Speech or Presentation
14 November 2011
The International Import Certificate - A Burdensome Relic
Memorandum to: The President's Export Council, Subcommittee on Export Administration
From: Cecil Hunt, Wiltshire & Grannis LLP, Washington, D.C.
and importers often bear the burden of obtaining an "international import
certificate," (commonly abbreviated as "IC") or some variant of such a
document. This document had its origin in
measures taken by the United States and other Western nations soon after World
War II to limit trade to the East. I
believe that the IC has little, if any, usefulness in the existing
international trade environment and that other measures can better serve trade
control needs. U.S. government agencies
should assess the need for ICs and work with other governments to eliminate or
reform this red-tape relic. The need for
alternative documentation should also be studied.
The IC basics are these: The exporter's government may require the
exporter to obtain an IC certified by authorities in a cooperating importing
country; the guts of the document is a representation by the importer
that it is importing described commodities and will not reexport them without
approval of the importer's government; the importer's government
certifies on the IC that this representation has been made to it. The IC is then used by the exporter to obtain
an export license.
The IC system originated in the 1940s
when Western governments established a cooperative East-West trade arrangement
that included a "Coordinating Committee" ("CoCom") to administer a common
control list and to coordinate permitted exceptions to trade restrictions. The precise rationale for the IC system is
now murky. It does appear to have been
designed to give the country of origin confidence that the commodities would
not improperly move beyond the cooperating importing country, but to impart
that confidence in a way that would not require the importer's government to
limit its discretion or to acknowledge extraterritorial jurisdiction of the
exporter's government. The IC system
also provided for issuance of a "delivery verification" ("DV") upon request
from the exporter's authorities.
CoCom no longer exists, but at least
some of its former member governments continue to administer vestiges of the IC
system, even if they do not require their exporters to obtain an
IC. The Department of Commerce still
requires U.S exporters to obtain an IC for many exports to these countries, and
the United States has established IC-type arrangements with several additional
countries, including India and the Peoples Republic of China.
Consider what a U.S. company goes
through if an intended export is one that requires an IC. The Department of Commerce regulations
require that the exporter receive a signed original of the IC before
licensed goods can be shipped. A
facsimile is not acceptable, so electronic communication will not get the job
done. The process entails much back and
forth. The customer must obtain and
complete the blank form prescribed by its authorities and insert product data
supplied by the exporter in the terms required by the export licensing agency. An authorized importer official must sign the
importer representation. The importer
must submit the form (by mail) to its authorities for a certifying signature
and return (by mail) so that the IC can be sent (after translation, if not in
English) to the exporter (by international mail), who must have the signed
original IC in hand before exportation.
A 2010 Paperwork Reduction Act filing for renewal of OMB authorization
for use of the IC estimated "time per response" as sixteen minutes! It might well take less time than that for
the customer to decide to buy from a non-U.S. source!
is another type of export control documentation that is more widely used than
the IC/DV system. Export control
authorities in the United States and many other countries often require some
form of representations and assurances from end-users with respect to the use
and disposition of items to be authorized for export. Such documentation can make a significant
contribution to the authority and ability of the exporter's government to take
legal action against diversion of controlled items. Department of Commerce regulations accept
such end-user statements for many exports to countries that do not participate
with the U.S. in a form of IC system.
The Commerce regulations call this document the "statement by ultimate
consignee and purchaser", but the abbreviated term "end-user statement" (EUS)
will be used here to refer to any such export control document that, unlike the
IC, does not have to be acted upon by the customer's government.
The Department of State has long
used the IC in its control of Munitions List items. To its credit, State's Directorate of Defense
Trade Controls has published notice of a proposed end to its use of the IC as
"duplicative and unnecessary" (76 FR 41438, July 14, 2011). There has been no indication that the
Department of Commerce is considering a similar move. This is a good time for a comprehensive consideration
of eliminating or streamlining the IC/DV system.
The following are among the
questions that should be addressed. Has
the IC any control or enforcement advantage over the end-user statement? For example, has an IC ever been essential to
a successful enforcement action or been invoked to obtain a foreign
government's cooperation in dealing with an actual or threatened
diversion? How many governments that
respond to U.S. requests for an IC require their own exporters to obtain an IC
or a comparable document for exportation?
Even if the IC system is not to be completely eliminated, what changes
could be made to it and to other export control documentation provisions to
speed the process through use of electronic means of communication and
authentication of documents? If
selective requirement of an EUS can serve control objectives, why exclude its use
in the exportation of controlled software and intangible technology? What justification is there for broadly
excluding destinations in the Americas from EUS requirements?
Standard customs entry documentation
should provide the importer's authorities with information they can use if they
wish to cooperate to achieve trade control objectives shared with the
exporter's government. Such
documentation is not selectively applicable to U.S.-origin trade, and it can be
provided at the port of entry upon the completion of the transaction, rather
than requiring that the customer make a special submission at the outset to a
possibly distant ministry office.
Intergovernmental consultation will
be in order, given the origin of the IC system in multilateral and bilateral
governmental arrangements. These
consultations could well provide an opportunity to strengthen procedures for
the exchange of information by authorities as needed, but without imposing
unnecessary documentation requirements on business.
It would be very helpful if this
Subcommittee were to examine these trade documentation issues and, if it sees
fit, report its findings to the President's Export Council. If the agencies involved decide to overhaul the
IC system and related requirements, the exporting community would doubtless
share its experience and concerns. Many
export control reforms are currently underway; this should be added to the