Who is Your Broker?

All importers rely on a broker to help them navigate and support their imports. A good broker is an important part of your team. But your broker is a service provider and there are significant limits to how much you can rely on them. Dabblers tend to say “oh my broker told me this was OK,” and that is absolutely NOT OK. Your broker has your POA to conduct a lot of business on your behalf, but they are not your compliance officer or ultimately responsible for your entries.

Specifically, there are two things your broker isn’t likely to be. First, they probably aren’t a wood or flooring specialist. They are going to fill in forms for your engineered flooring and your cabinets. But they are also going to do forms for cars and televisions and purses and coats. They are generalists. They know customs rules and requirements and forms but not all industry specific requirements. They might make mistakes (or at least not be likely to catch your mistakes) on Lacey data or TSCA requirements or HTS codes and even origin.

For example, remember my earlier blog on how plywood dictates the origin of engineered flooring? Let’s say you bring some Russian plywood to Vietnam and make flooring out of it. What is the origin of the flooring as far as U.S. Customs is concerned? Russia. Now if you tell your broker that it’s VN or perhaps they just assume it’s VN, they aren’t going to know enough about your production or perhaps even the Custom specific rule to catch the mistake. So they’re going to enter the wrong origin in your name. (I’ve even heard of brokers being clearly and specifically told “the origin is X” and still entering it as “Y” despite instructions otherwise.) You know your business and the rules unique to your trade – you need to make sure you assume responsibility for that trade.

Second, they won’t be liable. Look at the fine print. Fifty dollars an entry tends to be industry standard liability for any mistake they make. I have heard multiple horror stories with brokers making mistakes, sometimes even going against explicit instructions, that cost companies hundreds of thousands of dollars. The brokers then handed over a check for fifty bucks and an apology. (The latter is not even guaranteed.) The company is left with huge fines and duties and a black mark on their record with the government. It is even possible for a company to lose their importer license or continuous bond.

As a reminder, a “post entry amendment” is possible – if you find a mistake, you can usually correct it through that system. It’s a wise thing to regularly check the entries being made in your name. You have the ultimate responsibility for everything being submitted even if you told the broker to do something else.

Brokers are people and there are good ones and bad ones. Some of the bad lazy ones get tired of typing in Latin so they don’t complete your Lacey document the way you’ve specified. Some don’t read the fine print or follow directions – again, a good example is entering an origin based on where the container shipped from, not based on the rules for the industry.

Some give you the wrong HTS code because it was the first one they hit that seemed to fit. 4409.10.2000 is described as wood flooring with zero duty – that sounds like a winner, let’s stop there, right? But 4412.31.5225 also says wood flooring and it’s got a duty rate of 8 percent and 4418.73.4000 is wood flooring at 3.2 percent…even a good serious broker can’t determine which applies to you without greater understanding of the industry and your product. You need to do this work. Your broker is an important part of your trade compliance – but ultimately, the responsibility lies with you.

Elizabeth Baldwin is Environmental Compliance Officer for Metropolitan Hardwood Floors. In her 25 plus year career in the wood industry has visited over 70 countries and hundreds of facilities of all sizes and types. She describes herself as a “jack of all wood trades.” Familiar with jungles of all sorts–having camped out along the Amazon and walked the halls of Congress–she blogs for the NWFA on both environmental and regulatory issues for educational and informational purposes only. Her blog is not intended and should not be construed as legal advice. Persons seeking legal advice on compliance with CARB, TSCA, the U.S. Lacey Act or any other law, regulation, or compliance requirement/claim should consult with the regulatory agency directly and/or a qualified legal professional.

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