Global trade compliance: keeping your business safe and successful
Doing business across international borders can help companies access a wide range of new and exciting opportunities, but it can also present fresh challenges, such as adhering to the various rules and regulations governing trade around the world.
For organizations that want to maximize the potential of international expansion without putting themselves at serious financial or reputational risk, global trade compliance needs to be a top priority.
The fundamentals of global trade compliance
If you're able to achieve and maintain high standards of global trade compliance, you can feel confident about staying on the right side of international law.
There are many examples of why and how this concept relates to the import and export of goods across borders. The key elements of global trade compliance include:
- Tariff classification: The use of codes to categorize goods for customs purposes. This helps to ensure that appropriate duties and other customs measures are applied.
- Rules of origin: Different countries and trade blocs follow different rules to establish where goods, and the materials they contain, originated from. This is important to ensure products with preferential origin aren't subject to unnecessary duties, for example.
- Export controls: This includes export control classification, denied party screening / restricted party screening resp. checking sanctions lists and embargos, determining licensing requirements (including license management), as well as checks of end use and/or end users. Therefore, commitment to export control compliance and effective risk management is required.
- Incoterms: Internationally recognized rules and definitions that are crucial for establishing the responsibilities of buyers and sellers at different stages in the shipment cycle.
- Permits and licensing: Exports of certain types of goods - such as medicines, chemicals and plants - are carefully controlled, so businesses need to ensure they have the necessary licenses and permits before shipping them.
Global trade compliance is a broad subject area that encompasses many other elements - management of customs investigations and customer screening, to name just two. It's important, therefore, to do your research, prepare carefully, and use effective tools and software solutions to drive performance.
Why global trade compliance needs to be a priority
One of the clearest motivations to strive for high standards of global trade compliance is financial. The penalties for contravening local laws and regulations can be severe, so if you don't want to be hit with fines that threaten to wipe out any profits you've made from international sales, you need to understand and stick to the rules.
It's also important to be aware of how non-compliance can have wider repercussions for your business. From a brand reputation perspective, for example, potential buyers may take a dimmer view of your company and be less likely to buy from you if they know you've incurred financial penalties or even criminal sanctions.
Strong performance on global trade compliance can also help you achieve higher levels of efficiency and reliability in your supply chain. If your goods have all the appropriate classifications, licenses and permits, they're more likely to pass smoothly through customs and reach their destination on time.
When you're striving to succeed in a competitive global industry, advantages such as these could be crucial in giving you an edge over your rivals.