Global trade transactions account for trillions upon trillions of dollars each year, and this number is expanding as we forge into the future. Additionally, it is becoming more complex to manage US and international regulations.
Yet, despite these factors, compliance departments remain woefully underfunded and understaffed. According to our export compliance research,14.6% of compliance professionals believe that their company’s executive management is not aware of trade compliance.
How do you get executive level cooperation and sponsorship of your initiatives?
Join American Shipper and Management Dynamics for an upcoming educational webinar, “Bringing Compliance into the Boardroom.” This webinar, featuring a panel of global trade experts, will discuss how to get your voice heard when speaking to your c-level executives about enhancing your trade compliance operations.
On the heels of Xe Services’ (formerly Blackwater) recent $42 million fine for export violations; Barclays has also been hit with a whopping $298 million fine.
Barclay’s violated international sanctions by permitting its employees to accept payments into the US from banks in blocked countries, including Iran, Myanmar, Cuba and Libya.
In a settlement with U.S. and New York prosecutors made public Monday, the London-based bank agreed to pay $298 million to settle criminal charges. And it acknowledged that its employees, between 1995 and 2006, helped banks in Iran, Cuba, Libya, Myanmar and Sudan evade U.S. regulations prohibiting payments into the U.S.
Between 1995 and 2006, prosecuters allege that Barclays accepted over $500 million in transactions, concertedly covering up the country names where the illegal payments originated from.
In other cases, Barclays returned payments out of fear they would be detected by U.S. officials, sending fax cover sheets that said: “Payments to U.S.A. must NOT contain the word listed below.” Prosecutors said payments often were re-sent after references to the sanctioned countries, which included Sudan and Myanmar, were omitted.
Other recent high-value fines have come through in recent months, including:
ABN Amro settled for $500 million to end allegations that it helped Iran, Libya, Sudan and Cuba evade U.S. sanctions by “stripping” the identities of transactions to conceal the countries from which they originated.
Credit Suisse Group paid $536 million to settle similar violations involving transactions with Iran.
In 2009, a unit of London-based Lloyds Banking Group paid $350 million related to similar charges after being accused of masking the origin of payments from Iran and Sudan.
WSJ discusses the Barclay’s case in the first half of the video below:
Xe Services, formerly called “Blackwater,” was also fined this week for violating export regulations under ITAR, or the International Traffic in Arms Regulations. While acting as a contractor for the US government in Iraq, the company committed 288 violations of the International Traffic in Arms Regulations (ITAR), including the “unauthorized export of defense items and provision of defense services to foreign-end users in multiple countries from 2003 to 2009.” While no sensitive technologies were involved, the items do require a license before they can be exported.
The New York Times reported that Xe Services committed violations included illegally exporting weapons to Afghanistan, unauthorized proposals to train troops in Sudan, providing Taiwanese police officers with sniper training, and shipping military equipment to its personnel in Iraq and Afghanistan.
The company has settled the charges with the State Department to the tune of $42 million. Several outstanding allegations, investigations, and indictments remain in process, however, as these aren’t trade compliance related I’ll leave them for your own personal reading at NYT.
Just goes to show, an ounce of prevention, using trade compliance systems, is worth a pound of cure.
In this webinar recorded from a live presentation, our panel of global trade experts discusses best practices to ensure that their business processes take export regulations into consideration during all aspects of doing business on a global basis.
This 60-minute round-table discussion covers best practices for developing your company’s Export Management and Compliance Programs, including:
Strategic Value of your Export Management and Compliance Programs
Core Elements of an Effective Program
Steps Required to Build an Export Compliance Program
Sharing your Strategy with your C-level Superiors
Key Technology Considerations to Support Your Program
Hosted by American Shipper magazine, this webinar is a ‘must-see‘ if you’re learning how companies implement processes and systems that create a competitive advantage, and drive compliance with the Export Administration Regulations.
Are you attending this year’s BIS Update Conference, Aug. 31 – Sept. 2 in Washington, DC? If so, Management Dynamics invites you to join us for a Meet and Greet Reception at Gordon Biersch (just a few blocks from the Hyatt), on Wednesday Sept. 1 at 7pm. We’ll be serving cocktails and heavy hors d’oeuvres.
If you’re interested in attending, RSVP via our event page on LinkedIn, or send an email to emilythornton (at) managementdynamics (dot) com - We hope to see you there!
Trade Planner 3.0 scenario-based planning solution optimizes sourcing and distribution
decisions based on total landed costs and trade regulation risk
EAST RUTHERFORD, NJ, August 10, 2010 — Management Dynamics, a leading provider of Global Trade Management solutions, today announced the release of Trade Planner 3.0, a scenario-based planning tool that helps supply chain teams quickly and accurately evaluate alternative sourcing and distribution strategies to optimize total landed cost while assessing the impact of trade regulations.
According to U.S. Customs and Border Protection, companies import nearly $2 trillion worth of products annually from over 150 countries, a number that is expected to triple by 2015. With the increasing pressure to cut costs, accommodate new trade regulations, and take advantage of new preferential trade agreements, businesses need planning tools to improve the design of their global supply chains.
“Companies today are moving beyond sourcing decisions based on the lowest product invoice and are evaluating multiple dimensions including transportation costs, duties and taxes, regulatory compliance, and other country risk factors,” said Janet Suleski, Research Director, Gartner. “Scenario-based planning solutions provide key players across sourcing, logistics and compliance with the ability to make faster, more accurate sourcing and distribution decisions.”
With Management Dynamics’ Trade Planner solution, users can quickly and easily compare the costs of sourcing and distributing one or multiple products from multiple locations to identify the optimal decision. Trade Planner allows users to import product descriptions, classify products and store classifications by country in a product repository. Trade Planner is fully integrated with Management Dynamics’ Global Trade Content and supports classification by the Harmonized Schedules and Export Control Numbers for over 122 countries, and identifies all applicable embargoes, prohibitions, license requirements, and other product specific barriers to importing and exporting.
“Businesses are increasingly global in scope and need new planning tools to continually monitor total landed cost, model the cost reduction opportunities of shifting a supply base, evaluate new preferential trade agreements and assess the impact of new trade regulations,” said Nathan Pieri, SVP Marketing & Product Management, Management Dynamics, Inc. “Today, some of the world’s largest companies in retail, food service, electronics, and apparel, are utilizing Trade Planner 3.0 across the enterprise to collaborate and make better sourcing and distribution strategies by considering both cost and associated risks.”
Trade Planner 3.0 is an on-demand application that can be quickly and cost-effectively deployed – typically in a few days.
For Additional information: Make better-informed sourcing and distribution decisions. Maintain import and export compliance with on-demand access to the most comprehensive source of global trade content in the industry. Learn more at Trade Planner.
About Management Dynamics, Inc.
Management Dynamics is a leading provider of global trade management solutions that improve the performance of global supply chains for importers, exporters, logistics service providers, and carriers. The company’s solutions synchronize the flow of information among trading partners, optimize supply chain execution decisions, and streamline import and export processes to ensure trade compliance and minimize cost and risk involved in cross-border transactions. Management Dynamics’ time-proven solutions are used by more than 14,000 global users at some of the world’s most successful 3PLs, carriers, manufacturers, retailers, and high technology companies.
Remember the plan to double exports as a way to rebuild the US economy? The New York Times has analyzed the progress so far, with mixed results, and highlights the many barriers to achieving the goals of the National Export Initiative (emphasis mine):
Opening access to foreign markets, especially the fast-growing developing countries in Asia and South America, remains a politically touchy matter that will require the cooperation of Congress. A free-trade agreement with South Korea that was negotiated under President George W. Bush and that has been endorsed by Mr. Obama still awaits Congressional ratification, as do agreements with Colombia and Panama, and important issues remain unresolved in each.
Even more critical, by some measures, is the rising strength of the dollar, which increases the cost of American goods and makes them less competitive. The dollar has risen in value relative to the euro and the pound and remains overvalued, in the view of many economists, against China’s renminbi.
“When the dollar does get excessively valued relative to other currencies, exports don’t grow, period,” said Franklin J. Vargo, a former Commerce Department official who is the vice president for international economic affairs of the National Association of Manufacturers.
image credit: kevinzhengli
Exports in the first four months of 2010 have increased by 17 % versus the same period in 2009. Imports, however, are growing even faster. In May, the trade deficit in goods and services was $42.3 billion, up from $24.9 billion a year earlier.
Another problem for US manufacturers looking to pump up their exports is the difficulty in decoding tariff rates and exporting to countries with high tariffs. One major apparel manufacturer, urged officials to make it easier for exporters to find accurate data on tariff rates.
Exporters often struggle with the complex rules and documentation required by foreign governments. Additionally, each country to which they export has its own set of regulations. Exporters sometimes resort to simply overpaying “just to be safe,” resulting in loss of potential revenue. Other exporters face delays, resubmitting their documentation and payments, or pay unnecessary fines when they don’t follow the import regulations exactly.
Exporting your product into a country with high import tariffs also puts a damper on growth- your products won’t sell when they’re significantly more expensive than the competitors. For example, a wine industry expert says, “The single most restrictive barrier to wine exports remains the high import tariffs of most of the major markets buying U.S. wine today.”
This report profiles export compliance programs of large, small, & medium-sized enterprises in many industries to reveal challenges companies face in managing export compliance. Receive a copy of the Export Compliance Benchmark!
Have you registered for our complimentary GTM Newsletter yet?
Global trade content is an integral component of trade compliance, and helps companies use the correct classification, comprehensively screen for denied parties, identify regulatory control issues, and use the right trade compliance documents.
The GTM Newsletter summarizes changes to this global trade content on a weekly basis, featuring the latest trade content and industry sources from over 120 countries, including:
Landed Cost Updates
HS Descriptions
Denied Parties
Government Regulations, including Tariffs, Duties, & Taxes
The Wall Street Journal has a great article about the green sustainable global supply chain - specifically within the apparel industry – describing a new tool for consumers to determine how green their products are.
“How Green Is My Sneaker” describes a new software tool, developed by 100 retailers and apparel manufacturers, can determine the “Eco-Index” of their products. The tool calculates the score from a series of questions answered by the company and its suppliers:
The Eco Index, which is basically a software tool any apparel maker can use, poses a series of questions to companies on their environmental and labor practices—some of which require answers from the companies’ suppliers. It then assigns a score representing a percentage of a perfect score.
The questions cover every step in the life of a product, from raw-material production to manufacturing, shipping, and even disposal. For instance, Levi’s gets points for having a recycling program that lets consumers drop off their old jeans at Goodwill, and Timberland earns points for using leather tanneries that have wastewater-purifying systems. Points are lost for using bulky packing material or transporting goods long distances. The Eco Index also includes estimates of how consumers will wash and eventually dispose of their clothes.
The tool and scoring have been in development for over three years, but roll out to the public is not expected in the immediate future – even though retailers are announcing the Eco-Index at next month’s Outdoor Retailer trade show.
Image Courtesy Wall Street Journal, Levi's. Click to view interactive version.
Levi’s vice president of social and environmental sustainability, Michael Kobori, says the tool will be available “as soon as we can get everybody to agree” on how to publish and communicate it.
Nike is one of the sportswear and apparel makers using the Eco Index to measure its products’ environmental impact.
This sounds about as easy as herding cats, given the numerous brands involved. It’s one thing, many companies say, to use the data internally, but quite another to trumpet it to the world. They want to be sure everyone communicates the data in the same way. For instance, they don’t agree on whether the index should be communicated as a single number on a hang tag or in a more detailed manner that might involve directing customers to data on the Web.
For example, the majority of CO2 emissions over the life-cycle of a pair of jeans come from the consumer’s washing machine & dryer. Switching to cold water and line-drying cuts the CO2 emissions to a fraction compared to washing with hot water washing and machine-drying.
Levi’s also looks to be making a lot of progress in sustainability based on their research into the greenness of their products:
As part of its participation in the Eco Index, Levi’s did a separate internal study of its own practices. As a result, Levi’s changed its transportation routes last year to make them more efficient and reduced carbon emissions by 700 metric tons. In addition to the Goodwill agreement, Levi’s also cut back on packaging, allowing only three pieces of labeling with the jeans—a back-pocket tag, a size sticker, and a price tag.
In my opinion, sustainability and trade compliance are linked policies. Companies must have a plan in place for both- or else pay fines, waste money, lose time, and give up competitiveness in the marketplace.
Does your company have a sustainability policy? Would it be willing to advertise its Eco-Index on its products? Let me know in the comments & answer the poll below! (You don’t have to say your company, of course!)
Learn how your company can implement processes and systems that ensure compliance with the Export Administration Regulations (EAR). Best of all – it’s FREE!
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