I recently followed a LinkedIn conversation among customs specialists. The posted question: In the USA, what is the number one problem for Customs Compliance Managers?
The number one answer among these very experienced individuals was getting upper management/company owners to understand the importance of compliance with the rules of international trade. Company managers/owners look at compliance as an unnecessary expense. That is, it was agreed, until the wake-up call comes in the form of a crisis.
Senior managers/owners are often prepared to gamble that they won’t get caught. They may also be prepared to chalk up a fine to the cost of doing business. What such companies fail to realize, the specialists agreed, was that in the electronic age one penalty doesn’t just stop there but can lead to the company being flagged for more frequent and more intrusive examinations at the border. Suddenly, entries are being more closely examined. Shipments that used to sail through customs are being held for inspection. The company has lost its immediate delivery privileges, to be followed shortly by its reputation.
Many manufacturers, said another participant, continue to act as if they are manufacturing for a domestic market, ignoring the rules and requirements of international trade. Meanwhile, success in the international market requires that companies integrate these requirements into the relevant components of their entire processes. Some of these requirements can add to, or save on, the price of the product to the foreign consumer.
Another failing, it was agreed, is the tendency to blindly place in the hands of a third party the financial, business, and reputational risks associated with non-compliance. The days of saying to the customs broker, “here are the papers” are gone, said one participant. The importer or exporter, not the third party, is held accountable for ignoring the rules of international trade.
A wake-up call can come in the form of a heavy fine, loss of customs privileges, or even criminal charges.
This is why it is cheaper to comply than to get caught. A compliance program is about: (1) knowing the rules that can impact your business; and (2) putting in place the systems to monitor and minimize the risks associated with breaking those rules, deliberately or inadvertently. Just as the business owner puts in place procedures to minimize the risks of fraud or theft, entry into the global market place requires additional procedures associated with doing business internationally.
Yes, there are associated costs. But these are less than you would think. Here are some resources to help you get started:
- Download my free guide on this page for some simple preventive steps that you can administer yourself.
- The Federation of International Trade Associations (FITA) provides resources, benefits and services to the international trade community and useful tools to help you do business globally, and has assistance and tools for importers and exporters.
- Contact us about leading a seminar or workshop.
- Join our mailing list to stay informed.