Monday, October 18, 2010

Contracts and the International Sale of Goods

Between the office and teaching International Business Law at F.I.T., contracts have been a main topic on my mind recently. Just last week in class, I went over a Drawback Contract with my students to set out the pertinent areas of a contract while going over the duty refund concept of drawback.

This week, we are turning to contracts involving the international sale of goods and it reminds me of my law school days at Tulane when I first learned about contracts. The difference however, is that I get to expose my students to the UN Convention on Contracts for the International Sale of Goods, which was adopted by a diplomatic conference on April 11, 1980, and is commonly referred to as the “CISG.”

The CISG is an international set of commercial rules established to provide a framework for international sales contracts, that is, to govern commercial relationships between merchants of different countries. The rules are therefore, applicable to those countries who are “Members” that have ratified the CISG under the premise that the development of international trade on the basis of equality and mutual benefit is an important element in promoting friendly relations among States.

The CISG is comprised of 101 Articles, with each Article providing a rule specific to a commercial transaction, such as Article 51 which states “The buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention.”

Pace University’s Law School has the Institute of International Commercial Law and has a wealth of material on the CISG, including the CISG Treaty text and legislative history, cases on the CISG and other scholarly materials.

Unlike the CISG, the Uniform Commercial Code (UCC), which is our domestic law here in the U.S. that governs commercial transactions, has only 9 “Articles.” Within each Article however, are multiple sections, with each Article governing a particular area, such as Article 3, which deals with “negotiable instruments,” or Article 5, which deals with Letters of Credit.

Of course, for this week’s class, we will be focusing on Article 2 which deals with “Sales” as this is the section you would look to in order to understand how domestic merchants behave in a commercial setting. In fact, just perusing through Article 2, you see how it begins with contract formation and construction – after setting forth some definitions, of course – and then continuing on with the idea of acting in “good faith,” performing under the contract and alas, breach of contract.

It is not surprising that the “Remedy” section of the UCC is so lengthy, after all, it is not uncommon to find that it is not until a dispute arises that parties begin to pay attention to the laws governing their agreement.

Questions/comments? Post below or email me at clark.deanna@gmail.com

Wednesday, October 13, 2010

OWIT-NY Event Tonight on Trade Compliance

The Organization of Women in International Trade - NY Chapter is pleased to present

"Customs Compliance Software and the Bottom Line - Cutting Costs and Leveraging Time for Importers, Exporters, Brokers and Forwarders"

featuring

Jason L. O'Brien, Director of Sales and Marketing for MIC Customs Solutions

and Co-Panelist

John O'Shea, Director, Trade Compliance at Bloomberg L.P. (presenting the perspective on compliance systems from the user, manager and consultant side)


Topics of Discussion Include:

• License vs Hosted solutions
• Global Trade Compliance vs US Trade Compliance
• All in one Global Solutions vs Best of Breed
• Return on investment

Time: Networking and refreshments at 6:00pm. Program commences at 6:30pm.

Location: Law offices of Baker & McKenzie in the Grace Building,
1114 Avenue of the Americas (the entrance is on 42nd Street directly across from Bryant Park.) New York, NY

*** Cost ***: $20 for OWIT members , students, and government employees
$25 for non-members

About MIC-

MIC Customs Solutions is a worldwide leading provider of global customs solutions and is dedicated to the development, implementation and support of global customs software solutions. MIC specializes in integrated solutions while leveraging regional and national legal requirements. MIC software helps large and small companies grow, comply and compete globally. Currently, MIC customs software is used by more than 700 customers, in 40+ countries, on five continents.

Jason O’Brien is a 12 year veteran of the global trade customs compliance software space and will give an overview of the software industry as it relates to cross border trade and how it is being used in the Customs/compliance space globally to leverage time, energy and financial savings.

To register for this event go to www.owitny.org. You may also pay at the door. Hope to see you there!

Questions/comments? Post below or email me at clark.deanna@gmail.com

Sunday, October 10, 2010

FedEx and the “Express Consignment Facility”

This week I had the pleasure of taking a field trip with some of my FIT students to Federal Express in Newark, New Jersey. Referred to as “ECO,” which stands for East Coast Overlay, this facility is one of six regional sort operations in the U.S., with the others being in Indianapolis, IN, Memphis, TN, Miami, FL, Oakland, CA, and Anchorage, AK.

It is through these centers that all foreign freight is “cleared” for US Customs and other federal agencies, such as US Fish and Wildlife (US F&W) and the Food and Drug Administration. Not only does US Customs have an office on-site at ECO but I likewise met a US F&W inspector while there who mentioned inspecting live animals and getting the typical declaration for items with mother of pearl.

US Customs designates these regional sort operations as “hubs,” which are bonded warehouses permitted to handle international cargo. The regulations overseeing hub operations are under the “Express Consignment Facility” regulations found at 19 CFR Part 128.

We were given a tour of both ECO’s domestic and foreign freight operations, as well as the offices of FedEx Trade Networks, its on-site customs clearance operation. Interestingly, they have licensed customs brokers and, individuals working under their direction, to prepare and file entry summaries, which by definition, is done on behalf of the importer. They have high-tech software that allows for a quick tariff determination by way of “clicking” your way through the subheadings, which is done based on the invoice and other shipping records which are scanned in at the point of sale overseas. The oddity with FedEx’s clearance operation, however, which admittedly, I forgot to ask about, is as follows.

The shipper, by virtue of going to FedEx in say, Germany, pays for the service and directs FedEx to provide the customs clearance services so that the end recipient, aka, the importer and/or consignee here in the US, can receive the package at its address, as delivered by FedEx' domestic carriers.

Customs brokers, however, must have a valid power of attorney to engage in “customs business,”which includes the filing of entry papers, on behalf of the importer. It therefore begs the question – how is it possible that FedEx clears these shipments when it does not have a valid power of attorney (authorizing the broker to clear the cargo on behalf of the importer) for every domestic recipient of foreign cargo? This is a question I did not get a chance to ask as mentioned above. Perhaps they do have one after all for every importer in accordance with the regulations, though I would be interested to know how that is obtained given the express nature of FedEx.

Express consignment facilities are recognized as hubs by US Customs because it is through these that foreign cargo destined for other foreign locations gets sorted through. That is, cargo arrives on the inbound flight from a foreign location, which in the case of ECO would likely be from Charles de Gaulle Airport in France, and is placed on an outbound flight to a different foreign location.

As all cargo is listed on the airplane’s manifest, it is at these hubs that US Customs comes through, examining the manifest in search of anything suspect – be it the cargo itself, the foreign destination, etc. - and despite the cargo not being “entered,” or attempted to be entered into the US, as it has a final destination with a foreign address and it is just passing through the U.S. for logistical purposes, all cargo at an express consignment facility is “fair game” for inspection, detention, or seizure, as it is on U.S. soil.

Typically, a “suspect” shipment is one where contraband may be found, or where an allegation of a counterfeit or trademark violation exists, such as with a shipment of cell phones or other electronic devices. Any hint of a violation, and the cargo gets detained. ECO even had a designated US Customs holding cage for cargo that US Customs flagged for further investigation.

According to our tour guide, one of three licensed customs brokers in the Regulatory Compliance and Clearance office of ECO, FedEx’ relationship with US Customs is very good and that they work very closely with US Customs to further its mandates with regards to imports.

Remember, US Customs has free reign to inspect all cargo at any hub, whether it is destined for importation into the US or not. As most foreign cargo is routed through a FedEx regional sort operation while en route to its ultimate foreign destination, this is something to keep in mind when choosing an express courier from a foreign country.

Questions/comments? Post below or email me at clark.deanna@gmail.com

Friday, October 1, 2010

Consumer Product Safety and US Customs Cooperation

As the watchdog of our country’s borders, US Customs has the authority to enforce, and otherwise maintain the integrity of, other federal agency regulations with respect to imported merchandise.

While the Consumer Product Safety Commission (CPSC) is responsible for the oversight of some better known laws, including the Flammable Fabrics Act (addressing inter alia, sleepwear and mattresses) and the Consumer Product Safety Act (CPSA) (dealing with, inter alia, children’s products and lighters), it is likewise overseeing some lesser known laws which I find to be interesting, such as the Refrigerator Safety Act and the Children’s Gasoline Burn Prevention Act.

Like US Customs, CPSC has specific statutory authority under 15 USC §2066 and 15 USC §1273 for sampling imports in order to ensure compliance with consumer product safety rules. Where a violation of its regulations is suspected, it likewise may issue a notice of detention (if the circumstances so require) describing the alleged violation and its governing statute.

CPSC will issue this notice to the importer who then deals directly with CPSC. Copies are provided to the importer’s Customs broker and US Customs as well. Detained merchandise remains under US Customs custody whether US Customs has issued its own detention notice or not.

Typically, the recipient of a notice has 5 business days within which to provide the requested information to CPSC in order to resolve the detention. While extensions may be granted, CPSC makes an effort to resolve detentions within 30 days.

Of all of the laws that CPSC regulates, where a violation of the CPSA occurs (and only the CPSA), a hearing may be sought by the importer, owner, or consignee under the Administrative Procedures Act. During this time however, i.e., pending the completion of the hearing, the merchandise must remain under government custody at the expense of the importer, owner, or consignee, which in everyday language, typically amounts to fees for warehousing and other incidental charges, such as the use of a forklift, a forklift supervisor, etc. Charges will vary based on the quantity and type of merchandise at issue.

When requested, CPSC may grant a conditional release of the merchandise for examination and testing so long as it remains under the US Customs bond. While "conditionally released" the goods may not be distributed.

Of course, where the cargo is not returned prior to the termination of the conditional release period, there is always the risk that US Customs might issue a Redelivery Notice which could ultimately lead to seizure, destruction or exportation of the merchandise.

Or, in the event the goods are not redelivered, an importer would likely be facing an assessment of liquidated damages. US Customs must issue this notice however, within 30 days after the end of the conditional release period.

Lastly, an importer may request that the detained merchandise be exported or destroyed. Of course, destruction means that not only has the importer/owner forfeited the money for the cost of the merchandise, but it also has to pay out-of-pocket for its destruction, and carry out the operation under Government supervision.

Needless to say, when an alleged violation remains unresolved, big brother (i.e., some branch of the government) will be watching, until a resolution has been found, a penalty (or liquidated damages claim) has been paid, or the merchandise has been destroyed.

In my experience I have noticed that all too often, importers believe that “no news is good news.” As a practitioner, I recognize that no news can actually be a prelude to really bad news with expensive consequences.

It would therefore, be prudent to routinely review importation practices and protocols, and obtain periodic advice and counsel on existing practices to ensure compliance with existing laws or newly implemented regulations. As always with new endeavors, the prudent approach would be to obtain expert advice.

Questions/comments? Post below or email me at clark.deanna@gmail.com

Friday, September 24, 2010

Hooray for Spanish Designers Toni Francesc and Jose Miro!

It is rare to find an intersection between my professional and personal interests, and my favorite country (aside from the U.S. of course!). Last week I had the opportunity to attend an event that brought it all together – the law, fashion, and Spain!

The NY Chapter of the Organization of Women in International Trade collaborated with the Spain-US Chamber of Commerce and the organization, Catalonia Trade & Investment, for a panel discussion on breaking into the U.S. market, which was hosted at SUNY’s Fashion Institute of Technology, the fourth collaborator of this event.

With the fashion momentum sweeping over the Big Apple thanks to Mercedes Benz Fashion Week, during the panel I had the pleasure of joining two world renowned designers from Spain to view the Spring/Summer 2011 collection of Toni Francesc and the Fall 2010 collection of Jose Miro as presented at Cibeles Madrid Fashion Week.

Toni’s collection “Urban Forest” was breathtaking. It was predicated on the earth elements, with wood being the primary symbol of the collection. There were actually multiple designs where the wood was incorporated into the dress itself making for some very innovative fashions. Toni sought to express the different moods that we as people have, likening them to elements, and used different fabrics and cuts to suggest for example, the flow and energy of water.

Belts as shoulder straps or as a non-functioning decorative accessory, soothing colors, flowing fabrics and beautiful textures, some of which reminded me of stones, were all a part of this dynamic collection.

Jose Miro’s equally gorgeous and impressive Spring/Summer 2010 collection was likewise very feminine, with beautiful combinations of sheer and gathered fabric, many of which evoked an image of a flower or a large bow, accessorized with color coordinated shoes and butterfly hairclips. I loved it!

Jose described his company’s development of a line of high end shoes – a business move that would complement his thriving apparel line – as well as further expanding the manufacturing of his merchandise using organic materials, with a focus on preserving the environment.

He also talked about e-commerce and the benefits of having an online store so that new designs can be ordered and made in real time, in addition to the ability to circumvent the use of a middleman as it is a transaction directly between the buyer and seller.

Not only is that good for business, but it is also good in terms of dealing with US Customs and avoiding “first sale” and middlemen issues.

As for breaking in to the U.S. market, both designers believed that entry into the NYC market was the entry point into expansion across the country. Hence their participation in the events of NYC’s 2010 Fashion Week!

Questions/comments? Post below or email me at clark.deanna@gmail.com

Friday, September 17, 2010

International Trade, Bananas and Costa Rica

Riding along the carreteras in Costa Rica gives the impression that this country has a thriving economy. Its tourism industry is well organized, has no shortage of nature activities to offer, and even when the weather isn’t the sunniest, there are still many of us eager to take on the class 3 and 4 rapids of the Rio Pacuare (a journey I highly recommend!)

Tourism aside, one ubiquitous feature on the Costa Rican highways is all of the containers. It seems that every time I look up, a container truck is rolling past me. Hamburg Sud, Maersk, tex, Genstar, Crowley, Triton, Florens, and so on and so forth. According to my driver, highway 32 takes us directly to Puerto Limon, one of the main ports on the Carribbean Sea side of the country.

Across the landscape I have seen coffee, sugar cane, rice, pineapples, and of course, bananas (pronounced “bananos” in Costa Rica), growing. Del Monte trucks are abundant on the roads too, and I had the pleasure of visiting one of its banana plantations and witnessing the harvest and processing of bananas for export. While labor intensive, it was otherwise a relatively simple operation.

The first thing to notice was that all of the banana trees had large blue bags on them. Turns out these bags cover the bananas to protect them from birds. While the birds do not eat the fruit, should they land on them, the skin would be compromised due to their claws. Pests were not an issue as they sprayed the plantation with pesticides (and coincidentally, even the airplane that did the spraying was also yellow!).

The processing itself entailed a worker cutting the entire branch of bananas off of the tree which was then placed on a hook on a portable cable. When enough had been hung on the cable, a man would wrap a harness around his waist and then walk briskly towards the processing center along a designated path, with the bananas whizzing along behind him.

Upon arrival, the banana branches were lined up until they got to another man who quickly cut off bunches of hard green bananas with a giant machete, and placed them on a turn belt. The bananas then went into a water bin where they were rinsed and sorted through by women. After traveling through this water system, a man then retrieved the bananas and placed them onto a drying belt, where they were ultimately packaged by women.

Bananas that are “blemish-free” make the cut to be exported. Those not quite so cosmetically perfect get sent to a secondary plant for processing into products such as baby food (at least this is what my guide told me).

Hearing this got me thinking about how we (as a population) in America prefer to have in-store products look as if they have been airbrushed, that is, unless it is picture perfect and dirt free, we question its quality, seemingly forgetting that food is grown in soil (and therefore, in contact with dirt).

I remember my days in Malta where the produce truck would pass through the neighborhood for a couple of hours, a few days a week, and I had to go and track it down if I wanted to eat. There were plenty of wonderful fruits and vegetables that I consumed that did not look “perfect” and which required me to wash the dirt off of them.

I recognize there are legitimate reasons for the United States importing “bird claw-free” bananas, but it begs the question - Why is it that we are so easily swayed in our opinion based on appearances?

Questions/comments? Post below or email me at clark.deanna@gmail.com

Wednesday, September 1, 2010

Join Me for a Panel Discussion With Apparel Designers From Spain During Fashion Week

“Panel on Spanish Apparel Designers in New York City” featuring
Toni Francesc, Designer of Toni Francesc brand; Jose Miro, Designer of Jose Miro brand; and other industry experts.


Register now for the September 16th meeting of the Organization of Women in International Trade, New York Chapter (OWIT-NY)

IN COLLABORATION WITH

The Spain-US Chamber of Commerce, The Catalonia Trade & Investment Agency (Acc1o), and the Fashion Institute of Technology (FIT)


This event will provide case studies on how Spanish apparel companies have successfully entered the New York City market, and illuminate the significant economic impact of the global apparel trade in New York City.

Discussion topics may include, but are not limited to: strategies for New York market entry, perspectives on the New York apparel marketplace, and Spanish fashion trends.

Time: Networking and refreshments at 6:00pm.
Program commences at 6:30pm.

Location: Fashion Institute of Technology, Seventh Avenue at 27th Street, New York, New York. Event being held in the "Boardroom" C-building 9th floor.

*** Cost ***:$20 for OWIT/Spain-US Chamber of Commerce members, students, and government employees; $25 for non-members.

To attend, please register on-line Click Here. Online registration is available up to 24 hours before the event. If you miss the on-line registration, you can choose to pay by cash or check at the door provided there is still space available. Please note that the event is limited to 60 people.

For the latest copy of the OWIT International newsletter, where OWIT-NY is prominently featured please go to www.owit.org and login to the member area.

Great new membership benefits:
20% discount off all of World Academy Seminars and consulting services.
20% discount off membership to the Manhattan Chamber of Commerce - this offer is only valid until September 30th.

Finally, don't forget to follow us on Twitter.com/OWITNY.

I will be there and look forward to seeing you at the next OWIT-NY event!

Questions/comments? Post below or email me at clark.deanna@gmail.com