Corporate Trade Compliance Continues to Escalate in Importance

Trade regulations change often, but 2012 promises to be a year when they will change more than usual. With major new trade regulations ready to go into effect in 2012, more companies than ever will be faced with reclassifying materials and products they import or export. Furthermore, these changes can affect global sourcing decisions and as a result influence things like how quickly new products can be introduced onto the market. Staying on top of changes in customs and trade requirements has never been more important than it is now. Remaining compliant may involve shifts in strategy, use of different sources, and perhaps engaging the services of an international trade compliance consultant. Risks and Rewards of Global Sourcing There is no question that the shift toward global sourcing has reduced costs and helped companies increase their market size. However, with an increase in global sourcing comes an increase in risk associated with more complex supply chains. Not only are trade regulations in the United States fluid and changeable, so are regulations in other countries. Trade agreements change frequently due to many factors, including economic and geopolitical events. The reduction in costs due to global sourcing can be wiped out quickly when a company faces fines for noncompliance with international trade regulations. Remaining Up-to-Date is Key Correct product classification is a major component in a company's overall trade compliance strategy. Yet product classifications change and they are changing more frequently than ever. That means screening products against the latest product classification lists is essential to avoiding clashing with regulations. Some trade experts predict that in 2012 alone, companies may have to reclassify up to 40% of the materials and goods they import and export. It is certainly not unusual for companies to need the services of an international trade compliance consultant to navigate this constantly changing regulatory environment. When Unexpected Problems Arise In the past two years, many international businesses have experienced firsthand how international crises affect trade. An event like the 2010 volcanic eruption in Iceland or the 2011 earthquake in Japan can slow or halt international shipping of certain goods and materials. Almost immediately, shipping times can go from days to weeks, and shifting supply routes can introduce a whole new set of goods classification and trade regulation changes. Expertise with corporate trade compliance can make the difference between a natural disaster causing a hiccup in supply routing versus a complete shutdown in shipping. Trade Compliance is Everyone's Job Trade compliance isn't just something that a company's trade compliance specialist does. Those involved with manufacturing and design also need to have a basic grounding in what the regulations are and what the penalties are for noncompliance. Many companies choose to bring in consultants to train employees in the importance of compliance with all trade and customs regulations so that compliance is woven into every aspect of the operation. Ignorance of trade regulations, or an attitude that it is "someone else's job" can lead to big problems, including fines and even incarceration should violations take place. No matter the size or nature of an international operation, trade compliance is a very serious business.