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.

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

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

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