Blog Trade Compliance: License to operate
In this blog our Customs Manager, Yuri Florentinus, describes his view on Trade Compliance and how this should not be a barrier to international trade as long as you have properly safeguarded your business processes within your organization.
A few months ago, I read a book about simple project management. It described a situation that when someone wants to buy a car (for personal use) three important questions are asked:
- Which car is delivered and of which quality?
- When will the car be delivered?
- What is the price of this car?
Very remarkable! Because isn't the most important question just whether you have the right driving license and therefore know the traffic rules? You will think ... Yes, but of course that makes sense!
This is exactly one of the biggest problems with many companies involved in international trade in goods. They ensure that what is delivered is delivered at the desired time, is of the best quality and comes at a good price. This is also called core business. But do you know the rules of international trade? This is commonly referred to as "Trade Compliance" which means complying with trade regulations and laws.
Very simple: Trade Compliance is core business if you are international trading, it's your license to operate (say your "driver's license"). It is therefore important that you have properly safeguarded the knowledge of and compliance with international trade rules before you even deliver or purchase anything cross-border. After all, you just thought: Yes, of course. That makes sense!
Because many companies do not (yet) realize that trade compliance is a core activity, the problem is even greater. For example, a Trade Compliance department such as customs is often placed via a line organization with a department that is (too) far away from the board of Directors or management.
Safeguard trade compliance within your organization
Probably everyone remembers the whisper game that you used to do in the classroom, which always proved that the sentence at the end of the game was so twisted that it no longer resembled the original sentence. Thus, isn't it important that core activities are reported directly (or at least with as few as possbile 'chain of command' links) to the board / management?
In fact, these activities are related to the business objectives of companies that operate internationally. The weak positioning of, for example, customs within a company and the fact that it is not a core activity are often the reasons why Trade Compliance is not properly guaranteed within a company. In this situation, people often don't get the desired or necessary budget to invest in better assurance of Trade Compliance (for example, by purchasing a software solution).
Moreover, it also happens that customs is placed with a department with purely commercial customer-oriented objectives. This can cause a conflicting character when, for instance, pressure is exerted on the customs department to be able to "release" shipments more quickly. This is often at the expense of Trade Compliance. Meeting deadlines is important, but on the other hand you also don't put pressure on an authority such as a Customs Officer. And that person is also part of the supply chain. The challenges described often result in frustration, because comments such as 'the colleagues of the customs department are again acting difficult, some information seems to be missing again' or 'the Chamber of Commerce cannot issue the certificate of origin because the burden of proof does not seem to be in order' are made regularly.
International trade is a choice. If you want to do this, you must guarantee Trade Compliance within your organization. This is of course also possible through an outsourcing model where you hire the knowledge and you are completely unburdened. Trade Compliance is not a barrier, as long as you have properly secured it!
A robust control framework, tooling, analytics and specialists in conjunction with the correct positioning and compliance culture will ensure that you don't have to worry about compliance.
With the help of the Pincvision Customs Compliance Scan, we outline the customs compliance risks and opportunities that your company encounters. The absence of an imaginary license to operate could be such a risk. Don't hesitate, contact our Customs department! Call +31(0)88-4321 800 or send an email to email@example.com