U.S. EXPORTERS have a tough time competing in world markets. Part of the problem is barriers erected by other countries to keep out or render uncompetitive goods produced elsewhere. Too often, U.S. companies have only themselves to blame.
In any case, the last thing U.S. exporters need is further impediments to tradingsuccessfully in world markets, especially impediments in their own country. But that's what they face these days, at least if they export or attempt to export to any of 23 developing countries, primarily in Africa, Latin America and the Caribbean..The governments of those countries, identified by Clayton Yeutter, U.S. trade representative, have managed to extend their trade barriers from their own borders to U.S. shores through the use of mandatory pre-shipment inspections of exports. These aren't just the garden-variety physical inspection of goods to ensure the quantity and quality stipulated in the contract. Instead, the foreign governments commission private companies to review all the financial transactions involved in the contract. If the
financial arrangements don't meet the often vague standards required, the exporter can kiss the deal goodbye.
The foreign governments claim they need such inspections as weapons in their battle to halt the fraudulent flight of capital that is hindering their development efforts. A noble goal, perhaps, but it is the U.S. exporter who is being bloodied in that battle. It is the exporter who must deal with the additional administrative costs associated with the inspections and who must worry whether the delays involved, currently averaging three weeks but sometimes holding up shipments by as much as three months, may cost the company that business. And it is the U.S. exporter who is paying the cost of the foreign governments' battles, literally, as the exporter must pay for the very inspection that may jeopardize his contract.
On top of that, the shipment may not be permitted. If the inspector deems the freely negotiated price to be too high, he can issue a negative report, effectively
ifying the contract agreed upon by the exporter and importer. There is no appeal. Lower the price and profit margin or forget that piece of business.
Inspection opponents estimate the inspections will cost U.S. exporters 10 percent of their sales to those 23 countries.
Also, exporters are being required to submit confidential information concerning their suppliers. The inspection companies offer no guarantees, other than verbal promises, that that information won't wind up in the wrong hands.
A group of Florida exporters, later joined by counterparts from other regions, are trying to bring pre-shipment inspections to a halt by enlisting the aid of a powerful ally, the U.S. government, but so far that ally hasn't looked very powerful.
The exporters filed a Section 301 complaint that could have led to sanctions against five of the countries, but last week withdrew the petition at the request of Mr. Yeutter, who told the exporters he would not proceed with a 301 investigation.
Instead, he offered a plan under which the inspections would be monitored while bilateral negotiations with each of the 23 governments are under way.
Representatives of the exporters defended the development by saying 301 action is too heavy-handed and the new plan may result in a quicker solution to their troubles.
One problem. Unlike the reprisals that can be taken under Section 301, there are no teeth in Mr. Yeutter's "action plan." The strongest action listed is "encouraging" those governments to adhere to the General Agreement on Tariffs and Trade Customs Valuation Code.
The exporters, perhaps to put a better face on their initial disappointment, say they have received a "clear commitment" from the administration, but that commitment is to do no more than talk. Should the bilateral negotiations fail, what then? The exporters have the right to refile their 301 petition, but more time and money will have been wasted by then.
In any case, at a time when the U.S. government is urging companies to export, it is time for the government to back up those companies trying to do just that.