Framework For Global Import/Export Compliance

Dear Import/Export Compliance Manager,

I’m responsible for import/export compliance both in the U.S. and in the countries where my company is the importer and/or exporter of record overseas.  I have no one reporting to me in each of the other countries and instead have to rely on people from other departments, usually Logistics but often others such as Customer Service and Supply Chain.  I’m not sure where to even start in expanding the U.S. compliance program to these other countries.  Can you help?

Powerless in Peoria

Dear Powerless,

As you’re aware, you have a tough row to hoe.  While many import/export compliance personnel at larger companies have dedicated import/export compliance counterparts or direct reports in the other countries, speaking the local language and working face-to-face with people during their regular working hours, you’re having to do everything remotely without those advantages.  How to get compliance from your co-workers in other countries and the exact steps are subjects for separate blog posts; however, we can cover the first step, how to create a framework for a compliance program, in this one.

The Import/Export Compliance Manager likes to start with the laws and regulations.  Everything Import/Export Compliance Departments do, from product classification to valuation to deemed exports to free trade agreements, is based upon sets of laws, regulations and other rules, from the U.S. Export Administration Regulations to Chapter 19 of the Code of Federal Regulations to Council Regulation (EC) No. 428/2009 in the European Union to Japan’s Foreign Trade Control Law.  Can this information be known to the Import/Export Compliance Department in the United States?  In this day of the Internet and global consultants, plus your own local contacts (including freight forwarders and customs brokers), the answer should most often be ‘yes’.

Once you know the laws and regulations, you can then gather and determine the data required to comply with those laws.  When you’re aware of the Harmonized Tariff Schedule and its intricacies and have access to the rules in English through a provider like Descartes' CUSTOMSInfo, you can properly classify the items that are being shipped.  When you’re aware of the United States-Korea Free Trade Agreement rules, you can determine which products are eligible.  And so on and so forth.  Can this data be managed by the Import/Export Compliance Department in the U.S.?  As long as you get the necessary information such as product specifications and manufacturing processes, yes.  However, there is a caveat that local authorities may have a different interpretation of the data.  Be careful.

So you may have a handle on the laws, regulations and data.  Now what about where the rubber hits the road: the documentation and information provided to the local government?  This may be the U.S. Census Bureau with the Electronic Export Information, the German Customs Administration (Zoll) with your Abschliessender Steuerbescheid or the equivalents in other countries.  Being based outside of those countries, you cannot file most of these documents with the appropriate governmental authority nor should you.  By creating processes for and auditing those who do, such as your freight forwarders and/or customs brokers, however, you can ensure that you are maintaining an acceptable level of compliance.  Thus, you can ensure that you know what is supposed to be happening and are following up to make that it is. 

What the above framework achieves is the simplification of import/export compliance outside of your local office for the rest of the company and your service providers to see and understand.  It also sets up a framework for import/export compliance to follow, ensuring that you note, for each country, what the laws and regulations, data, required documentation, associated processes and auditing steps are and who is responsible.  That’s the easy part.  After that the hard work of making it work begins.  Good luck!