The Trade Compliance Manager: ‘Negotiator of Risk’ and ‘Champion of Opportunity’

Trade compliance is a critical silo in any company with a global footprint and import and export operations.

The trade compliance function is too often viewed as only a restrictive internal procedural entity that prevents a company from making wrong decisions about operating in global trade.

But when managed proactively and creatively, trade compliance can become a strategic advantage, helping a company become more competitive in global operations. It can offer a two-fold benefit to the organization — managing risk as well as opening the door to competitive opportunities.

Import and Export Operations Enforcement

In imports, the Trump administration is restructuring U.S. Customs Border and Protection (CBP) as a serious enforcement agency from its prior role in trade facilitation. It has set up a task force coordinating CBP, the U.S. Department of Homeland Security (DHS) and the U.S. Department of Justice (DOJ), with the aim of aggressively seeking out fraudulent importers in three target areas: valuation, harmonized tariff schedule (HTS) and origin data.

Other more traditional areas, like record keeping, forced labor, tariff management and control over service providers, continue to be areas of enforcement.

Blue Tiger International has seen a noticeable uptick in CBP enforcement, with additional manpower, use of technology/AI and increased import file reviews.

Pertaining to exports, Blue Tiger International is also observing a more aggressive approach by such agencies as the U.S. Bureau of Industry and Security (BIS), the enforcement arm of the Department of Commerce. Recently, we have been made aware that 400 additional BIS Officers are being added to the agency for purposes of increasing scrutiny of export regulations.

In both scenarios — import and export — the administration is focused on fraudulent procurement practices that potentially impact the flow of import revenue into the U.S. Treasury.

There is also an emphasis on fraudulent practices pertaining to classified, proprietary and intellectual property rights (IPR) exported with insufficient control over which countries and consignees are the beneficiaries of those transactions. In such cases, goods could be sold to inappropriate buyers with potentially clandestine uses for the merchandise.

The Trade Compliance Manager Position

The role of the trade compliance manager clearly has an important place in global trade to assist a company in managing import and export operations according to the regulations put forth by numerous government agencies. Thus, the manager’s role is serving as the “negotiator of risk.”

But that’s not where the story ends. Trade compliance managers can play an even greater role in utilizing the import and export regulations to the benefit of procurement in imports and in sales and business development in exports.

For example, importers can leverage import regulations to their advantage to create more than 20 strategic opportunities. These include bonded warehouses, foreign trade zones (FTZ), first-sale opportunities, alternative sourcing, free-trade agreements, tariff engineering, choice of Incoterms and HTS line-item reviews.

Led by the trade compliance manager understanding and applying import and export regulations to the company’s advantage, these options can provide significant improvement in managing both risk and cost in the global supply chain,

A powerful example is the utilization of an FTZ, which, when correctly constructed, can provide substantial savings, in such areas as duty deferral or elimination, cash flow advantages, reduced customs clearance costs, reduced material processing fees, product manipulation, tariff inversion, quota avoidance, streamlined logistics, and long-term storage and safety stock

Another example is tariff engineering, which is the legitimate re-engineering of how an imported product is manufactured overseas; this changes the HTS number, offering a lower duty amount.

Considerations

You may find that, due to regulations, an export is not authorized to a particular country or consignee. A trade compliance manager, in viewing the specific transaction, may consider a different approach, requesting an exemption from the regulation or requesting that an export license be issued. If approved by the BIS, the agency typically approached in this situation, the transaction may go forward.

This can create an alternative view of how the government views the specifics of the transaction, resulting in a more favorable outcome. And, with the export being allowed to move forward with an approved export license, the trade compliance manager becomes a “champion” of the export sale, not the suppressor.

Turning the Tables

Having worked for more than 40 years in global trade and compliance management, I have witnessed many times trade compliance managers seeing themselves as only an internal police force on import and export regulations. In many cases, that narrow view is self-inflicted.

Numerous opportunities exist for trade compliance managers to move from enforcer to enabler ­— opportunities that reduce risk and spend and create competitive programs and initiatives.

Such efforts can make a large positive operational impact that is not associated with restrictive guidance but rather with insightful options. Knowledge of how the regulations can be utilized to create benefits enables trade compliance managers to guide their companies in creating competitive advantage.

Trade compliance managers of the future have the opportunity to redefine their role and become more robust contributors to (1) impact competitiveness, (2) margins and profits, and (3) creation of new business opportunities — all of which help them earn recognition as a critical asset in company operations.

(Image credit: Getty Images/1715d1db_3)