Most importers and exporters do not file their required import-export information directly with the government. Instead, they rely on licensed professionals to help them navigate the treachery of the murky waters of import-export laws and regulations.
In some cases, very large importers do “self-file”, having made the significant investment in the required (in the US, ABI – Automated Broker Interface) software that can “talk” to Customs. In many case, (US) exporters do make their own Electronic Export Information (“EEI”) declaration via the relatively new Automated Export System, “AES”.
And still, the vast majority relies on a licensed Customs Broker to make import declarations, and a licensed International Freight Forwarder to make export declarations, providing the details of the export transaction via a Shipper’s Letter of Instruction, “SLI”.
In all cases, the Principle, i.e., the importer or exporter must provide a duly-executed Power of Attorney (“POA”) appointing these licensed agents to act on their behalf. And these guys, these agents, ARE licensed, and ARE professionals in their fields, so….
Can’t I, as the importer or exporter wholly rely upon these professionals to make my declarations and not worry about any liability due to material errors, aka “violations”?
In a word:
The courts have consistently ruled that the principle, i.e., the importer or the exporter is never free from its liability in spite of properly appointing even highly qualified agents. In fact, in United States v. Optrex America, Inc., Slip. Op. 06-73 (CIT, May 2006), the Court of International Trade specifically ruled that solely relying on a Customs Broker for import declarations is “prima facie evidence of lack of reasonable care”, and therefore immediate proof of liability on the part of the principle.
So what SHOULD an importer or exporter do to protect themselves? As with any other business partnership-, the standard control cycle is highly recommended to avoid potential penalties for violations that will still accrue to you:
- Have a robust broker/forwarder selection process with demanding requirements, beyond only price. One violation can cost far more than a $5/transaction savings!
- Once selected, provide all duly-appointed brokers or forwarders with a robust Directive that specifically outlines how you want them to do business on your behalf.
- When executing that Power of Attorney, do not merely sign the version they provide you: read it, and modify it to protect you!
- Review the Broker or Forwarder terms and Conditions. If you have leverage, renegotiate them to make them more favorable to you. For example, the Standard NCBFFA Terms and Conditions limits the broker/forwarder liability to $75 regardless of which party is at fault: don’t be left holding the bag!
- On a routine (annual?) basis, use a well-developed scorecard to measure the appointed brokers/forwarders against the Directives you provided them. If they are sub-standard in any area, develop a corrective action plan and monitor it to successful conclusion, or…
- If they remain deficient, protect yourself, revoke the Power of Attorney and start over again.
It may look like a lot of attention to a seemingly unimportant area, but one penalty for any violation, even a negligent one, can run from the tens of thousands to the millions of dollars:
Do your Agent Reviews, and why not in March – before you have to finish your taxes!?
and Don’t Let this Be You! ©
 In the US, Customs Brokers are licensed by the US Bureau of Customs and Border Protection, “CBP”.
 In the US, Freight Forwarders are licensed by the Federal Maritime Commission, “FMC”.