why are most export errors not just single violations but they represent sort of a multiple infractions?
David Noah: Well, if you ship something to a country that you’re not supposed to be shipping to or a person that you’re not supposed to be shipping to without an export license, your first violation is the actual shipping. But you can’t ship anything internationally without filling out lots of paper work. And when that paper work is included, if you said that you don’t need a license, each time you’ve said that on the various different documents that you’ve included with the shipment, that’s an additional violation and that’s an additional penalty.
Host: So the 40 containers that I shipped out when I signed off on each individual piece of paper work have 40 different charges, right?
David Noah: That’s right and that adds up quickly at $250,000.00 a piece.
Host: So what suggestions do you have for small business owners who are trying to stay up-to-date and aware of the changes in these export rules?
David Noah: Well, I would really recommend that company has to create a written export management plan for their company. Document the steps that your employees should follow for every export transaction and then make sure, you make sure that they’re following those steps and that they’re doing exactly what you have outlined in that plan.
Host: So it’s a business plan but it’s focused specifically on your exporting policies and procedures.
David Noah: Yes, absolutely.
Host: What is the best tip for the business owner new to exporting to stay compliant? Is it training?
David Noah: Absolutely, it’s training and not just in training of the employees that people who are doing the actual shipping of your goods, but really upper management needs to be involved in that training as well. They need to know what those regulations are. They need to know what the penalties are so that they can support the staff. Who’s on the front line actually doing the work?
Host: So it’s not just the guy working downstairs in the warehouse, it’s the vice president in the corporate as well, right?
David Noah: That’s right. I mean if there are violations, it’s not going to be that person in the warehouse that’s going to get thrown in jail. It’s going to be the person who has the responsibility for that.
Host: Great information again, David. Thank you for joining us.
David Noah: Don’t ask.
Host: David Noah is the President and Founder of Shipping Solutions, the developer of export software. You can learn more about his company at www.ShippingSolutions.com and our company of course is SBTV.com where small business is our only business. Thanks for joining us.
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