Am I my Suppliers' Keeper? |
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By: David Hayes Posted: 2009-06-14 05:32:10 |
| One way of dividing export control breaches is those which are internal to a company, e.g. unauthorised deemed exports to company personnel, and those which are external to a company. In the latter category, a significant proportion involve transactions with the supply chain. In this population of transactions, a further logical subdivision can be made into breaches which are committed by the purchasing company and breaches which are committed by the supplier. This often results in a situation where the purchasing company effectively washes its hands of any breach by the supplier - "we flowed down the requirements, it's your fault you didn't comply". What is the role of export control training in addressing this situation?Abandoning suppliers and failing to offer export control training,and/or other support may be too simplistic an approach and, overall,be more damaging than getting actively involved.From a purely compliance perspective the "leave it with you" approach may, arguably, make sense; the suppliers breach is not your breach,assuming the relevant requirements were correctly flowed down.However,compliance is not, or should not be, a standalone function carried out for its own sake but rather it is simply a means of ensuring that business is conducted in accordance with applicable international trade legislation. The goal, therefore, is not compliance but the compliant conducting of international trade. The first goal is easy to achieve with 100% success,simply cease to conduct any international business! The reality is that a breach by a supplier is just as capable of stopping your production line as is a homegrown breach. Given that the production stoppage risk per incident is approximately equal,attending to one whilst ignoring the other cannot be an acceptable approach to risk mitigation.Having accepted this proposition,the corollary is a rejection of the "I'll leave it with you" approach to supplier difficulties in the trade compliance arena. Once the need for engagement has been recognised the questions then arise; how much engagement and how best to deliver? Should support be limited to export control training or should it be expanded to offering what might be termed operational support? In general, the further down the food chain a company sits the fewer resources it has for specialist functions, including export control training and compliance. However, it is also the case that supplier to large customer relationships are not, typically, one-to-one. A supplier in a given industry will typically supply many larger players and it would not be effective, either for the supplier or the purchasers, for the supplier to receive support and guidance from each one. The difficulty for purchasers therefore is how best to provide an appropriate level of compliance support, without swamping the supplier and/or providing what amounts to a subsidy to their competitors, since an improvement in supplier compliance will benefit all customers of that supplier, not solely the party providing support to the improvement. There may also be issues or concerns around any liability which might attach to the support provider in relation to subsequent breaches by the supplier, especially if the level of support goes beyond the provision of export control training, but it should be possible to address these by the use of appropriate legal safeguards.What is clear is that the responsible commercial approach for purchasers is to be, at least to some extent, their suppliers' keeper in relation to international trade compliance. At least, export control training should be offered, with further support being dependent upon a number of factors, including the importance of the relationship with a given supplier.The company was established to provide rapid, professional advice and assistance to companies currently affected by export controls or who are considering entering the market place but are unsure of the commercial and regulatory implications. |
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