1. Navigating the International Trade Regulation Landscape
A marcus evans Interview with Valentin A. Povarchuk, Trade Compliance Counsel at
3M
Valentin Povarchuk answered a series of questions for marcus evans
rd
ahead of the forthcoming 3 Annual International Trade Compliance
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Conference, April 24 -26 , 2013 in Chicago, IL. All responses represent
the views or Mr. Povarchuk and not necessarily those of 3M.
ME: I read there have been more global trade regulations created in
the last 10 years than ever before. Why such a surge? Can you
attribute it simply to government being government, or is there more
to this?
VP: There is certainly some amount of bureaucracy for the sake of
bureaucracy in every country. However, I believe that the exponential
growth in regulations governing international trade is not the result of pure
bureaucracy. This growth in regulations is driven by two main factors:
growth in trade itself, and politicization of trade.
ME: What is the rationale for it? You’d think countries would want to streamline regulations for
the sake of their mutual economic interests, not make things more difficult. Is it any one concern
such as terrorism that’s driving this, or is it a broad-based set of concerns - or something else
entirely?
VP: If countries were run only by economists taking into account only economic interests, there is no
doubt that there would be few restrictions on international trade, regulations would be streamlined on the
international level, and all would be better off -- economically. But it is not that simple. As global trade
grows, it affects numerous aspects of life and groups of people throughout the world. Certainly, it
generates wealth, but it also affects security, human rights, the environment, foreign policy, employment,
product safety, labor rights and government revenues, just to name a few things. In the increasingly
democratic world this generates laws and policies that tend to restrict trade in various ways and
sometimes are in direct conflict with each other. Trade affects a multitude of interests, and those interests
that are best organized or closest to power can do most to affect trade.
ME: And yet, I read that all signs point to more regulation, from food and product safety to new
cargo and supply chain security obligations. Is this beneficial?
VP: In my opinion, having more regulation is not a problem in itself. In fact, it can be a good thing. Of
course, you may call me biased because as a lawyer, I make my living interpreting and applying complex
government regulations. But I say this because in my experience in the United States, most of the time

2. regulations provide indispensable guidance to my clients on how to conduct their business in the ever
growing maze of laws and policies that affect their trade operations. Regulations are the flip side of
transparency. Of course, in some countries regulations can also be used to create opportunities for
bureaucrats to collect bribes. And even here in the U.S. there are some agencies -- they know who they
are -- who like to keep their regulations vague to increase their power and discretion. But when done
properly, regulation can provide valuable guidance on how the law will be applied, so it should help the
industry to do business.
ME: And regulations are just one part of the picture. It’s also important for companies to stay
abreast of changes in regulations, agreements, global markets and technology. But would you
say changing regulations comprises the bulk of the picture?
VP: You are right. In addition to politics, global trade is made ever more complex by other factors,
including changes in technology and proliferation of bilateral trade agreements in many parts of the world.
For example, selling industrial machinery was less complicated when some industrial machines did not
incorporate lasers that could, let's say, shoot down a satellite. There are also ethical issues that can add
complexity to trade. Sophisticated companies and investors may wish to try to stay ahead of these
various developments that can affect their business. Ultimately, however, many of these complicating
factors will result in regulations, which hopefully will provide companies with some guidance on how to
deal with them. The growth in bilateral trade agreements is another matter, in my opinion. It just results
in the creation of multiple sets of rules, sometimes overlapping and sometimes conflicting, often very
different from each other. I think having these multiple sets of rules is less efficient and rational than
having global trade rules under the aegis of the World Trade Organization, but it seems that it is the best
way we have now of opening new markets for international trade.
ME: With so much at stake, in terms of fines and imprisonment for violations, how is it that so
many companies dealing in import-export are lacking in terms of screening for restricted parties
or having a management team on top of the situation? What do you find the prevailing reality to
be?
VP: Having represented numerous clients as a trade compliance lawyer in the law firms in which I worked
before I joined 3M, I no longer get astonished by how poorly informed and poorly organized some
companies, even some large and sophisticated companies, can be in the area of trade compliance. The
truth is, the web of regulations and restrictions applicable to international trade in the U.S. can be very
complex and onerous. Even the most sophisticated and well-organized companies will have trouble
staying compliant 100% of the time, despite their best efforts. The risk of violating the law by, for
example, selling something for export by a denied party, are even greater for small and mid-size
businesses engaging in international trade. Such companies often have no expertise and few resources
for ensuring compliance with multiple trade-related laws and regulations that can apply to them.
ME: What are some principles that companies can implement to strengthen trade practices so
they can remain compliant?
VP: In general, companies and business leaders should recognize that several areas of trade regulations
-- including Customs requirements, export controls, embargo and trade sanctions, restricted party lists,
and anti-boycott rules -- can have significant effects on their trade practices. They need to know these
rules or consult those who do. It is particularly important that businesses consult trade compliance
experts early and often. We would much rather hear from them in the business planning stage and
provide advice on on-going basis than have to unravel a big mess post-facto. This should also help

3. companies to keep the costs of compliance down.
ME: What is your message to companies?
VP: I think here I will give the same recommendation as many of our government regulators do.
Whatever is the size and scope of your business, if you are engaging in international trade, make sure
that you have a documented trade compliance program commensurate with your risk level. Conduct a
risk-based analysis of your business and identify risk areas for trade compliance. Adopt formal policies
and procedures, and ensure you have staff to implement them. Depending on the risk level of your
business this may vary from a few pages of a basic procedure and a part-time employee to a compliance
department staffed with dozens of experts and multiple compliance manuals and procedures. There are
some template compliance manuals and procedures out there -- for example I know that Thomson
Reuters published a template import compliance manual and an export controls compliance manual (I
know because I co-authored the latter).
ME: If a genie gave you three wishes as it pertains to international trade—whether that means
within government, businesses or in some other way--what would those wishes be?
VP: I wish my requests to the genie were not restricted to international trade! Well, if you have to limit it
this way, I still have a few wishes. First, I wish that countries around the world managed to find ways to
remove further barriers to trade and agree on advancing consistent global trade rules within the World
Trade Organization. Second, I wish that government agencies throughout the world stopped making
rules designed to increase their power, unfettered discretion, or capacity to collect bribes. Finally, I wish
that businesses throughout the world recognized the presence and inevitability of complex trade
regulations and involved compliance professionals as critical members of their teams.
ME: What can attendees gain from attending this conference?
VP: I think attendees can learn about most important developments and challenges in export and import
compliance directly from government officials and some of the foremost experts in the field. In addition,
attendees will have an opportunity to learn about best practices for meeting global trade compliance
challenges through discussion and experience sharing among their trade compliance colleagues.
Valentin Povarchuk joined 3M in July 2012 after representing the company for several years as outside
counsel on compliance matters. Prior to 3M, Valentin practiced export controls and Customs law for six
years in Washington DC law firms McDermott Will & Emery LLP and Arent Fox LLP. Valentin has held
leadership positions in professional and community organizations, including serving as a Vice Chair of the
American Bar Association’s International Trade Committee.
Mr. Povarchuk will be conducting a pre-conference workshop entitled “Navigating Processes for a
Successful Global Trade Compliance Audit”.
For more information please contact Kara Drapala, Marketing Coordinator for marcus evans at
312.540.3000 x6491 or karad@marcusevansch.com.
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