Asking The Right Question: Are You Trade Compliant?
Very often, we talk with individuals who are focused on specific needs. They have questions like: “How do I get an ITAR license?” or “What is the ECCN for my product?”
Although these questions are valid and important, sometimes companies need to take a step back and look at the bigger picture. The United States takes a strong stance on global trade, and each company must have a trade compliance program that meets the trade rules of all relevant government agencies. This means that your company must have a clear understanding of the rules and all aspects of trade compliance to meet international law and pass external audits.
Instead of focusing on one aspect of import/export regulations, the question they should really be asking is: “Are we trade compliant?”
What Is Trade Compliance?
In today’s global marketplace, companies do business both within and outside the United States. Your supply chain depends on following various trade agreements, international trade regulations, and tariff classification. Large companies often have a trade compliance team or trade compliance manager.
Yet, even with these specialties, many companies unintentionally receive import and export violations, and these violations lead to hefty penalties and fines for failure with trade compliance functions.
International business is more complex than ever before, and this is why you need a clear understanding of the rules of export control, customs authorities, and export laws. As a result, exporting and importing has become an essential part of day-to-day operations. Since your business relies on global trade, your company needs to ensure that your operations have solid global trade compliance.
To remain competitive, companies must have a comprehensive understanding of the laws and regulations which govern their imports and exports. Very simply, that’s what trade compliance is all about!
Trade compliance is the process and system of understanding and adhering to the laws and regulations controlling the export and import of goods, products, information and technology between the United States and other countries.
Why Is Trade Compliance Important?
1. International Trade Compliance Protects National Security
It’s important because countries have the right and need to protect critical products, technology and information from falling into the wrong hands.
For example, the United States must protect certain items from going to other countries and individuals who wish to do us harm. It’s also important to safeguard our competitive advantages in a global marketplace.
2. Trade Compliance Protects Your Business From Costly Violations
It’s important that companies and individuals remain compliant to the laws and regulations, in order to avoid the negative consequences of non-compliance. Those consequences can include hefty monetary fines and seized shipments.
There can also be jail time for individuals, and the U.S. government can even debar a company from exporting anything to anyone. (The next time you ask yourself how important trade compliance really is, just think about what would happen if your company could not ship any product to any foreign destination!)
Effective trade compliance ensures that goods are classified correctly, origin, and valuation of goods are accurately declared in accordance to the laws and regulations and that the appropriate duties and taxes are paid. However, this is only a small part of the bigger picture.
3. Trade Compliance Protects Countries & Companies
An effective trade compliance program protects the company and country from potential danger by:
- Screening new vendors
- Customers, and visitors by applying for licenses to import and export goods; and by ensuring that all requirements are met regarding exports and imports.
- Your trade compliance program must be cognizant of new and changing regulations.
- Ensure that good records are maintained for all export and import transactions.
Global Trade Compliance Helps Your Business Success!
As you can see, trade compliance is a vital component of any global business.
It’s everyone’s responsibility and in all our interests to comply with these requirements.
So, the next time you hear a specific question or need, take some time to step back and “see the forest through the trees.” It could be that your company is missing some of the larger issues at stake.
Need help improving your trade compliance? Export Solutions has worked with hundreds of organizations to do just that! Let’s schedule a no-charge consultation to begin the discussion today.
Trade Compliance FAQ
Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.