One-Stop Shopping in the Green Lane: European customs and trade firms ally in a quest to add value for clients

Friday, May 27, 2016 - 15:29

Green Lane, an affiliation of European customs and trade law specialists, is named after the fast track for EU travelers between member states. It’s an apt designation. The goal of the alliance is to ease customs and trade dealings for companies working with the 28 EU member states and the Brussels-based EU. Launched by McGuireWoods, Kneppelhout & Korthals and three other firms, three key members – Vassilis Akritidis and Yves Melin of McGuireWoods and Jikke Biermasz of Kneppelhout & Korthals in the Netherlands – discuss the problems Green Lane seeks to address and the benefits for its clients. Their remarks have been edited for length and style.

MCC: Tell us about your new project, Green Lane. What specific factors, in particular client needs, led to such an ambitious undertaking?

Melin: It started with origin fraud investigations. These take place in several jurisdictions at the same time across various member states. Lawyers represent companies in the exact same situation but before different customs authorities. We learned a lot from the other firms with which we were in touch. That was the first driver: information exchange and learning from one another’s experience to enable us to better represent our own clients. There would be added value for ourselves and for our clients in talking to trade and customs lawyers in other EU member states.

We contacted a few firms, and Kneppelhout & Korthals in the Netherlands seemed a great fit. Jikke and her colleague, André Jansen, visited us in Brussels, and that was how Green Lane was born.

Biermasz: When it comes to international trade and EU customs law, there are clear advantages in cooperation between law firms in the member states and specialist lawyers in Brussels, including anti-dumping, export control and sanctions legislation. Sometimes you need Brussels-level policy insight and contacts, and sometimes you need local expertise, as when member state customs authorities impose tax assessments on clients. There’s interaction between the EU political center in Brussels and the customs authorities in member states. It’s a clear advantage to have collaboration between specialist law firms.

Another important benefit is that customs law is a very specialized area of the law in the member states. In Brussels, you may have more firms specializing in international trade and EU customs law, but that is definitely not the case in most of the individual member states, where you may have a small number of specialists per country. It’s important for us when we need assistance in another member state to know the right people. The relationship between a client and his lawyer is based on trust. We don’t want to entrust our clients to somebody who doesn’t know what he’s doing.

Akritidis: It is also important to note that there are two distinct legal orders in the EU. There are national laws, and there’s European law, which is akin to federal law in the U.S. Those who practice European law are not familiar with the exact procedures of each national jurisdiction of the member states, and likewise those who practice local law are not as aware of the laws of other member states and of the European legal order, which has supremacy over national laws. The complementary nature of the skill sets was a very important factor in creating the alliance in order to be able to service large clients throughout Europe, covering major ports of entry into the EU’s single customs territory, but also to expand the span of our network and widen our brainstorming on Europe-wide cases, to develop new clients and to organize creative cross-border events.

Melin: It re-creates, in a sense, a level playing field between us and our clients on the one side and customs authorities on the other side. On the authority side, you have 28 European customs regimes, one per member state, and the European Commission. These authorities talk to one another all the time. They consult, they exchange information, they debate issues, and they vote and resolve issues. It’s difficult for each individual lawyer in each individual member state to follow these discussions with the level of intensity needed to understand where the issues are coming from.

By creating a network, we hear of issues from different sources. We hear of how customs here and there apply the common EU rules. They are 28 plus the commission. Ultimately, we’ll be 28 as well.

MCC: How have you gone about identifying the firms you’ve invited to join the alliance?

Biermasz: We have one very key selection criterion. We are an alliance of law firms. To join Green Lane, each law firm has to be admitted to the national bar association in its member state. We have set this requirement for quality reasons (strict disciplinary rules, including confidentiality) and because of clear advantages. For example, in the Netherlands only law firms are authorized to litigate in civil proceedings. For a firm to join the Green Lane network, you have to have a clear track record and broad experience in international trade and EU customs law, including export control, sanction legislation and anti-dumping cases. Apart from that, of course it also has to work between the contact persons.

Melin: That’s a very important factor. We need to like the people because, at the end of the day, we want people who are troubleshooters and with whom we can create a positive working relationship. We want people who like to share expertise and experience and, ultimately, work together.

Five firms decided to found Green Lane. We used the membership rules of an existing association in another sector to save time; we met to discuss the project and decided to go forward because we all know and like one another, in addition to being lawyers and experts in trade and customs. That’s how we gathered the founding firms, as we call them. We wanted to grow quickly to 10 member states, to reach cruising speed. We have already reached that threshold. Now geographical growth is less of a focus. The priority is to use this beautiful tool and to take advantage of the new synergies it creates.

MCC: Some experts say the disaggregation of various services will require changes to the big law firm delivery model. Is Green Lane an example of such a change? Is the EU especially fertile ground for the evolution of innovative service delivery models?

Akritidis: We have heard all sorts of stories about tectonic shifts in the legal industry and how big law firms deliver services. There is indeed a tectonic shift in the way that clients want their service. They want to deal with a smaller number of lawyers and law firms. They want to deal with real experts who are cost-effective, who have predictable budgets and who will not lean on the client’s time.

Green Lane is a clear example of how we respond to the new requirements of the markets by providing a one-stop shop for clients with customs issues around Europe. We offer the cost-effective value of the network branded as Green Lane, not the value of a single law firm brand. The larger the client, the more they appreciate this type of network. We have received very good feedback from clients on the concept of the alliance and how it works.

Melin: The way this took shape is specific to our own history with McGuireWoods. It’s a large firm with a limited presence outside of the U.S. When we compare ourselves with the other big law firms we compete with, they have some experts in Europe. This complicates things, as none of them have customs experts in more than a handful of jurisdictions because these people are rare, and often, conflicts in big law firms drive them away. The fact that we were in a smaller office outside of the U.S. could be seen as a weakness, but it’s actually a strength. It gives us total freedom to create a network like this, with only the best people. Imagine trying to do this in another firm with, say, 10 offices in the EU. How likely is it that in these 10 offices you would have able customs lawyers? Zero. We discussed it with the firm’s management, and they told us to go ahead.

MCC: Given that this is a unique alliance – a specific focus on international trade and customs law across Europe – would-be members must have various questions and concerns. What issues do the firms you approach mention most frequently? How are you getting past those?

Melin: All of the firms want to be sure that we are all independent. They want to be able to recommend the other Green Lane firms, but they do not want to be forced to work with Green Lane firms.

Obviously, the situation is a bit different for each of the individual firms, but they all come with the same question: “Will I still be free to instruct other firms in Brussels and in other countries?” The answer is “Yes, if you have established relationships, that’s fine. You can continue with them. We would, of course, like you to consider the network rather than go to our competitors in Brussels.”

Biermasz: I worked for a larger global law firm at the beginning of my career. What you see in large firms that claim to have a global presence is that to a certain extent you are supposed to work together with the branch office in other countries as the designated supplier. When you’re talking about a specialized area of the law – such as EU customs law and international trade law, export control, and sanctions legislation – in each country you have a smaller number of people who really know what they are talking about and have been admitted to the national bar. It would be the luck of the draw to have a real customs specialist in each branch office of a global law firm. Of course that is not the case. If they don’t have an expert in customs law, why should you have to work with that designated supplier of correspondent services? Yet you’re forced to.

A network like this, built around a specific expertise, gives you much more freedom and flexibility. This is definitely a next step in our profession. Today’s world is very transparent. We are communicating through email and phone all day. It is not necessary to have an office in every country of the world. A network like this works fine. It’s transparent and creative, and it can reduce costs because we only work together when we need one another in cross-border cases.

Melin: Because we know and trust one another, we have quite interesting discussions. Lawyers like Jikke in the Netherlands and the others in the other countries are fantastic customs litigators. I learn tremendously from their expertise about how EU law can be implemented as we discuss the arguments they put before the national courts. But because the lawyers in the various countries don’t have exposure to how the rules are made in Brussels, and don’t know exactly how the European Commission collects facts and evidence, which buttons to push, or what people to meet, anytime we discuss a case and an argument can be made to challenge an EU rule, we feel we have added value.

MCC: Green Lane has been operational since last fall. Can you provide examples that show how the alliance is adding value for clients?

Melin: The dynamic is fantastic. I want all of my clients to have the opportunity to talk to the right people in customs, and with Green Lane, I know I can go with confidence to a member law firm. On the other side, I can feed the Green Lane lawyers my understanding of, for instance, how an anti-dumping duty was calculated. This is so comforting. I don’t have to go to someone who’s maybe sort of good – someone I may have never met. There is a tremendous added value to this alliance.

Biermasz: Sending work to a law firm in another country can be a huge dilemma. For example, I have a concrete case where Eastern European customs authorities have imposed a large additional tax assessment on my Dutch client. I cannot communicate directly with the authorities there as I don’t speak the language. I don’t know the culture, policy and practice. So I need to have a local expert. Although we all apply the same EU customs law, it works completely differently in practice in, for example, Portugal or Hungary. I need a local expert I can trust. I owe that to my client. But trust can be difficult if you have not worked together in a network like this. You have no choice other than to trust your correspondent, but at the same time, that is difficult when you are not able to verify whether your trust is justified.

Melin: In Eastern Europe, it’s pretty difficult to find lawyers who are specialized in customs. That is the next frontier for Green Lane.

MCC: Your trade law team joined McGuireWoods in 2013. Has Green Lane helped you attract work from the current U.S. clients?

Melin: Green Lane is very recent. The agreement was signed in October, but we met for the first time in February of this year. The first time we could actually talk to colleagues about the alliance in an effective way was at our recent partnership retreat. The response from our colleagues has been positive. For example, our transportation industry team is interested, and the support from the head of that group has been tremendous. During the retreat, we spoke endlessly about Green Lane to everyone. It was also featured in a general presentation about the firm’s 2015 achievements. This exposure meant people asked questions about the network. Still, it’s a work in progress. Most of the actual work we have received thus far has been from Green Lane firms, and the work we have given to Green Lane firms has been for trade clients of the Brussels team.

MCC: We’d love to hear about some of that work.

Melin: We do a lot of anti-dumping investigations, which are the result of a 15-month administrative procedure before the European Commission. This is what we consider to be our bread and butter. We were heavily involved in a case concerning grain-oriented electrical steel, which is a highly specialized product used by manufacturers of power transformers. We were initially hired by an Asian producer to help get the lowest possible duty and to raise awareness for their EU customers in relation to the dangers of the investigation. We started visiting their customers in the EU, and as a result, one of them hired us; we ended up being very active in the case for that client. Fast-forward 15 months and we had a good result, with the duties withdrawn and a low minimum price imposed instead – below market price. It’s as if no duties were there for our clients, both the Asians and their EU customers. This particular case was from late 2015.

What followed were all sorts of practical questions about the difficulties our clients were experiencing when trying to benefit from the minimum price. The implementation is quite problematic with some member states. I was able, in a matter of an hour or two, to get Green Lane firms involved and to get a letter from customs authorities in Italy and Germany, confirming that our reading of the situation was the right one and that the clients could benefit from the minimum price and don’t have to pay the duty. The clients were happy about the seamless and quick solutions and the answers we provided.

Here’s another example. One of Jikke’s colleagues has a longstanding relationship with a pharma producer in the Netherlands. He was approached with an esoteric question about duty relief on a pharma compound and contacted us. We know the commission and the people handling duty relief. Two or three months later, this compound was added to the list of duty-relieved products. It was complex, and Jikke’s colleague would probably have had difficulties talking to the right people. But that was easy for me – just two or three days of work. If you had to reverse engineer this from the Netherlands, it would take forever. For the client, the added value is fantastic.

Biermasz: Green Lane also tries to stay on top of recent developments. We are not the type of lawyers that sit still, have their networks in place and wait until the client knocks on our door. We are constantly following up on the issues in EU customs practice that are keeping our clients up at night. For example, the additional tax assessments that Turkey imposes upon importation are, in our view, in violation of WTO rules. A lot of clients and branch organizations have trouble with that, and there is a clear case for cooperation on a larger project between EU law firms specialized in customs law. When we see something like that, we immediately jump on it.

Melin: Before we formalized Green Lane, several of us had clients involved in disputes with customs concerning the payment or the refund of anti-dumping duties. Green Lane facilitates interaction among members and sharing knowledge and information. This helps us bring clients completely new arguments. Before, they would fight with a procedure; now, we fight on substance.

This creates a platform. If one company successfully challenges an EU duty, it invalidates the regulation for the EU as a whole. It is a long and costly exercise for clients. If you don’t act quickly with the right arguments, your claim will be time barred. With our network of existing clients and associations, we try to gather a group of companies who are willing to pool their efforts into one annulment procedure. The cost of that one procedure is spread across all of the participating companies. That lowers the cost of getting the duties back.

For the lawyers, the network makes it cost-effective. Not everyone will have the time to research the WTO implications and EU law and think of these arguments separately. We are cost-effective, which is a major asset for clients. It’s added value for both our clients and for the firms in the alliance. That’s beautiful.

MCC: Trade and customs law continue to evolve at a rapid pace, including a new EU Customs Code that replaced the Community Customs Code on May 1. What does that mean for your clients?

Biermasz: Some issues are eye-catching, such as the replacement of the first sale principle by the last sale principle for the valuation of goods at customs. The Community Customs Code that has been replaced dated back to 1992. The world has changed. Europe wants to have a strong competitive position, and in that respect, modern customs legislation is a facilitating element.

Melin: Customs practitioners all over Europe have been talking about the new EU Customs Code for years. Most of the rules were made public at the end of last year – about 2,000 pages. There are blockbuster issues that everyone has been talking about, such as valuation. And there are many small differences here and there. Customs officials are only beginning to grasp the new framework, and there’s a lot to clarify.

The Green Lane network is very helpful as we can learn from one another. We increase our exposure to issues and interpretations. The authorities talk to one another all the time, and lawyers typically work in silos. We are re-creating a level playing field. Once we learn from one another, we can put forward positions before the authorities and hopefully prevail for our clients or advise them on how to avoid costly mistakes.

 

 

Yves Melin, a partner in the Brussels office of McGuireWoods, can be reached at ymelin@mcguirewoods.com.

 

Vassilis Akritidis, a partner in the Brussels office of McGuireWoods, can be reached at vakritidis@mcguirewoods.com.

 

Jikke Biermasz, who specializes in international trade, EU customs, transport and insurance law with Kneppelhout & Korthals in the Netherlands, can be reached at jbi@kneppelhout.nl.