Additional Laws and Regulations
As with domestic shipments, any parcel shipper shipping goods internationally must know the rules and regulations governing their shipments. For these shipments, both United States and foreign laws will apply. This is true for transportation providers as well as shippers. International transportation service providers will have different regulatory standards and legal liability rules governing their services.
Contracting. Contracts relating to international shipments may also be governed by different standards. For instance, for international shipments, most people prefer to use the terms of sale found in INCOTERMS as opposed to the terms of sale based upon the Uniform Commercial Code (UCC). Also, the United Nations Convention on Contracts for the International Sale of Goods (CISG), sometimes known as the Vienna Convention, is a multilateral treaty that establishes a uniform framework for international commerce. It has been ratified by 94 countries, including the United States.
Cargo Liability. Another very significant area of difference is the laws governing a carrier’s liability for loss and damage to goods. Generally speaking, in the United States, the provisions of the federal statute known as the Carmack Amendment (49 USC § 14706) will apply to ground shipments by motor carrier. However, for international shipments by ocean carriers, their liability is governed by the Carriage of Goods by Sea Act (COGSA). The gist of it is to set the limit of liability at $500 per package or customary freight unit as well as establishing 17 defenses and other terms and conditions.Usually, but not always, international air shipments will be governed by a treaty known as the Montreal Convention. The Montreal Convention establishes liability at 22 Standard Drawing Rights (SDRs) per kilogram. The value of a SDR fluctuates; however, it was set by the International Monetary Fund (IMF) at $1.41 as of October 1, 2021. This makes the limit $14.10 per pound. Furthermore, the inland or surface leg of the shipment occurring in a foreign country will be governed by the laws of that country.
HazMat. The shipment of hazardous materials (HazMat), which are usually referred to as “dangerous goods” in international shipping, are subject to additional rules to those of the United States. For these shipments the following could apply:
- The International Civil Aviation Organization’s Technical Instructions for the Safe Transport of Dangerous Goods by Air (ICAO Technical Instructions)
- The International Maritime Dangerous Goods Code (IMDG Code)
- Transport Canada’s Transportation of Dangerous Goods Regulations
- International Atomic Energy Agency Regulations for the Safe Transport of Radioactive Material
- The International Civil Aviation Organization’s Technical Instructions for the Safe Transport of Dangerous Goods by Air (ICAO Technical Instructions)
Customs and Trade Laws. Yet another area of concern relates to customs and laws regulating trade between countries. All international shipments entering into the commerce of another country will be subject to laws governing their importation, including their classification and valuation; any duties (taxes) imposed upon them; and any restrictions on their importation. This includes, but not limited to, restrictions required by regulatory, health and safety, trade quotas, and intellectual property rights laws.
Under US law, a US importer of record is responsible for using “reasonable care” in importing goods into the United States (19 U.S.C. § 1484). Under the concept of “informed compliance,” US Customs and Border Protection (CBP) has published guidelines as to the responsibilities of the trade community in importing goods. It is the responsibility of the importer of record to ensure that reasonable care has been used in providing accurate information to CBP.
U.S. export licenses; export control laws; and sanctions. Many countries have export licensing and control laws. These are generally aimed at either limiting or prohibiting from export goods that are controlled due to technology or other strategic or sensitive characteristics. In the United States, there are three main government agencies involved in export regulation:
- The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce
- The Directorate of Defense Trade Controls (DDTC) of the U.S. Department of State
- The Office of Foreign Assets Control (OFAC) of the U.S. Department of Treasury
Development of a Compliance Program
Did reading, or even just skimming through, the first part of this column give you a headache? That is not surprising. This is a very complicated area with lots of nuances and exceptions. However, I would hope that if nothing else, you come away with an understanding of why it is critically important to have a robust compliance program in place.
This article originally appeared in the 2021 International issue of PARCEL.
