Why is trade compliance so important?
Companies do business both inside and outside Japan in today’s global marketplace. Therefore, your supply chain depends on compliance with various trade agreements, international trade regulations and tariff classification.
However, even with these specialities, many companies inadvertently receive import and export violations, resulting in heavy penalties and fines for noncompliance with trade compliance functions.
International business is more complex than ever, so it is necessary to have a good understanding of export control regulations, customs authorities and export laws. Consequently, export and import have become an essential part of daily operations. Since your business depends on global trade, your company needs to ensure that your processes have global solid trade compliance.
Companies must thoroughly understand the laws and regulations governing their imports and exports to remain competitive. So, in a nutshell, that’s what trade compliance is all about!
What is trade standards compliance?
Being trade compliant means complying with international export, trade and finance laws.
Who is required to comply?
Companies in all industries are required to meet compliance requirements. However, it is not an exclusive regulation for security-sensitive sectors, such as telecommunications, computing, research, aerospace or financial institutions. Therefore, penalties for noncompliance can be severe.
Why is trade compliance substantial?
Compliance with trade regulations is vital for import and export and is responsible for all companies. The larger the company, the higher the expectations of compliance. To comply, you need to understand what rules and regulations applicable to your business—being compliant means meeting the demands of customers and suppliers while supporting sustainability, long-term growth and competitive advantage. These are key elements to the success of a global supply chain.
Advantages of meeting trade:
- The reputation of companies and employees is protected by facilitating legal and responsible trade.
- Exposure to fines and penalties is minimised.
- Promote customer satisfaction by avoiding shipping delays.
- Save money by avoiding delays, investigations and penalties.
Consequences of noncompliance:
- Shipping delays
- Economic sanctions
- criminal sanctions
Key elements of trade compliance:
- Tariff Classification – The correct classification of goods using commodity codes and tariffs is essential for compliance with customs regulations, as well as to establish the correct rates of duty, the origin of the goods, Intrastat, export control and many others. Other customs procedures.
- The preferential origin is associated with a trade agreement between two countries or blocks. If the goods you export are of preferential origin, they will likely carry a reduced or zero duty rate when entering your customer’s country.
- The non-preferential origin is the one that dictates the origin of the product that is shipped. The rules associated with the identification of origin are specific to the rules of the importing country.
- Incoterms – Incoterms are commercial terms recognised worldwide that are used to clearly define the responsibilities of the buyer and the seller throughout the life cycle of the shipment; they are an integral part of a contract so that both parties are clear about the deliveries, the costs, risks and responsibilities.
- Licenses and Permits – You are responsible for checking if you need a permit or license to import or export certain products. There are controls, e.g., on military/paramilitary assets, technology, medicines, chemicals, works of art, plants and animals.
- Your goods will be confiscated and delayed if you import and export without the proper license.
- Export Controls – Some products are subject to export control legislation as they could have harmful uses. It is responsible to classify all products according to the corresponding legislation. This will ensure that the correct license requirements can be established.
- Customs Management – Have a clear plan of action if your business is the subject of a customs investigation.
- Selection – Selection of customers, suppliers, and transaction data regarding sanctioned, politically exposed, and other risk entities will help ensure you’re not inadvertently doing business with an undesirable person.
- Appraisal – Each submission must have an appropriate appraisal associated with it, which must be defensible if challenged. The valuation must conform to one of the six methodologies approved by the World Trade Organization (WTO ) and be declared in the Single Administrative Document (DUA or C88 form).
Effective trade compliance programs
The Trade department establishes effective compliance programs to ensure regulatory compliance throughout the supply chain.
The product portfolios of life science companies are exposed to national and international regulations, which require various registration, license and reporting requirements. In collaboration with different business units and external business partners, our Trade Compliance department establishes effective compliance programs to ensure regulatory compliance throughout the supply chain.