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Don't Gamble With Trade Compliance - Inbound Logistics

by:VIPUTRANS     2021-01-28
Cross-border Trade, Vendor Compliance, Supply ChainRecent trends in tariffs, enforcement, and e-commerce shipping complicate the international trade landscape. To avoid significant fines, businesses must learn to dot every i and cross every t in the compliance process. Even existing allowances and privileges are being threatened, challenged, or taken away from shippers who violate trade regulations, creating an immediate threat to profitability.Rick Brumett, Vice President, Client Solutions, Transportation Insight, 877-226-9950Compliance has to be an ongoing process of assessment and evaluation. Companies should not assume that "no news is good news" or that even a clean history void of violations guarantees future compliance. Silence can breed false confidence. Instead, compliance requires due diligence.Three key issuesCorporate executives need to focus on the top three issues of trade compliance as a best practice. First, know the tariffs that Customs and Border Protection (CBP) is imposing on goods imported into the United States and how to stay aligned with the ever-changing Harmonized Tariff Schedule (HTS) structure. This involves using an import management process as a financial control.Second, focus on free trade agreements and plan for the potential of duty-free status disappearing from sourced goods. Executives need contingency strategies to overcome the loss of or change to trade agreements such as GSP or USMCA. Elimination of a free trade agreement can add additional costs such as an ad valorem duty rate for each country across the product's supply chain. Finally, companies must re-examine their profiles and compliance practices, including record keeping, and make sure they are operating correctly. Informed compliance is more than a best practice; it is the law. For decentralized organizations with multiple locations, compliance is difficult to prove without documented processes and ongoing training.Many importers and exporters seek independent evaluation of compliance programs. Independent Validation and Verification (IV&V) requires a knowledgeable partner that helps identify high-risk areas within a program. IV&V includes an assessment that can uncover loopholes, gaps, and inconsistencies that could lead to fines or other punitive damages and introduces a plan to close the gaps.International shippers cannot afford to gamble on compliance. In response to the complex trade environment, some organizations have created compliance departments managed by C-suite officers ultimately responsible for mitigating risk emerging in this key operational area. Others are looking to augment their operations with the expertise of an enterprise logistics provider that maintains a working knowledge of the dynamic international trade environment.Good Actor AwardCBP recognizes companies that undergo an independent and voluntary IV&V assessment as a "good actor" within the spirit of proactive compliance management. CBP may view a company operating in a vacuum without education from outside sources as being on the wrong side of the Reasonable Care standard.A business enterprise that ignores the financial risks emerging in international trade compliance jeopardizes its ability to grow and serve new markets, create satisfaction for customers, and, ultimately, protect its profitable performance.
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