Industry insights

Navigating International Trade Challenges

March 19th, 2019, Posted in News

Integration of national economies contributing to globalisation has been one of the most important developments of the last century and led to tremendous growth in trade between countries. Exports today are more than 4,000-times larger than they were a century ago.

New technologies in this modern age have made the world a more accessible place than ever before, drastically increasing complexity in international trade.

International trade compliance is becoming increasingly complex. Regulations and legislation are interwoven across countries, with multi-lateral and bi-lateral agreements, while they differ in application with varying export control regimes. As individual countries aim to  provide global outreach while securing their national borders, differing sanctions may apply to regions that impact international business. The challenges continue(!), all becoming harder to understand on a day-to-day basis, making it easy to see why global business can face a multitude of challenges.

In order to prep your business to best manoeuvre these situations, we have outlined the four biggest challenges standing in front of your company, and success, in today's regulatory environment

1. International security concerns

The world of security and threat management has changed substantially, and today we operate within a complex supply chain that requires a coordinated flow of information, services, goods, and payments within and across international boundaries. As a result, increasing security measures are in place that present a significant impact on the trading community.

While these measures have been introduced to improve border security, changes such as rapid globalisation and business expansion, quick interactions and exchanges of information and procurement of sensitive goods/commodities/materials can all cause international security concerns and create uncertainty for traders who have to comply with them.

2. International trade laws

Succeeding in international trade is not without its challenges, but overcoming them can lead to global success. A fundamental way to achieve this is by understanding the role that international trade laws play in the process. Although complicated to navigate, they are necessary to ensure national and global protection against proliferation and are essential to maintaining peace and security.

However, when it comes to extraterritorial jurisdictions from other countries and government bodies, it can become complicated, depending on where the content of goods and/or technology originate from. If  proper due diligence and attention to detail are not employed when transferring around the world, it can ultimately restrict your day-to-day operational trade routes of business.

These issues and risks if not taken seriously can have costly consequences resulting in significant fines, export privileges revoked and potential imprisonment.

3. End use of products

Although it is difficult to guarantee what happens to controlled items after they leave the exporting country, businesses that export licensable goods must ensure that they determine the end user of the product and follow through with great traceability.

To protect yourself (and others) against potential threats of diversion, or assisting in proliferation of WMDs, its extremely important to both know who your end customer is, and their needs for your products.

In addition, globalisation has made the world smaller and presented a range of opportunities to source materials from all over the world and route transactions. However, with subsidiaries and suppliers strategically placed in various regions with unique sets of trade laws and regulations, it is challenging to remain aware of any extra-territorial jurisdiction that follows the flow of your products across the board and at different points in the trade cycle. Therefore, it is imperative that you have the proper export control classifications across multilateral and regional trade regimes and appropriate export authorisations in place.

4. Compliance Controls

Compliance controls are increasing beyond the arena of Aerospace and Defence industries, beyond the scope of Strategic and Dual Use goods, and can impact both import and export customs procedures across other verticals – pharmaceuticals, automotive, financial institutions, as well as academic institutions.

Companies should make sure they understand the space they operate in, and how they are impacted by far reaching government agencies, along with Customs requirements for import and export (both in your exporting country and country importing to).

Having the proper export and customs classifications in place is the first step in heading the challenge of requirements. Classifications will help guide your path to whatever controls are awaiting and supporting documentation necessary to proceed with your transactions.

Risk of not knowing the situation can lead to violations and have serious consequences, including criminal sanctions, fines and loss of export and trade privileges for your organisation.

Contact Us

At OCR we are here to help you understand the complexities of global trade. Contact us and speak to one of our solution experts who can help future proof your business.