Tuesday, March 31, 2009

10 Ways to Reduce the Cost and Risk of Global Trade Management

In today’s uncertain times, one thing remains certain: There will always be changing global trade rules and technologies. The following are 10 of the top ways we believe companies can ensure they are being as efficient, safe and cost-conscious as possible in the short run while building a sound infrastructure for future needs.

With the goals to reduce cost and risk in the supply chain, automation and working closely with partners are the two most practical areas of opportunity.

Below are the abbreviated 10 ways to reduce cost and risk in global trade management. For the full version, visit the Journal of Commerce website

1. Companies must validate more things.

2. Importers and exporters have more direct accountability.

3. Electronic submission is required.

4. Savings opportunities can be realized by having proactive plans.

5. Enabling scalability so companies can expand their trade management capabilities gracefully.

6. Build a virtual network of partners, vendors, agencies, etc.

7. SaaS-based systems are cheaper and easier to work with.

8. Supply chain security is critical.

9. Keeping the entire trade picture in view.

10. Part of corporate social responsibility reporting.

Managing global trade will continue to be laden with complexities and changes from all sides of the puzzle: governments, trading partners, service providers and related partners, nongovernmental interest groups and consumers. As such, importers and exporters are challenged to provide global trade processes that incorporate all the collaborating parties, changing laws, new and historical data and accomplished work from the virtual network. Utilizing automation and partners is more necessary than ever to streamline processes while ensuring the highest levels of safety and compliance.

Lacey Act Declaration Enforcement Delayed, Filing Procedures Clarified

The Department of Agriculture has issued a notice updating the trade community on the implementation of the import declaration requirement under the Lacey Act amendments. Specifically, the USDA is delaying the initial stage of enforcement of this requirement and clarifying the procedures for filing the declaration.

Enforcement. Under the Lacey Act amendments, imports of certain plants and plant products must be accompanied by import declaration containing the scientific name of the plant, the value of the importation, the quantity of the plant and the name of the country from which the plant was harvested. For paper and paperboard products containing recycled content the declaration must also include the average percent of recycled content regardless of species or country of harvest.

The USDA has now modified the schedule of phased-in enforcement of the declaration requirement that it had previously announced. As a result, while the electronic submission of the required data elements will be accepted starting April 1, enforcement will not actually begin until May 1. As of that date U.S. Customs and Border Protection will enforce the declaration requirement for imports under HTS headings 4401 (fuel wood), 4403 (wood in the rough), 4404 (hoopwood; poles, piles, stakes), 4406 (railway or tramway sleepers), 4407 (wood sawn or chipped lengthwise), 4408 (sheets for veneering), 4409 (wood continuously shaped), 4417 (tools, tool handles, broom handles), and 4418 (builders’ joinery and carpentry of wood).

USDA is encouraging importers to use this 30-day period for live testing of the electronic system. The government will use this time to complete its work on integrating the Lacey declaration requirement into CBP’s expedited border release programs.

It is not anticipated that enforcement of subsequent phases, as detailed below, will be delayed.

CBP has automated the process for collecting the required data elements and expects and urges most importers to use the electronic system to file the declaration. Specifically, data will be transmitted to the Automated Commercial System through the Automated Broker Interface in the cargo release module. Electronic filing of the declaration will not preclude remote location filing.

Importers will have the option to complete and present a paper declaration for each line, but if a paper form is used it must be mailed to USDA at the address on the form. If a paper form is submitted to CBP as part of the entry package it will be returned to the importer (or importer’s representative) for mailing to USDA.

For more information on deadlines and filing procedures, please visit the USDA at http://www.usda.gov

More information will also be available from Customs and Border Protection at http://www.cbp.gov

Wednesday, March 25, 2009

Optimizing Your Procurement Technology Investments in 2009

1. Get Visibility Into Your Spend (Spend Analysis)
If you don't know how much you're spending on each category, sub-category, product, and service, who you're spending it on, in what amount, by unit, you need to get this visibility. Get a good spend analysis solution and dive in!

2. Take Your Strategic Sourcing up a Notch (with e-Sourcing)
Start with the most attractive savings opportunities that were outlined in step 1. This is your best bet to negotiate big savings in this downturn.

3. Focus on Contract Compliance (adopt Contract Management)
You need to enforce hard-won savings by insuring that internal staff and suppliers are compliant with contractual agreements.

4. Implement e-Procurement
Done right, this will make it easy for your buyers to buy on contract.

5. Get a Grip on Global Trade (adopt Trade Visibility solutions)
Chances are your global sourcing endeavors are needlessly costing you more than you think! As per my recent Illumination on "why you need trade visibility", you're probably paying more than you need to on duty, using costly inefficient processes, paying unnecessary document preparation costs, and making costly errors that are costing you million of dollars a year.

To view this article, visit Sourcing Innovation at BLOG.SOURCINGINNOVATION.COM/2009/03/24/optimizing-your-procurement-technology-investments.aspx

Tuesday, March 24, 2009

Mexico Begins Retaliatory Tariffs on U.S. Exports

Mexico on Thursday began imposing tariffs on a range of U.S. exports ranging from grapes and Christmas trees to shampoo and cordless phones in retaliation for the decision by the U.S. government to end a pilot program that allowed Mexican truckers to operate in the United States.

The trucking ban was part of the omnibus spending bill signed into law earlier this month by President Obama.

Obama is planning a visit to Mexico on April 16-17, following a visit scheduled for next week by Secretary of State Hillary Clinton to Mexico City and Monterrey.

The National Association of Manufacturers on Thursday expressed deep concern that the Mexican tariffs would harm its members and employees by jeopardizing export sales. It said 17,000 manufacturing jobs were at risk.

“This is the worst possible time to send a signal to our closest trading partners that the United States does not take its commitments seriously,” it said.

The trade association said the cross-border truck program, under strong monitoring from the Department of Transportation, indicated that Mexican motor carriers can operate safely beyond the restricted commercial zone along the border.

Law firm Sandler, Travis & Rosenberg gave this partial list of impacted products and the new tariff amounts which range from 10 percent to 45 percent:
• Christmas trees, 20 percent.
• Onions, cabbage, pasta, 10 percent.
• Almonds, dates, peanuts, 20 percent.
• Fresh grapes, 45 percent.
• Fresh pears, apricots, cherries and strawberries, 20 percent.
• Frozen potatoes and peas, 20 percent.
• Fruit and vegetable juices, 20 percent.
• Wine and other alcoholic beverages, 20 percent.
• Health and beauty items, 15 percent.
• Tableware, kitchenware and glassware, 20 percent.
• Various printed matter, 20 percent.
• Manmade fiber yarn, 15 percent.
• Carpets, 20 percent.
• Jewelry, 20 percent.
• Home appliances, 15 percent to 20 percent.
• Cordless phones, 20 percent.
• Sunglasses, 15 percent.
• Pens and pencils, 20 percent.

To read more, visit the National Association of Manufacturers at http://www.nam.org

BIS studies Reasons for Under-Used Export Licenses

The U.S. Commerce Department’s Bureau of Industry and Security wants to know why so many export licenses that it issues to companies appear to be unused or used for less than the authorized quantity or value limits.

The agency said in a Federal Register notice of inquiry Friday that it’s “particularly interested in whether characteristics of the export license application review process induce applicants to apply for greater authorizations than they need and, if such is the case, any costs associated with such applicants.”

BIS issues licenses for exports subject to the Export Administration Regulations. Most licenses are valid for two years.

A recent BIS review of export data from the government’s Automated Export System indicated that by the end of calendar year 2007, 48 percent of the licenses issued
in calendar year 2005 for the export of commodities had not been used at all. The agency also found that some licenses may have been used for less than their full quantity or value.

In addition, BIS said it has no basis for estimating whether a similar lack of use or under-use exists with licenses for software or technology exports because these exports are often “intangible and, therefore, not reported in AES.”

The agency requested that industry comments be received by no later than May 4. For more details and contact information, access the BIS Federal Register notice.

To learn more, visit the US Bureau of Industry and Security at www.bis.doc.gov

Ross ERP Supports REACH Compliance for Chemical Manufacturers

Enterprise solutions provider CDC Software has released the latest version of Ross ERP, adding functionality to its enterprise resource planning application solution aimed at helping chemical manufacturers comply with recent international regulations.

The new version 6.3.2 of Ross ERP automates, processes and provides documentation that helps chemical companies comply with their obligations under the specific guidelines set forth in the European Union (EU) legislation called Registration, Evaluation, Authorization and Restriction of Chemical Substances (REACH), which became effective in June 2007, and which has recently been supplemented in January 2009.

Ross ERP version 6.3.2 not only helps EU companies maintain compliance with REACH, but it also assists U.S. and other non-EU companies to comply with REACH reporting, CDC said.

More specifically, Ross ERP version 6.3.2 addresses the EU REACH directive that forbids the sale of unapproved products within the European Economic Area (EEA) (EU, Iceland, Liechtenstein and Norway). Furthermore, REACH requires registration and selective evaluation of more than 30,000 chemical substances and it applies to chemical substances manufactured in, or imported into, the EU for ownership or conversion into finished products.

REACH is designed to help ensure that all parts of the supply chain — from manufacturers to downstream users such as distributors — have the information they need to use certain chemicals safely. This requires several steps, including the communication of information related to the health, safety and environmental properties of these chemicals, as well as required risk and risk management measures up and down the supply chain.

To view the full article, visit Supply&Demand Chain Executive at
http://www.sdcexec.com/web/online/IntegrationERP-News/Ross-ERP-Supports-REACH-Compliance-for-Chemical-Manufacturers/35$11144

FTZB Receives Application to Expand Activity in Illinois Zone

The Foreign-Trade Zones Board has received an application from the Tri-City Regional Port District, grantee of FTZ 31, requesting authority on behalf of WRB Refining LLC to expand the scope of manufacturing activity conducted under zone procedures within Subzone 31B at the WRB oil refinery complex at sites in Madison County, Ill. Comments on this application are due by May 19.

The refinery is undergoing an expansion that will add units and upgrade existing units within the subzone boundaries and is expected to expand crude production capacity up to 380,000 barrels per day. Zone procedures would exempt the increased production from customs duty payments on the foreign products used in its exports. On domestic sales of the increased production the company would be able to choose the duty rates for certain petrochemical feedstocks (zero) by admitting foreign crude oil in non-privileged foreign status.

To view this article, visit WorldTrade/Interactive at http://www.strtrade.com/wti/wti.asp?pub=0&story=30574&date=3%2F20%2F2009&company=

Thursday, March 19, 2009

Global Supply Chain: Balancing Cost Reduction and Performance Improvement

Over the past decade, globalization has helped many companies improve their competitive positions. Organizations that pushed their supply chains to become ever longer were often rewarded with lower input costs and increased sales to emerging markets.

But today, growth in many global economies has slowed, and the economic prosperity of the past several years is being replaced by uncertainty. This reversal of fortune is placing downward pressure on business, causing corporations to seek savings and improved efficiencies. Since a large portion of a company's revenues and expenses flows through its global supply chain, it will come as no surprise that management will expect its supply chain to increase efficiencies during the current downturn.

To guide your company, it is important to recognize where these efficiencies may be found, to understand how leading companies approach their global supply chains, and to take the appropriate actions.

To view the full article, visit SupplyChainBrain at http://www.supplychainbrain.com/content/nc/general-scm/global-supply-chain-mgmt/single-article-page/article/global-supply-chain-balancing-cost-reduction-and-performance-improvement/

Salt Lake City Foreign-Trade Zone Receives Reorganization Approval From U.S. Commerce Department

Salt Lake City Mayor Ralph Becker announced today that Salt Lake City has received approval to reorganize its Foreign-Trade Zone (FTZ) from the Foreign-Trade Zones Board of the U.S. Department of Commerce. Salt Lake City's zone project is designated FTZ #30.

"This is great news for Salt Lake City and Utah businesses" commented Mayor Becker. "A Foreign-Trade Zone in Utah is a significant advantage to companies who are doing business in international trade or thinking about that opportunity. It is a great complement to the other assets we have in place as a global city."

A Foreign-Trade Zone is a designated site licensed by the U.S. government that offers U.S.-based businesses advantages in competing with foreign firms in international trade. A designated zone can defer, reduce, or eliminate customs duties, improve cash flow, lower inventory costs, and streamline customs procedures.

To view the full article, visit Utah Pulse at http://www.utahpulse.com/featured_article/salt-lake-city-foreign-trade-zone-receives-reorganization-approval-from-us-commerce

Foreign Trade Zone Designation is Elusive

Created in the summer of 2006 with great fanfare and expectations, the Southeast Iowa Regional Economic and Port Authority has been the class underachiever in the Lee County school of economic development.

One of the first actions of the port authority upon its creation was to pursue a foreign trade zone designation.

Foreign trade zones serve as places where foreign and domestic merchandise is considered to be outside the United States, according to a Web site for the National Association of Foreign Trade Zones.

Zones encourage local business and manufacturing by removing disincentives to manufacturing in the United States such as duties and tariffs.

The next closest FTZ is in the Quad Cities area.

For the southeast Iowa port authority, officials applied to have four areas declared general-purpose foreign trade zones: Mount Pleasant, Burlington, Louisa County and Lee County.

Unfortunately, that FTZ application has been waylaid by miles of bureaucratic red tape.

To view the full article, visit The Hawk Eye at http://www.thehawkeye.com/Story/Prg-port-authority-031509

Tuesday, March 17, 2009

Insourcing Global Trade Management

Most importers and exporters are careful to manage inventory, tariffs and compliance. In a recent survey of trade consultants conducted by Integration Point, every respondent (100%) indicated that their client companies perform denied party screening and recognize foreign trade zones. However, most outsource this work to consultants, freight forwarders or other third party service providers. The cost of internal automation and process control has been too high for most importers and exporters to do on their own. Acquiring and maintaining a trade management system and data has been too much of a burden for smaller companies to adopt on top of their core business needs within manufacturing, sales and marketing and supplier relations.

Now however, with increasing government fines and liability being imposed, companies often don't want to entrust a third party for all compliance requirements. In a recent case, Cabela's, an outdoor equipment outfitter based in Nebraska, agreed to pay a $680,000 civil penalty to settle allegations that it committed 152 violations of the Export Administration Regulations. The law stipulates that even jail time may be imposed on offenders. As such, compliance failure is just too risky for any sized importer and exporter.

To avoid such liabilities, importers and exporters must be able to clearly prove that they applied "reasonable care" to all traded goods. While third party (outsourced) solutions can do this, many importers and exporters want tighter control of the process and paperwork. For example, every respondent in the Integration Point survey indicated that they want to store product certificates for future reference, even if the compliance checks are being done by a third party.

To view the full article, visit Industry Week at http://www.industryweek.com/articles/insourcing_global_trade_management_18650.aspx?Page=2&SectionID=4?ShowAll=1

Why Comply?

The US Government is taking unprecedented steps to protect national security, and nowhere is the impact of that effort felt more than at the country's entry points. For global shippers, this heightened security consciousness presents myriad challenges when it comes to clearing goods through US Customs and Border Protection (CBP), which requires more and allows for less than ever before.

Failing to understand and comply with the latest CBP requirements can cost shippers and importers serious time and money. A spot inspection can delay the movement of material for several hours; a hold can delay it for several days.

The good news is that CBP offers new tools and programs to help shippers and importers meet its new, stringent requirements. If shippers had to choose one action that would help expedite the movement of goods through Customs, it's to become certified under the Customs-Trade Partnership Against Terrorism (C-TPAT) program.

CBP launched the C-TPAT initiative in an effort to help it work more closely with businesses to improve border security. To qualify for C-TPAT certification, shippers and importers must meet a variety of requirements in several categories, ranging from business practices and record-keeping to facility security and developing working relationships with supply chain partners on security issues.

To understand more about the latest CBP programs and requirements, view the full article on page 36 in the February 2009 edition of the Journal of Commerce.

Vitality Predicted for European 3PL Sector

For many centuries, trade routes between Europe and major civilization centers in Asia have been bustling. Very early on, eager European consumers waited patiently for exotic food items, fabrics, gemstones and other luxury goods emanating from China and the Indian subcontinent. Brisk two-way trade later became well established and, in the 13th century, Marco Polo and his commercial peers further expanded trade along the legendary spice trails. A few hundred years later, the New World added yet another chapter to European trade history.

Container ships have supplanted caravans, and computers have replaced cardamom. Goods that transited for months over precipitous, treacherous trails or under sail now move in a matter of days via ocean and air.

However, certain trade essentials remain unchanged. European appetites for Oriental and Occidental goods continue unabated, and the world still looks to the European continent for leadership in manufacturing, fashion, and design.

In the accelerated environment of contemporary world trade, today's European shippers are turning increasingly to third-party logistics providers to facilitate and expedite their international transactions.

3PLs operating on the continent generally meet universal industry definitions as to their composition and function. The accepted description of a 3PL is a logistics entity that facilitates a transportation transaction but is not a primary beneficiary. Normally, they surpass the level of individual transactions to manage the larger transportation enterprise on behalf of the customer.

To read the full article on the 3PL sector in Europe, visit page 36 in the March 2009 edition of the Journal of Commerce.

Tuesday, March 10, 2009

US FTZs and Duty-Free Treatment

In the 110th Congress (2007-2008), Representative Bill Pascrell sponsored legislation that would have corrected an inequity currently faced by manufacturers operating in U.S. Foreign-Trade Zones (FTZs). Such manufacturers must compete in the US marketplace against duty-free imports manufactured abroad by firms in FTZ partner countries. This unequal treatment occurs even when the FTZ products meet the rules of
origin under NAFTA and other US Free Trade Agreements.

Pascrell’s bill (H.R.6415;110th Congress)would have provided that goods that are manufactured in a US-based FTZ and comply with the rules of origin under a trade agreement, to which the United States is a party, may enter the customs territory of the United States at the rate of duty applicable under that agreement.

Pascrell’s bill was not acted on during the last Congress, so it died at the end of the session. There is a renewed effort to reintroduce this bill, as part of an effort to boost the competitiveness and reduce costs of US based manufacturers who employ US workers. The initiative is being supported by a combination of public and private entities that recognize the importance of trade as an economic stimulus, and seek to increase the competitiveness of US-based manufacturers in the global marketplace.

Is your company interested in furthering the goals of this initiative? For further information or to learn more, please contact Megan Wilson, AAEI’s Director of Government Affairs at mwilson@aaei.org

Global Trade is Important Engine for Recovery

Reflecting on the ongoing debate of nationalization versus globalization in the margins of the recent meeting of European heads of state in Brussels, CEO DHL Express Europe, Scott Price, said: "Global trade is the engine for economic recovery and any move towards national protectionism creates the reverse. As a European industry we know that global trade is a job and growth facilitator and it is now more important than ever to underline this fact in order to encourage business, finance and not at last the European public to build up confidance again."

To view the full article, visit Outsourced Logistics at http://outsourced-logistics.com/global_markets/news/global-trade-recovery-0304/

Export Control Reform Examined in Context of Economic Recovery

Export control reform has been an item of interest for a number of U.S. industries for several years, and a congressional hearing this week suggests that lawmakers may be ready to seriously consider it. Witnesses at a February 25 hearing of the House Science and Technology Committee said that the current system puts U.S. companies at a disadvantage in the global marketplace and that reforms could play an important role in government efforts to promote economic recovery.

In the post 9/11 environment, Congress has had little appetite for taking any action that could be construed as a liberalization of export controls. In opening the hearing, however, Committee Chairman Bart Gordon asserted that “it is time for Congress to take another look at the nation’s export controls regime to ensure that it is working effectively and without unintended adverse impacts.” As part of that review, Gordon stated, “we want to understand any negative effects that the current export controls regime may be having on our efforts to stimulate the economy and promote long-term growth through investments in science and technology.” Both Gordon and Space and Aviation Subcommittee Chair, Gabrielle Giffords, expressed hope that the House Armed Services and Foreign Affairs committees will review this issue as well.

To view the full article, visit WorldTrade\Interactive at
http://www.strtrade.com/wti/wti.asp?pub=0&story=30375&date=2%2F27%2F2009&company=

Thursday, March 5, 2009

10+2 Is In Effect. Are Your Trade Programs Ready?

The requirements of the Importer Security Filing, 10+2, took effect on January 26. The clock is now ticking, and there are only eleven months left in the CBP informed compliance period to achieve full compliance before full enforcement and (significant) monetary penalties take effect.

Under the Importer Security Filing initiative, the electronic transmission of 10 data elements from an importer (or its freight forwarder), and 2 from the vessel, must be executed no later than 24 hours prior to the loading of cargo onto a vessel destined for the US, shifting data transmission to an earlier stage of the supply chain distribution process.

If a company does not comply, it can be fined a minimum of $5,000 for each violation. If you do a lot of importing, that will add up fast.
Are you in compliance? Are you sure? If you don't have good trade visibility, and don't verify the 10+2 submissions filed (on your behalf by your freight forwarder and broker), you might not be ... and you won't know it without good trade visibility. Moreover, you might be risking other non-compliance losses.

For more insight, check out the latest Sourcing Innovation Illumination on Why You Need Trade Visibility.

Trade Screening Solution

The Denied Trade Screening solution from trade compliance software provider Integration Point provides export screening for all types of denied parties, including people, embargoed countries and restricted products. And a capability called recursive searching allows exporters to quickly build complex searches to identify specific screening results.

Companies can use the recursive searching feature to locate the exact company or person they are trying to locate within a list of search results. Similar to building blocks, users can create complex search strings to pinpoint exact results from a history of past searches.

Automating the export screening process also allows the exporter to scan multiple control lists from around the world, perform both phonetic (metaphone or soundex) and exact searches through complex algorithms, and screen and record foreign national visitors to office and manufacturing locations.

Source: Logistics Insight Asia http://www.logasiamag.com/article-1123-tradescreeningsolution-LogisticsAsia.html

Tuesday, March 3, 2009

Growing Together: Insider Perspectives on the NAFTA Nations' Economies

It has been more than 15 years since the United States, Canada, and Mexico signed the North American Free Trade Agreement, dramatically changing the region's trade prospects and economic reckoning. But is NAFTA leaving global trade dollars on the table by not being as competitive as it could be?

To answer that question, Inbound Logistics and sister publication Inbound Logistics México hosted a panel of North American trade and transportation experts. They recently met in Dallas to discuss the common trade interests among the three countries and to develop plans for fostering greater cooperation.

The group included the Canadian Consul General and representatives from the advocacy group North American SuperCorridor Coalition (NASCO), Mexico's Urban Land Institute think tank, the Mexican state of Nuevo Leon, the Port of San Antonio, and other organizations leading the drive for development in the three countries. The participants discussed the NAFTA partners' shared challenges, strategies for strengthening individual and collective economies, and the importance of logistics in the public and private sectors.

To find out how these thought leaders are coming to grips with the challenges facing the NAFTA countries, view the full article at Inbound Logistics at

http://www.inboundlogistics.com/articles/features/0109_feature08.shtml