BOW WAVE 371

Bow Wave Issue 371--Fine Print Edition

news and views on trade, insurance and risk

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(c)2007 WavyLine.com	Issue No 371 01 Jan 07
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Quarterpoints
3. Panama Radio
4. More Seasonal Casualties in the Kiel Canal
5. 2007 HTS Changes
6. And Finally...

1. Welcome

Poem of the Week

64

When I have seen by time's fell hand defaced
The rich proud cost of outworn buried age,
When sometime lofty towers I see down razed,
And brass eternal slave to mortal rage,
When I have seen the hungry ocean gain
Advantage on the kingdom of the shore,
And the firm soil win of the watery main,
Increasing store with loss, and loss with store,
When I have seen such interchange of state,
Or state itself confounded to decay,
Ruin hath taught me thus to ruminate,
That time will come and take my love away.
This thought is as a death, which cannot choose
But weep to have that which it fears to lose.

William Shakespeare, from The Sonnets

New Readers this week include:-

Allen Chong of Vero Marine in New Zealand
Surveyor Capt Zarir Irani in Dubai
Jake Fisher of Miller Insurance
Web designer and humourist Mike Tier of Marinade
Sukhpal Singh of Eurasia Ship Management in Mumbai Frank Peddar of DnB NOR Bank in London

News of Readers

Marcus Archer has left Union Transport and joined WK Webster in Sidcup

Contact him at:-

archermarcus@hotmail.com

Readers Write

From Ronald Woehrn of the Nautischer Verien zu Bremen:-

Our 14th Annual Seminar will take place on 24FEB07 on the subject of

EDUCATION + MANNING = SAFE SHIPS ?

The subject will be examined by 8 highly professional speakers. and the location will be the Golden Tulip Hotel in Bremen. Readers can contact me for further details/ registration

Fax +49 421 507747
or
woehrn@ahlers-vogel.de

Note from the Editor

This edition features small print, pinch points in Schleswig-Holstein and new US Federal Rules on customs tariffs. Yikes.

Leave us hope 2007 brings

Sense from the Regulators
Acumen from Underwriters
Certainty from Brokers
Understanding in the Marketplace.

Your editor wishes Readers all the best for the coming year and we look forward to being of some service.

Enjoy!

2. Quarterpoints

Your editor's last column in Lloyd's List concentrated on the fine print....

I HAVE always found it best to base opinion pieces on current preoccupations.

You can summarise your thoughts at the time and give a flavour of the subject which is taking up a lot of your time. At this time of year it is customary to offer some thoughts on the year past or the year to come.

The fact is, for the past six weeks I have been much occupied with the preparation of a wording in connection with a new marine insurance venture and I am unusually able to opine on a subject which rarely appears in these columns.

So here are 10 thoughts on wordings:

- There are many precedents. Marine wordings follow the work of past draughtsmen, many quite forgotten. The old source for them, pre-technology is a collection known as Witherby’s, a copy of which we all have somewhere near. Therein are to be found the plain vanilla, approved clauses which are presented in a manner which recalls past customs and technology in the setting out of standard form contracts. I have the 71st edition in my home office, from the year 2000, a little out of date but largely reliable because...

- Innovation is rare. There are few new wordings launched in our tradition and precedent loving industry. What few are launched have been known to suffer for attempting to move the industry to a new place. I have in mind the effort by Roger Nixon, then of the Cornhill, and others in 1995 to change the terms on which hulls were insured under the institute hull clauses.

- Leverage is influential. The drafters of the 1995 efforts had the misfortune to launch their efforts on a market which was softening and went on softening for the rest of the decade. Wordings are one part of the terrain which is subject to the struggle of underwriters and buyers for the upper hand. When the owners can canvass a softening market they probe the vulnerable providers, not only for lowered rates but also a lessening of the full rigour and safety under the wordings.

- Commodification is rife. The jousting for influence between the more able brokers and insurance managers with the underwriters is the main bulwark keeping a process of complete commodification at bay. Otherwise the tendency towards everyone offering the same thing would sweep pretty much everything before it.

- Technology does not always help. The new LMA depositary of wordings, launched successfully in August this year and taken up already by large parts of the market in London, is designed to favour the cause of contract certainty. This it may well do, but it will not help to ebb the tide of commodification which is such a feature of the industry.

- The matter of price. If you have a market wedded to single versions of hallowed wordings, dunned into practioners and lawyers from their earliest years in the industry, it follows that competition will necessarily take place mainly on the subject of price. This gives the idea of the London market substance but it does not do much to ameliorate the outrageous swings of the insurance cycle.

- Vanishing skill sets. There used to be a white collar worker in the industry called a wordings technician tasked with putting together the cover wordings for concluded contracts. These specialists became victims of the long era of mergers and acquisitions in insurance of the past 20 years when handloom weaving of this sort was priced out of the market. It is rumoured that some exiles aged in their 50s have been returning to the industry to help with the thorny issue of undocumented contracts which plague many insurance brokers faced with the need to put contractual flesh on past business.

- There are few gurus. If you are in an organisation which has an original draughtsman on the staff with the intellectual proprietorship of any given wordings you are in a fortunate position. In many companies, in many clubs, the original draughtsman has moved or passed on. His or her successors are like the slightly less confident successors in title of a complex building --adding new additions here and there, blocking a redundant exit, redividing the rooms, erecting a new conservatory and adding a garage, all of which are not entirely in keeping with the intentions of the original designer.

- "Enumerated risks" plays "all risks". There are two main schools of thought when it comes to wordings in marine and transport. You either list the roles and services you intend to cover and then, with greater or lesser dexterity by way of definitions,
qualifications, exclusions and clarifications, deploy the rules or clauses to define the terrain. The
other approach is to list the risks intended to be covered and to define in a separate section the finer print.

- In the beginning is the demand. As interesting as wordings may be, and as important a part of the product of marine insurance they may constitute, it is always a good idea to identify a demand before starting to draft a new wording.

I once spent many months, off and on, in the 1980s putting together a wording in German for stevedores which incorporated the principles of the German insurance draughtsmen with the less doctrinal approach of English insurers. It was a long project and resulted in a strange document which was duly lodged with the Berlin Supervisory Office, from whence it did not stir as no one in the market in the end was moved to purchase it.

With all due thanks for those moved to read these lines, it behoves me also to thank the readers of Quarterpoints for all their support and forbearance during 2006.

3. Panama Radio

Richard Vizor has reported on the launch in October last of the PBC (Panama Broadcasting Corporation) and an English language service magazine programme broadcast on FM in Panama. Readers who are interested can listen to the programme by clicking on the link below. The programme includes a round of the week's news which is passed on by Panamanian Consuls around the world commenting upon events in the country of their posting.

http://www.on-the-radio.com

4. More Seasonal Casualties in the Kiel Canal

Our Schleswig-Holstein correspondent Klaus Lehmbecker reports further trouble in the Kiel Canal over the holiday season. The tanker "King Edward", flying the Marshall Islands flag, rammed the No 3 Lock Gate at the Northern Lock at Holtenau. A decision was made to remove the damaged gate and replace it with one taken from the Southern Lock which had been damaged earlier on 22DEC06. Before the reinstatement of the lock ships were effectively blocked for 2 or 3 days in the canal, something which has rarely occurred in the history of the waterway.

The local paper,the Kieler Nachrichten is full of rather acid comment about the way the crisis was handled by the authorities and is especially tart at the non-availability of the floating crane "Hiev" to assist in the work, Evidently no crew was available at short notice over the holiday period.

Those who can read German can follow the story in the paper by typing Kieler Kanal in the search box:-

http://www.kn-online.de/

5. 2007 HTS Changes

This item appeared in The Quest the ezine published by Messrs Avalon, specialists in freight liabilities and customs bonds:

CBP gives 45 days

In 2007, the biggest revision of the Harmonized System will take place since its introduction in 1989.

The Harmonized Tariff Schedule (HTS) is a complete product classification system, which contains a hierarchical method for describing all goods in trade for duty, quota and statistical purposes. The HTS of the United States (HTSUS) is administered by the U.S. International Trade Commission (ITC).

More than 350 amendments to the Harmonized Tariff Schedule (HTS) Codes and notes have been made, affecting 83, or more than 85 percent, of the 97 chapters.

Many current headings and subheadings are being deleted, added or merged into new tariff headings. The chapters most affected are those dealing with industrial and technological products mostly in chapters 84, 85, 87 and 90. For example, changes in the classification of semiconductor manufacturing equipment will be set under one heading (8486), and multifunctional office machinery will be included under the heading for printing machinery (8443).

Updates occur every five years. Changes to the HTS are necessary to keep up with technological developments and changing patterns in international trade, as well as from classification questions or disputes that have arisen. This year’s update is extensive for technology products, with significant changes in other areas.

The changes have important implications for importers, exporters, customs brokers, freight forwarders and carriers, because the incorrect classification of goods can result in the seizure of shipments and the imposition of heavy fines. Some may find their HTS number databases to be out-of-date or that in certain cases, the duty for a product may change. NAFTA and other preferential duty treatment programs may also be affected.

Before the President can sign the changes into law, 60 legislative days (or days when Congress is in session) must pass from the time the U.S. International Trade Commission notifies Congress of the proposed changes. That period was completed the week of Dec. 4.

During its annual trade symposium on Dec. 13-15, CBP announced they will give the trade community 45 days to implement the changes incorporated in the 2007 HTSUS. The trade community had expressed concern that 15 days might not be enough time to update corporate classification and compliance systems given the large number of changes. CBP also benefits from a longer lead time since they are short-staffed and may be unable to handle all of the programming.

The export Schedule B should be published in January 2007. Schedule B is published once per year and this year’s changes include the deletion of nearly 1,200 obsolete numbers and then the addition of 1,100 numbers.

The complete ITC report on the changes to the 2007 may be found at:

http://hotdocs.usitc.gov/docs/tata/hts/Pub3851.pdf

Contact Avalon via Gale Lawton at:-

glawton@avalonrisk.com

To subscribe to the ezine go to:-

http://www.avalonrisk.com/QuestNewsletter.aspx

6. And Finally...

Many thanks to Frazer Hunt for these eternal verities on the eve of the new year:-

We Hold These Truths To Be Self-Evident...

- Don't sweat the petty things, and don't pet the sweaty things.

- One tequila, two tequila, three tequila, floor.

- One nice thing about egotists: They don't talk about other people.

- To be intoxicated is to feel sophisticated but not be able to say it.

- Never underestimate the power of stupid people in large groups.

- The older you get, the better you realize you were.

- Age is a very high price to pay for maturity.

- Procrastination is the art of keeping up with yesterday.

- Women like silent men, they think they're listening.

- Give a man a fish and he will eat for a day. Teach him how to fish, and he will sit in a boat and drink beer all day.

- A fool and his money are soon partying.

P.S. New Scientific Finding courtesy of Paul Dixon

Yesterday, University scientists released the results of a recent analysis that revealed the presence of female hormones in beer. Men should take a concerned look at their beer consumption in 2007. The theory is that beer contains female hormones (hops contain phytoestrogens) and that by drinking enough beer, men turn into women.

To test the theory, 100 men were fed 8 pints of beer each within a 1 hour period. It was then observed that 100% of the test subjects:

1) Gained weight.
2) Talked excessively without making sense.
3) Became overly emotional.
4) Couldn't drive.
5) Failed to think rationally.
6) Argued over nothing.
7) Had to sit down while urinating.
8) Refused to apologize when obviously wrong.

No further testing was considered necessary

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