NCBFAA Seeks Reconsideration of Antiboycott Regulations for Vessel Certificates

The Bureau of Industry and Security (BIS) should reconsider its "unfair and unnecessarily adverse" interpretation of antiboycott regulations for "vessel eligible certificates," the National Customs Brokers & Forwarders Association of America (NCBFAA) said in a filing with BIS (here). The association complained that the BIS Office of Antiboycott Compliance (OAC) has taken a problematic stance as to how it considers such certificates, hurting exporters and forwarding agents as a result. Antiboycott laws restrict U.S. companies' compliance with Arab-country laws that call for a boycott of any dealings with Israel, including use of Israeli ports.

Some freight forwarders have received anti-boycott penalties due to not reporting a letter of credit’s request for a carrier’s certificate when the request includes the word "agent," said the NCBFAA. The OAC's position seems to be that exporters or forwarding agents are prohibited from sending vessel certificates, which say the vessel is compliant with boycott laws and eligible to enter Arab ports, to third parties, said the NCBFAA. It's also apparently illegal for the exporter or forwarding agent not to report the receipt of certificate request to the OAC if the request is signed "by an agent of the master or owner of the vessel," said the association.

The antiboycott regulations do not "provide fair notice to the public of OAC's position by stating these certificates are problematic," said the NCBFAA. Frequently, when booking cargo for export with a steamship line, "the forwarding agent will request the carrier to supply any certificate required by the by the letter of credit," the group said. "The carrier then prepares the certificates and signs it, although in most cases the individual signing it will indicate that he/she is doing so as an agent of the carrier." Letters of credit are typically reviewed by the banks' compliance departments to make sure they don't violate antiboycott regulations and other laws, said the NCBFAA. Often, such vessel eligibility certification looks at other issues, such as seaworthiness and route, it said.

Additionally, the certificates are "rarely if ever forwarded by the bank to the buyer of goods in the boycotting country, but is instead retained by the bank, so that buyer in the boycotting country rarely sees the certificate," the trade group said. It's also unclear how the OAC considers the passing along of the certificates signed by the agent of the master or owner of a vessel be a willful violation considering "the complexity and lack of specificity" the OAC's interpretation, it said. "We believe that it cannot be reasonably argued that the actions of exporters or their forwarding agents as described here have any role in implementing or facilitating the illicit boycott" or that the OAC interpretation gives "fair or reasonable notice of the conduct that is prohibited." The agency should revise the "ill considered, hypertechnical interpretation of the regulations that does little other than to exact penalties from and cause embarrassing publicity to companies who happen not to comprehend the significance (to OAC) of having an agent sign an otherwise lawful document," it said.