 Did you know that under federal law, CBP must give reasonable notice if it wants to examine any records? See 19 USC §1509. Did you know that under federal regulations, CBP must give 30 days' written notice and that CBP can give less than 30 days' written notice only if the entry records are required in connection with a determination regarding the admissibility or release of merchandise? Did you know that under federal regulations, CBP is allowed to verbally request entry records, but that any such demand shall be followed by a written or electronic demand? See 19 CFR § 163.6.
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This article is about writing compliance policies that make sense, and voiding those that do not.
Did you ever see the Princess Bride, the Spielberg movie about a princess who has been kidnapped by three bad buys? There is a swashbuckling, dashing hero who sets out to rescue the princess. The kidnappers throw obstacles in front of our hero, but he overcomes each obstacle methodically and with great flair. The boss kidnapper describes each successful triumph by our hero as “inconceivable”. “It is inconceivable” he keeps repeating. Finally, one of the his fellow kidnappers tells the boss kidnapper: “You keep using that word. I do not think it means what you think it means.” People relish using their own little language for their own little social or business circles. It’s insider lingo meant to exclude outsiders. I appreciate the desire talk in code, except often no one really has taken the time to confirm that the insiders are really understanding each other. Often people don’t understand each other but are embarrassed to say to. Further, when it comes to legal compliance, you shouldn’t have secret code. Inclusivity is the goal. You can’t follow orders if you don’t understand the order. Here I don’t just mean the legalese and technical jargon that suffocate that are suffocate communication. I also mean the business jargon. Take “sanction,” for example. This is one of those rare words, maybe the only one there is, that has two opposite meanings. Sanction means permission and it also means penalty. In trade compliance, it often refers to embargoes. We have embargoes against Cuba and Iran, for example. You may hear a sentence that goes something like this: “I cannot sanction that export shipment because we risk sanctions for violating US sanctions against Cuba.” I know. Scary, right? The sentence may have its own internal logic, but it is unwieldy and repetitive. Here is how I would revise it: “I don’t think we should export because our company might be penalized for violating the US embargo against Cuba.” What do you think of this sentence? “We need to be proactive by following these best practices and incentivize and leverage our core competency to establish metrics that will lay the groundwork for the company’s new paradigm.” Do you know anyone who talks like that? Do you want to strangle them? They seem very smug, very proud. I don’t know why. They haven’t said anything, at least not anything worth paying attention to. Or, maybe that is exactly why they are proud. They managed to string together popular non-sense and threw it all out there in the middle of an important meeting, daring anyone to challenge the integrity of what they said. The challenge is almost never answered. You need to be or find a brutal editor to make avoid the evils of modern business and legal jargon. Fortunately, there are a few detanglers out there, websites and books that help you remove the debilitating jargon. Some are free. I found this one. It’s called Unsuck-it.com. Not only does it reveal and let’s you cut through the awful jargon, but you get to submit your own entries and corrections. A couple of years into this economic malaise and there are no unequivocal signs of recovery.
There is a temptation during economic downturns for companies to slack off in the legal compliance area. Not only is it dangerous to surrender to that urge, but it also misses the great economic advantages that inevitably come from maintaining a real trade compliance program during economic slowdowns. Let’s take audits or investigations, for example. They are like having federal regulators perform a company-wide root canal. But a fascinating realization happens in the months and years following an audit or investigation. Defending and preparing for the intrusion impose a discipline that helps the target company become more profitable in the long run. Back to the root canal. You get dental rot because you aren’t as attentive as you should have been to your dental health or, if you were attentive, something snuck through undetected in spite of your best efforts. But a bad tooth is a bad tooth. You wouldn’t stop brushing and flossing during lean times, would you? Indeed, it is during lean times that you take extra care to make sure those things you currently have and the processes in place are not compromised out of fear that you won’t have the resources later to tend to emergency repairs. Taking pain drugs to mask the problem and in the hope that the infection won’t spread is bound to land you in the emergency room and wipes out any “savings” from not going to the dentist and setting you up for an early introduction to the lovely lifestyle of dentures. But if you dare visit the dentist, you certainly are prepared to save your winning smile. If you have a sound international trade compliance program, you can better take advantage of government initiatives to your advantage. For example, you and your industry peers may be able to bring a successful challenge on foreign competitors under our antidumping laws. You will be better able to take advantage of the protections that US Customs and Border Protection offers to protect your intellectual property. Is there proof that trade compliance is a money saver? It’s difficult to marshal empirical evidence for or against the proposition, but it’s clear that enhanced penalties for both export and import violations are designed to dissuade companies from viewing fines and penalties as the cost of doing business, merely a nuisance that one suffers through rather than invest in compliance programs. It’s hard to hold on to that kind of thinking, especially during lean times, when you’re whacked with penalties in the tens of millions of dollars. Let’s also give the Government some credit for trying to provide empirical proof that compliance saves you money. Cargo examinations and delays are bottom line killers, but does enrolling in voluntary compliance programs like the Customs-Trade Partnership Against Terrorism (C-TPAT) help? Yes, according to CBP. Neglecting trade compliance during lean times allows obvious and hidden problems to fester. Now is the time to take a full measure of your compliance weaknesses and strengths, to find the economies of scale (you wouldn’t believe how much waste and fraud a good compliance program can eliminate), and to avoid problems with federal regulators. Trade compliance, even in big companies that have compliance programs with all the bells and whistles, is seldom a big-ticket item compared to other company expenditures. It becomes a big-ticket item only when the feds knock at your door and you’re not ready. Federal enforcement authorities have an uncanny ability to detect when companies are cutting legal corners. So, don’t cut any. Corners, that is. Keep your compliance efforts robust and honest. Your bottom-line will be healthier for it. Maybe even your smile will improve.  If only they made GPS units for legal compliance.
So you’re driving your family from Texas to visit the new Harry Potter theme park in Orlando. You’re under the gun. You must complete the long drive before tomorrow afternoon because you made special reservations and plans for your daughter to spend her birthday at the park. You can’t be late. But you've never been to Florida. “How hard can it be to find this park?” you think to yourself, confident that your advanced, albeit largely untested, driving and navigation skills will get you there in time and without a hitch. But your spouse keeps bugging you to buy a map “just in case” (you draw the line at GPS because you view the technology as undignified and wimpy). You give in to her demand (you hate it when she’s completely correct) and, while gassing up the car, you rifle through the collection of maps at the local convenience store. This is Texas, so the store does not have an Orlando map, but it does have a map to Plano, Texas, a city of comparable population and geographic configuration. You plop down $10.27 (includes tax) and stick the map in the glove compartment. The drive proves more challenging than you anticipated, and you need to make up several hours that you lost somewhere along the Gulf Coast. You finally reach the Florida border, but there are no road signs to the Harry Potter theme park or Orlando. You are fast approaching a fork in the road. You’re probably doomed anyway, but take the wrong road and your fate is sealed. Everyone in the car starts to panic, so your wife pulls out the new map from the glove compartment, opens it and asks “Honey, where’s the map to Orlando?” [Disclaimer: the story you just read is completely fictional, excepting the part about the new Harry Potter park, which rocks from all accounts]. I know what you are thinking. There isn’t an idiot on earth that would buy a map to a city he/she is not visiting. I respectfully disagree. Lawyers see this kind of thing happen every day, not with cartography, but with compliance manuals and procedures. Manuals and procedures are maps of sorts that lead companies to legal compliance. You would think that their importance would be more widely recognized. Companies regularly buy off-the-shelf compliance templates, “borrow” some other company’s manual, or fail to update a good compliance manual that may have been correct and helpful in the distant past. While we are on the subject of the Gulf Coast, let’s talk about BP’s oil spill and the importance of good compliance policies. BP’s emergency cleanup plan instructs its employees to look out for walruses, sea otters, sea lions and seals during oil spills in the Gulf of Mexico. The problem is that none of these mammals live in the Gulf (I guess we should all be thankful that BP did not also list orcas, penguins, and flying reindeer). BP’s emergency plan also lists the contact information for an ocean biologist who has been dead for five years, and unless BP or Kevin Costner know a reputable medium, that information is likely to be of little value in cleaning up the spill or mitigating BP’s legal exposure. It is not that BP is exceptionally bad when it comes to its emergency procedures, just equally bad. The news services are reporting that BP copied verbatim its emergency cleanup plan from other major companies. I cannot predict whether BP will be indicted for its misdeeds and mistakes in the Gulf. However, I can predict with some confidence that if BP is indicted and convicted, the Government will trot out BP’s shoddy emergency cleanup plan to convince the judge to inflict the most severe punishment possible. BP’s oil spill is a nightmare that keeps on giving, but it may be possible to find an untainted, healthy anemone in all the oily muck. Maybe companies will more often evaluate their compliance procedures before emergencies pop up. Maybe it will finally sink in that due diligence requires that they DO diligence. If your compliance procedures are not customized to fit your company’s unique needs and culture, and if they are not updated regularly to accommodate rapidly evolving laws, technology, and changes within a company, then they are as helpful as a Texas map in Florida. |
Oscar Gonzalez
Principal and a founding member of GRVR Attorneys. Archives
September 2016
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