For those that may not know, trade compliance refers to the regulatory framework for all trade between countries. Certain stipulations within the regulations may include classification, risk determination, lending, and applicable duties and/or fees. In some cases, specific countries may have different trade agreements for every country it interacts with.
“Achieving compliance […] is dependent on having access to timely, accurate, and complete information and establishing process controls — the same success factors required to create more secure and efficient global trade operations.”
Simply put: it is the system of understanding the applicable laws and regulations put in place to control the importing and exporting of goods into countries.
The possible trade agreements can equal all of the possible pairings of countries! That’s a lot of trade agreements! Needless to say, navigating compliance can be a little difficult.
A lot of importance is placed on trade compliance within the global supply chain, so it’s crucial that you move forward with care and learn all that you can on this prickly topic.
Below, we’re going to cover what you need to know as a starting point. Keep reading to learn more…
Why is trade compliance so important, exactly?
Let’s start with one of the more top-of-mind reasons: protection. Countries have the right to protect themselves from other countries or individuals that may be harmful. This is especially overt in the context of products or technology that should not fall into the wrong hands. It also helps protect certain competitive advantages within the global marketplace.
Then, of course, there’s seeking compliance with regulations to avoid the negative penalties of not being compliant. In most cases, the penalty is a sizeable fine, but may even result in a full-on seizure of the shipment. Both of which would be a notable setback for any kind of business.
“If you think trade compliance is expensive, try non-compliance.”
Former US Attorney General Paul McNulty
At a minimum, compliance means that your commercial goods are correctly classified, clear country of origin listed, with an accurate valuation. This is definitely only scratching the surface of what is required, but a customs broker is well equipped to help guide you through the process and even file on your behalf.
Here is a list of documentation that falls within the responsibility of the importer:
- Ensuring accurate data is documented
- Retaining the data on your commercial shipment
- Auditing the data on a regular basis
- Providing descriptions of your goods
- Declaring any applicable assists and/or royalties.
- Marking goods with the manufacturer and country of origin.
Click here for our US Customs and Border Protection Checklist.
Of course, working with a broker will certainly push this process along — they can help ease the burden of documentation and compliance for importers. A solid broker that is trained in all regulations can ensure that your commercial goods shipments are always up to regulatory standards.
That being said, this is not a figurative get-out-of-jail-free card! In the event that there is a violation of regulations during the shipping process — the ownness falls on the importing party (you), not the broker.
All the more reason to make sure that you’re working with a customs broker that is knowledgeable and professional. Click here to read our recent blog post: How To Evaluate Customs Brokers, to make sure you’re making the right choice for your business!