Thursday, November 08, 2007

On Bismarck and Brokers

Otto von Bismarck is reported to have said "Laws are like sausages, it is better not to see them being made." Clear evidence of that is Senate Bill 2045. This bill, introduced in September by Senator Mark Pryor of Arkansas is intended to sure up consumer product safety by reforming the Consumer Product Safety Commission.

Section 15 of the bill states:

Section 17 (15 U.S.C. 2066) is amended by adding at the end thereof the
(i) The Commission may--
(1) designate as a repeat offender, after notice and an opportunity for a hearing, any person found by the Commission to have committed multiple violations of subsection (a); and
(2) refer any such person to United States Customs and Border Protection with a recommendation that the person's import license be terminated in accordance with that agency's procedures.

The subsection (a) referred to is the provision that allows Customs to refuse admission into the United States of merchandise that does not comply with U.S. standards, is defective, or is hazardous.

Here is the question, who is going to be a repeat offender? One would think that it would be the importer of shoddy merchandise. The problem with this interpretation is that importers almost never have anything called an "import license." There are exceptions for guns and other controlled merchandise, but an import license is generally not required in the United States.

Unless, of course, Congress is talking about customhouse brokers. Brokers are licensed by Customs to engage in customs business on behalf of importers. Is that the license the CPSC might recommend Customs and Border Protection revoke?

It seems impossible that Congress wants to force brokers, who are agents of the importer, to confirm that the importer's merchandise does not violate U.S. safety standards. That is just not part of their job, not within their normal skill set, and not a reasonable expectation.

On its face, it appears that this bill was originally drafted by someone with little if any knowledge of how trade works. It looks as if the bill was intended to allow the CPSC to prohibit importers from further importations. But, it seems that the brokers are the ones facing the sanction.

According to the National Customs Broker and Forwarder Association of America, the bill has now been marked up by the Senate Committee on Commerce, Science and Transportati0n. Apparently (and I admit I have not seen the amendment), the Senate decided to make it explicit that its intention is to go after brokers' licenses. This, of course, has the look of a face-saving move intended to send the message "We know there is no such thing as an import license; we always meant to target the brokers."

Geez. I am hopeful that someone will come to their senses before this sausage is thrown on the grill and served up Chicago style.

UPDATE (11/22/2007): Word on the street is that brokers have been removed from the line of fire of this loegislation. I guess someone on the Hill was listening.

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