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.