MANAGEMENT AWARENESS AND SUPPORT OF TRADE...

MANAGEMENT AWARENESS AND SUPPORT OF TRADE COMPLIANCE

• Michael Laden, Trade Innovations, Inc.

• Don Luther, 19CFR Consulting, LLC

TODAY’S PROGRAM

• Our speakers have more than 50 years of combined knowledge and service in the global trade industry

• Today’s focus will be on reviewing the types of risks that face all companies, and strategies for getting awareness and support from company leadership.

• We have approximately 40 – 45 minutes of content and then we will take questions

All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015

WHY SHOULD YOU CARE ABOUT CBP*?

• It’s the LAW• Law requires importers to exercise Reasonable Care.

• Because CBP cares about YOU!• The importer of record is responsible for all aspects of compliance, including admissibility,

proper payment of duties and fees, other government agency requirements, etc.

• Problems can be costly.

• Additional duty assessments• Civil and criminal penalties• Seizure of merchandise• Additional exams and delays in cargo delivery• Audits by CBP• Adverse publicity

* (and also FDA, USDA, EPA, Census, BIS, etc.)


IT’S SCALABLE

• We recognize and realize that every company is unique in its own way

• They are different sizes and face different challenges

• We also recognize and appreciate that all “corporate cultures” are not the same

• Some are much more focused on compliance; others may be more tolerant of risk

• The fundamental question is, “How do we raise the company’s awareness about the necessity to have a highly compliant operation?”

• The ideas and concepts we discuss today are scalable


COMMON CHALLENGES

• Increased business pressure for speed in the supply chain

• Increased regulatory pressure for more / better quality /earlier information

• Static or decreasing resources devoted to compliance

• Lack of interest or understanding on the part of company leadership


“TYPICAL BOSS” ATTITUDE

• We’re in the ___________ business, not the Customs business

• You, the compliance / logistics person: Your job is to handle the Customs stuff. Do that and stay out of our way.

• If it isn’t broken, why try to fix it?

• We’ve been importing for years without any big problems.


WE’VE GOTTEN AWAY WITH IT FOR THIS LONG…

• How do you respond to this statement typically made by a senior executive?

• With a calm logical response grounded in law and regulation

• If that doesn’t work, it may be necessary to document the issues in an e-mail or memo

• You can also seek advice from an expert

• Or (politically risky) you may elect to escalate it to senior leadership

• You may also allow problems to occur occasionally, to highlight the fact that they can occur.

• If those options don’t work, there’s always 1-800-BE ALERT, or

• Simply put, “It is what it is”


TWO REASONS CBP IS GETTING MUCH BETTER AT FINDING ERRORS

• Data mining – CBP is nearing the completion of rolling out ACE. The new system gives them better data mining and better data to mine

• CBP is also leveraging their assets and knowledge in fusion centers (Centers of Excellence) to find discrepant transactions (classification, value, origin, quantity, IPR, ADD/CVD, etc.)

• As a side note, CBP is also moving away from auditing the top 1,000 importers and moving more into the second and third tier of importers – so importers should expect to see more activity this September when audit letters go out


IT’S NOT JUST CUSTOMS…

• With CBP’s new ACE system, and the “single window” approach now being implemented, other government agencies are getting more involved.

• FDA, USDA, DOT, EPA, CPSC, FWS, FCC, just to name a few

• These agencies are getting “plugged in” to the system

• They will be getting access to a lot more information than before.

• They will likely take a more active role in regulating imports based on this info.

• This means a greater chance for cargo delays and enforcement actions.


PLAIN AND SIMPLE;

TRADE COMPLIANCE NEEDS TO BE DISCUSSED HERE…


HOW DO WE GET THERE?

• I have a simple, but effective two-pronged strategy

• First, it was always my policy to talk to “anyone who would listen”

• So, I was routinely invited to speak at team meetings

• Making the sessions as interesting as possible, I would use these opportunities to train and inform

• The second prong relies on relationships

• No matter where you report in an organization there are two individuals you want to be close to:

• The General Counsel

• The CFO and/or CCO


WHY?

• Because the General Counsel should be familiar with the laws and regulations governing foreign commerce; and as a result should be empathetic to your cause

• If they don’t they don’t know much about trade; they can retain outside Counsel to become more “informed”

• As for the CFO, their primary mission is to protect the company’s “purse strings”

• If the CFO is aware of the type and potential amounts of fines or penalties an importer can be subjected to, it should get their attention

• When describing the role of trade compliance, you can also use an IRS or tax analogy with the CFO that should make them empathetic to your cause

• Both individuals have the ear of the Chairman


OUR PIVOTAL ROLE AS COMPLIANCE PROFESSIONALS

Internal• Sales/Marketing• Engineering • Finance/Treasury• Legal• Vendor Operations• Procurement• Security• Logistics/Distribution• Quality Assurance• Audit• IT

External• CBP and PGAs • Vendors and factories• Customs brokers• Consolidators • Carriers (All modes) • Forwarders/3PLs• Managed services• Banks• Technology providers

Global Trade Compliance

WHERE IN THE COMPANY SHOULD COMPLIANCE RESIDE?

• Worst: Sales, Marketing, Admin

• Slightly Better: Logistics, Purchasing

• Best: Finance or Legal Department


COMPLIANCE BEST PRACTICES

• Integrate compliance planning into sourcing and purchasing operations

• Compliance should not be an afterthought.

• Stay informed on regulatory requirements

• Implement standard procedures and internal controls

• Controls should be designed to monitor, detect, and correct compliance problems.


MAKING THE BOSS CARE• Use the Data!

• Risk profile based on ITRAC or ACE data• Duties paid, high risk classifications, free trade agreement usage• Potential for antidumping duties or other problems

• Explain Risks• Potential for added costs, penalties, and delays in the supply chain• Special issues related to mergers and acquisitions• Changes made without Compliance Managers’ knowledge

• Sourcing, materials, locations

• Stamp out Ignorance• Canada is a separate country from the U.S.A.• Broker does the work, but the Importer is held responsible• Free Trade is not Free


QUESTIONS?

CONTACT INFORMATION

Michael Laden

Trade Innovations, Inc.

(952) 843-8312

[email protected]

Don Luther

19CFR Trade Consulting, LLC

(301) 722-3449

[email protected]

mailto:[email protected]

mailto:[email protected]

MANAGEMENT AWARENESS AND SUPPORT OF TRADE...

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