ILMA Compoundings August 2016 - 28

INTERNATIONAL INSIGHT

More to the Story
Nearly all of these situations have details in play that are not
visible, but strongly steer the outcome from the beginning.
Many importers do not mention them, as they can be viewed
as unflattering and erosive of the importer's image in the
eyes of the exporter. Sometimes when they are mentioned,
the exporter finds difficulty accepting their legitimacy or the
claimed impact and dismisses them. We will discuss the two
most prominent factors.
First, destination importers typically experience harsher
treatment from their local authorities than does the exporter.
Part of this is cultural, where the culture imposes a higher
standard of conduct (often unwritten or at least "uncodified")
on a local party, than they impose on a foreign party. Many
countries have cultural stratifications (formal or informal
"classes") that can adversely affect credibility and even formal
legal rights. While some countries might easily come to mind,
most countries have at least some form of this disparity.
Beyond cultural stratification, the regulatory authorities in
many jurisdictions presumptively see their local importer as
less credible and frequently presume guilt from the start. In
some countries, the importer has little or no opportunity to
effectively plead their cause. This is not universal by any means,
but the trend is real and to some extent flagrant.
The second prominent factor is the other side of the same coin.
Foreign exporters are widely treated favorably by destination
regulators. Most exporter readers can immediately list
exceptions they have experienced, but the favorable treatment
is spawned out of pragmatic self-interest, not from international
preference. The strongest self-interest is that the exporter is
fueling commercial opportunity. Even in highly protectionist
countries, the exports they allow and promote concern
products that are domestically underproduced, if available at all
(but for importation).
A similar self-interest is the potential development opportunity
the exporter precipitates. Importation fuels local commercial
interests, including processing, related downstream
manufacturing, distribution, warehousing and transportation
- to name the obvious few. It also helps promote unrelated
development investment (especially from foreign sources) by
leveraging the quantity and value of imports into perceived
growth potential and by touting the pedigree of the strength of
the exporters participating in the economy.

These and other self-interests cause local regulators (and
corresponding enforcement authorities) to adjust their
perspective on, and approach to, importer infractions when
the exporter becomes directly involved. Misconduct becomes
a "gap." Guilt can become a "misunderstanding." Penalty can
become a "correction." Again, this is not universal, but it is
prominent. At the local level, the enforcement arm might
remind the importer of the consequence dodged. But even
in those instances, a second or third offence can enjoy similar
treatment and outcome based on the actions of the exporter.

What Intervening Means
The role the exporter needs to play requires initiative and
overt activity, but it should not be viewed as representing the
importer, nor should it be high-handed or adversarial. There is
no template, as every jurisdiction will benefit from differences in
the approach.
The process must begin by the exporter resisting the two
primary barriers (and their components) strongly enough
and for a period of time sufficient to enter candid but careful
discussions with the importer. If the situation warrants the
exporter's direct involvement, the parties should discuss what
that might look like.
Often this process will benefit from outside expertise, in either
an advisory capacity or as a team member. The advantage of
including an outsider as a team member is that it signals to the
regulator that the exporter is acting objectively and not solely
out of proprietary self-interest.
As there is no template to this role, two objectives are primary.
On one hand, the exporter must convince the regulator
that they share perspective and objective on correcting the
situation and preventing its recurrence. On the other, the
exporter must reinforce to the regulator that the importer is an
integral part of the value the exporter offers and not just a local
conduit to the market.
These two objectives are stated more simply than is the
strategy to achieve them, as regulators will be cautious and
prone to look for superficiality. Nevertheless, the benefits of
this approach are well worth the cost and effort and often go
beyond saving the commercial value of the transaction itself.

Eggenschwiler is an international trade attorney and director of
global trade for the Redstone Group LLC. He may be reached at
614-923-7472 or jeggenschwiler@redstonegrp.com.

Vol. 66 No. 8 * 28 * August 2016 Compoundings



ILMA Compoundings August 2016

Table of Contents for the Digital Edition of ILMA Compoundings August 2016

FROM THE CEO
FROM THE PRESIDENT
BOARD BRIEF
NOTES FROM NLGI
THE HEART OF ILMA
In Memoriam Mike Ryterski (1920–2016)
Radco Industries Promotes Brian Finch
Manufacturing Day is Coming! October 7, 2016
THE EVOLUTION OF GROUP II
VOICES & VIEWS
INTERNATIONAL INSIGHT
FOCUS ON ETHICS
FAMILY BUSINESS
RULES & REGS
POWER PLAY
LEGAL EASE Preparing for Brexit
THE WHITE PAPER
ILMA Compoundings August 2016 - 1
ILMA Compoundings August 2016 - 2
ILMA Compoundings August 2016 - 3
ILMA Compoundings August 2016 - 4
ILMA Compoundings August 2016 - FROM THE CEO
ILMA Compoundings August 2016 - 6
ILMA Compoundings August 2016 - 7
ILMA Compoundings August 2016 - 8
ILMA Compoundings August 2016 - FROM THE PRESIDENT
ILMA Compoundings August 2016 - BOARD BRIEF
ILMA Compoundings August 2016 - 11
ILMA Compoundings August 2016 - NOTES FROM NLGI
ILMA Compoundings August 2016 - THE HEART OF ILMA
ILMA Compoundings August 2016 - 14
ILMA Compoundings August 2016 - In Memoriam Mike Ryterski (1920–2016)
ILMA Compoundings August 2016 - Radco Industries Promotes Brian Finch
ILMA Compoundings August 2016 - 17
ILMA Compoundings August 2016 - Manufacturing Day is Coming! October 7, 2016
ILMA Compoundings August 2016 - 19
ILMA Compoundings August 2016 - 20
ILMA Compoundings August 2016 - THE EVOLUTION OF GROUP II
ILMA Compoundings August 2016 - 22
ILMA Compoundings August 2016 - VOICES & VIEWS
ILMA Compoundings August 2016 - 24
ILMA Compoundings August 2016 - 25
ILMA Compoundings August 2016 - 26
ILMA Compoundings August 2016 - INTERNATIONAL INSIGHT
ILMA Compoundings August 2016 - 28
ILMA Compoundings August 2016 - FOCUS ON ETHICS
ILMA Compoundings August 2016 - 30
ILMA Compoundings August 2016 - FAMILY BUSINESS
ILMA Compoundings August 2016 - 32
ILMA Compoundings August 2016 - 33
ILMA Compoundings August 2016 - RULES & REGS
ILMA Compoundings August 2016 - 35
ILMA Compoundings August 2016 - POWER PLAY
ILMA Compoundings August 2016 - 37
ILMA Compoundings August 2016 - LEGAL EASE Preparing for Brexit
ILMA Compoundings August 2016 - 39
ILMA Compoundings August 2016 - THE WHITE PAPER
ILMA Compoundings August 2016 - 41
ILMA Compoundings August 2016 - 42
ILMA Compoundings August 2016 - 43
ILMA Compoundings August 2016 - 44
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