by M. Sigmund Shapiro
April 4, 1998
The rule change contemplated by the Department of Commerce
redefining who’s the exporter of record reaffirms its bureaucratic
myopia and should earn it its own "E" award for unnecessary
meddling. If there is a more effective way to stifle exports it
would be hard to find.
An axiom of international trade is that one sells CIF and buys
FOB. The reason is obvious. A CIF selling price contains hidden
shipping elements that can be padded by the seller, and therefore
most sophisticated buyers like to control the international movement
of the goods. Many times goods are sold to a foreign buyer
"ex-works" with no intermediaries.
The intent of the proposed rule change, of course, is to make the
ex-works seller responsible for any illegal transshipment on the
part of the buyer. Why would any manufacturer in his right mind want
to enter the export arena under those circumstances, knowing full
well that a hungry bureaucratic lion awaits him?
I’m glad to see that industry is up in arms over the proposal and
have hopes that common sense might prevail.
But I’m also concerned that such thinking might spill over into
the new Customs Automated Export System (AES) soon to make its
debut. Enforcement and other bureaucratic bells and whistles will
see it die a-borning.
