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.)
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
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
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
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
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
“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.
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
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”
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
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
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
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.
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
PLAIN AND SIMPLE;
TRADE COMPLIANCE NEEDS TO BE DISCUSSED HERE…
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
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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
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
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
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
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
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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.
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
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
All Rights Reserved - Trade Innovations, Inc. and 19CFR Trade Consulting, LLC 2015
QUESTIONS?
CONTACT INFORMATION
Michael Laden
Trade Innovations, Inc.
(952) 843-8312
Don Luther
19CFR Trade Consulting, LLC
(301) 722-3449
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