THE NEW COST OF EXPORTING

THE NEW COST OF EXPORTING

There was something strangely predictable about the way shipping companies began to charge exporters fines for late shippers export declarations. The Trans-Atlantic Conference Agreement recently announced a fee of $100 per late filed SED beginning on Sept. 1. Alianca had already announced similar fees, and most other lines are expected to follow suit. Here's how that came about:

The Census Bureau and the Customs Service announced that as of Aug. 4 they no longer would accept faxed SEDs from carriers trying to make the deadline for submitting the complete manifest four days after a ship sails. A group of carriers shortly thereafter presented itself in Washington, begging for mercy. There was no way carriers' practice of faxing SEDs could be ended that quickly, they said. They needed time to prepare. Fair enough, said Census and Customs, but there's a quid-pro-quo involved. We'll give you more time to prepare for an end to faxing SEDs, until Nov. 1, but there's something we want in return, the agencies said. We want you to name names. Give us the names of all your customers who still file hard-copy SEDs so we can convert them into users of the Automated Export System. And we won't object if you, as a unified industry, start charging your customers for SEDs filed late to you - hence the new fees on exporters. The deal was done.

Exporters don't have the carriers to blame. The lines have long absorbed fines for late SEDs assessed to them by the government rather than risk antagonizing their customers by passing the fees through. Rarely does a major carrier fail to achieve the maximum of $1,000 in fines for late SEDs for a given vessel. It is not uncommon for a carrier to pay $1 million a year in fines to the U.S. government for late SEDs and false manifesting. Carriers understandably welcome the opportunity to recoup fines they didn't cause in the first place.

To the extent exporters are displeased by this turn of events, they should be looking to Washington. What the government appeared to do was deftly turn a specific problem - illegible SEDs arriving by fax - into a blunt instrument designed to achieve a much sought-after goal, that being increased use of the AES system. C. Harvey Monk Jr., chief of Census's foreign trade division, said it's inaccurate to impute such a motive to the two agencies. It was an ''unintended consequence'' that the edict on faxed SEDs would result in more widespread use of AES by exporters and forwarders, Monk said. ''We definitely did not foresee that.''

But even if it wasn't intended, the result could not have been more consistent with the expanded use of AES that Census and Customs are moving decisively to promote. The Automated Export System allows required information on export transactions to be submitted electronically to the government. It screens every field of the transmission for possible errors, thereby increasing the accuracy of the data submitted. Nearly half of all hard copy SEDs contain at least one error, Census says. Such errors have led to significantly under-reported trade statistics and weaknesses in the enforcement of export laws, the latter a growing concern on Capitol Hill.

To obtain better export data, new rules will take effect in October requiring exporters and forwarders to supply specific information for the SED or AES submission. But while that will improve the accuracy of the data, it doesn't address the issue of shippers' reluctance to use AES. The deal with ocean carriers does. Though only 25 percent of export transactions are reported through AES, the actual number of SEDs that arrive in Washington -- some 450,000 per month -- hasn't declined from last year due to the growth in trade. Why not make AES mandatory? A deal with exporters to jumpstart what had been a dormant AES program specified that participation be voluntary. Working within that deal, the government has tried to cajole exporters into participating by shutting down the AERP system and by creating a free Internet-based filing system called AES-Direct. In response to a mandate from Congress to consider the use of AES as an export enforcement tool, Customs and Census eagerly recommended that it should be made mandatory, something that may well come to pass.

This is the end-result: The government will get better trade statistics and enforcement tools, but exporters must shell out more money, a fact that can easily get buried in all the commotion. Government policy has long been designed to support U.S. exporters, who need all the help they can get to compete in the increasingly globalized economy. Their interests should not be forgotten.