TradeLane

As regional companies look to grow into multi-nationals in the never-ending search for new markets, an understanding of Global Trade Compliance becomes critical for several reasons.  One of the most obvious reasons is to reduce the risk of running afoul of local laws and regulations. Additionally, maintaining a consistent and reliable supply chain and taking advantage of various government programs such as Free Trade Agreements, Duty Drawback, Security Programs and other initiatives designed to benefit compliant importers and exporters speeds the supply chain and saves money. 

As companies expand into more and more markets, inevitably they reach a critical mass where the need to standardize compliance functions across multiple geographies, business units, and Customs regimes becomes apparent.  By “apparent,” we mean that you have done such a good job that you have been gifted compliance responsibilities for not 1 country, but 108. This is often a daunting task given the labyrinth of varying trade regulations. The first phase to this process is assessing the company’s current state compliance profile on a global basis, then moving to implement global frameworks to bring a level of consistency across the network.  Here are a few simple steps to get you started:

The UN Convention on Registration of Objects Launched into Outer Space defines a "space object" to include component parts of a space object as well as its launch vehicle and parts thereof.  All well and good for keeping track of things floating around in the stratosphere, but what if you made your space object here in the US using imported (read “duty-paid”) components.  That space object lifts off, and there go all those dollars in duty payments.  Can you get any of that back?

In most operations, the compliance department audits and approves the duty bills as part of its responsibilities. The good news is that the U.S. government will accept many forms of payment for import duty and fees:

• U.S. currency and coins
• Bank drafts
• Cashiers' checks
• Certified checks
• Personal checks drawn on a U.S. financial institution
• Domestic travelers' checks
• U.S. Governments checks endorsed by the payee to the U.S. Customs and Border Protection
• Money orders (U.S. Postal, bank, express or telegraph)

The bad news is that there’s no clear way for an international compliance group to show that these every-day compliance processes improve the bottom line. Or is there?

The US government offers businesses the opportunity to recoup the duties they pay on imported goods that are taxed, subsequently exported, and taxed again. An astonishing estimate of $2.5 billion of those monies is unclaimed by businesses eligible for duty drawback.

The basics of a drawback program may appear straightforward, but the complexities of drawback reveal the true potential for significant duty recovery. It is worth taking the time to look when the payback has so much potential.