Trade compliance, defined, is far broader than strict compliance adherence by a diligent employee. Trade compliance overseers should include strategies for their end-to-end (E2E) global supply chain and also operations like cross-border import-export within their management of trade compliance.
Today, we will focus on import-export/re-export and/or deemed export activities and their applicable laws and regulations. Respecting the complex, far-reaching government responsibility to provide national security, collect taxes, and impose penalties and fines on trade compliance is wise. As part of your company’s commitment to ethical operations, it has established an internal control program in many functional areas, which often include the trade (import-export) area. In June’s post, we overviewed internal control programs in general.
One vital element is:
- Information and Communication – Systems or processes that support the identification, capture, and exchange of information in a form and time frame that enable people to carry out their responsibilities.
When a company puts trade compliance program into action it translates into:
Who To Train and Why
While no law specifies training, both import and export laws and regulations should be approached with diligence. U.S. Export Administration Regulations (EAR) sets standards such as “knew or should have known.” (See 15 Code of Federal Regulations (CFR) part 700). By specifically identifying a “knowledge standard” you ensure all parties involved in any tangent points of import-export law or regulation implications are trained. With training it also becomes imperative to document training of trade compliance to meet your legal obligations.
Based on your business functions and processes and all applicable laws and regulations, you can determine whom best to train. “All,” really means “all.” Frequent gaps exist from where regulations and laws don’t include easy-to-implement writing. You must create and implement an appropriate, and meaningful, trade compliance-training program by understanding your business first. Going to Accounting, HR and/or Finance who can provide department cost centers, names, and/or job titles will aid your selection of trade compliance staff to send for in-depth training. Below we list standard functional areas are and the tangent of the core content of each area to import-export issues.
What to Include
Training in trade compliance can span a wide range of topics. Import-export affects the functionality in practically every area of your company. Top audience topics that can be used generically or modified by preference based on how your company might frame them are as follows:
Classifications for Import and Export (HTS/ECCN)
- Valuation of Customs
- Country of Origin
- Export Control: Know your Partners & Screening
- Export Licensing
- Security of Supply Chain
- Overall Awareness
When to Train
- New-Hire Orientation: All new employees should have exposure to a high-level overview of trade compliance in your organization. Should an issue cross their daily work life, they can then flag it for additional attention. A simple tri-fold orientation brochure is one way to include your basic trade compliance message.
- Annual (Re)Certification Code of Conduct: Display strong adherence and commitment by management to your organization’s Code of Business Ethics and Conduct which should include how best to adhere to all import-export laws and regulations.
- Yearly Training: Annual training sessions are key for every functional area AND executive management. Diligently document attendance in case of government audit including who and the training content provided. Otherwise, you will not be credited for your efforts in an audit. Minimally, businesses employ the use of a training log or sign-in sheet that must be saved in case of an audit.
How To Train
There are basically two types of trade compliance training for your overall business: in-person or automated. There are pros and cons for each one and they do not fit all sizes and needs. At this point, there is no any automated/web-portal trade compliance we recommend. Online training systems do maintain an audit trail of who logged in, how much time they spent on the course material, the responses to any embedded questions, and as such provides a solid back up of compliance training in case of audit.
Interactive dialogue is most productive, however. The invaluable sharing of personal experiences and business cases can often truly help your company minimize, mitigate and/or avoid risks. Professional training may be hired at a fee and these companies will customize their training based on your needs While automated solutions are enough to check the box, true dedication to prevention of trade compliance violations and penalties will choose personal training solution.