Companies doing business both within and outside India must have a thorough understanding of the laws and regulations which govern their imports and exports. Read to know how to remain competitive in dealing with global trade.
In today’s global marketplace, several reasons demand the attention of Trade Compliance.
Countries have the right and are required to protect critical products, technology, and information from falling into the wrong hands. It’s equally essential to safeguard the competitive advantages in a global marketplace.
Companies must strictly follow the laws and regulations to avoid the negative consequences of non-compliance.
The Importance Of Trade Compliance
By being compliant a trade compliance program is considered valid, provided it protects both the company and the country from potential danger.
The process of being compliant in global trade includes:
- Screening new vendors, customers, and visitors
- Licenses renewal and application to import and export goods
- Ensuring that all requirements are met for exports and imports
Shortcomings in trade compliance may result in hefty monetary fines and seized shipments. Individuals can be jailed, and the country can debar a company from exporting anything to anyone. Effective trade compliance means a proper classification of goods including the origin, and valuation of goods are accurately declared in accordance to the laws and regulations, and the duties and adequate payment of taxes are done appropriately.
Additionally, your trade compliance program must be aware of new and changing regulations and must ensure that clean records are maintained for all export and import transactions.
Trade Compliance Can Be A Significant Opportunity
Adopting a technology or a process requires a check on investments and therefore applying a Smart Trade Compliance concept helps in a substantial cost reduction in supply chains.
Three main innovation-paths that can be conceived to achieve Trade Compliance:
- System Based Control: The shift from transaction-driven control into process-control, working in tandem and exchange information between all partners in the supply chain.
- Coordinated Border Management: It refers to the development of close cooperation of different government agencies to minimise the disturbances in the supply chain flow of the industry while fulfilling the necessary government-functions.
- Pushing Out the Border: To determine the place and time for inspections, keeping in mind the level of interference they can cause in the logistical chain. In a supply chain, stoppage of the flow of goods at the border defies logic.
Industry and government-agencies have to ascertain whether certain checks that can violate the smooth flow can be executed at the point of loading/unloading and administrative checks or exchange information can be executed separately.
Trade Compliance Manager
A trade compliance manager plays an integral role in global trade compliance dealing with the legal, regulatory, and administrative aspects of importing and exporting goods into a specific country.
The compliance manager’s goals include:
- Certification of the products compliant with the laws and regulations of the country
- ensuring cost-effective goods import, leveraging preferential duties under trade agreements
- Identifying and mitigating risks associated with non-compliance to prevent unnecessary penalties
- To prepare for customs/government audits
Overall, apart from saving and protecting millions of dollars in international-related transactions, including dealing with thousands of potential classification codes across multiple geographies, each with their own regulatory and customs processing systems.
Automating Trade Compliance Process
It is a known fact that compliance norms are subjected to change in every country, and it impedes the seamless business processes if left unattended.
The integration of automation software to streamline the compliance process can offer much-needed relief from day-to-day compliance management. However, the software comes with its limitations in the form of restricting it to managing the data. The challenge lies in mining the data for inaccuracies and inconsistencies, mainly when multiple products, geographies and compliance processes are involved.
To accomplish these task compliance specialists typically prefer to partner with external consultants for data mining and then apply them within a global trade management software application.
To achieve a competitive advantage, dedicating resources to develop a diligent trade compliance program is necessary. The regulations and standards existing in international markets keep varying and hence, as an exporter or importer, being vigilant about trade laws and regulations within the countries will ensure smooth and efficient trade practices, and is ultimately indispensable to the success of businesses in the international arena.