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American Shipper

Self-disclosure of customs violations unheard of in China, panel says

Self-disclosure of customs violations unheard of in China, panel says

   Companies operating in China are not compelled to self-disclose customs violations in the same way that they are in the United States, panelists at a conference on China trade compliance in San Francisco said Thursday.

   “I never once saw a self-disclosure come across my desk,” said John Larkin, president of Arlington, Va.-based Larkin International Trade Associates and former commercial officer and export control attach' for the U.S. Embassy in Beijing.

   The panel moderator, TYCO International Trade Counsel Carol Fuchs, asked the conference audience if anyone operating in China had every self-disclosed in China. No one raised their hands. When she asked the same question about the United States, nearly everyone raised their hands.

   It’s a question of penalty mitigation and consequences, the panelists said, that cause companies operating in China to be reticent to hold their hands up if they discover a violation.

   “If we found out we were in violation, I don’t know what we’d do,” said Thomas Shillinglaw, vice president and assistant general counsel for Corning. “We wouldn’t sweep it under the rug. We’d get our Chinese counsel involved, but we wouldn’t want it to tarnish our reputation. I just don’t like to hide things, especially in a country like China.”

   Panelists said voluntarily self-disclosing could lead Chinese officials to investigate companies further, and could have the deleterious effect of making the government feel like it had lost face since it missed the violations as well.

   “In some countries, a voluntary disclosure can trigger an investigation,” Fuchs said. “They figure, if they’re doing something wrong, what else are they doing wrong?”

   It runs counter to the environment in the United States, where companies that self-disclose are typically looked upon favorably when punishment is meted out.

   “There’s no set system (for mitigation of penalties),” Larkin said. “On a personal level, you may get a mitigated penalty, but there’s nothing procedural. The key is showing the government that you’ve taken a corrective action, whether you self-disclose or not.”

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