If you are involved in international trade compliance business operations, you need to be clear and well aware of the rules and regulations governing the same. Some rules are established by the governments of respective nations, as per the business landscape of their countries, whereas others are established with the aim of meeting the requirements of international trade agreements. For smooth operations in import or export business, you must understand the regulations properly for avoiding risks. Failure to comply with the regulations, even unintentionally, may lead to severe consequences including seizures, fines, inspections, imprisonment and loss of market access. Laws and regulations surrounding international trade are quite complex and to understand the risks of non-compliance fully it’s better to consult a customs, accounting or tax professional.
Here is an overview of thetop challenges in international trade compliance:
Getting accurate background information about a product could be difficult sometimes which makes getting accurate valuation for Customs difficult. Identifying assists could be a tough task. Assist refers to the things of tangible value that an importer provides to the producer or supplier. Assists help in reducing the production cost in comparison to the scenario where the producer would have acquired the things from a third party. However, people involved in the purchase or manufacture of a product, sometimes, are not aware that which products qualify as assists. Thus, calculating the transaction value for Customs require collecting all such necessary information.
Inconsistent Implementation of Rules
Certain WTO rules are interpreted in different ways in different countries. This often creates global trade barriers between certain nations. Differences in interpretations are caused by many variables such as no implementation of existing laws, absence of well-developed legal system etc. As a result, sometimes, exporters in some countries get more favored treatment than others. Other factors like corruption, political posturing etc., also lead to inconsistent implementation of several WTO rules in many countries.
In light of the various rules and regulations regarding the HS code, getting HS classification correct is a huge challenge. Computerized or automated classification programs also have errors and if you aren’t skilled or experienced, you won’t be able to detect them. Also, inadequate business information about goods and inconsistent interpretation of regulations lead to much confusion and improper classification.
Commercial invoices must contain detailed description of goods and information regarding the requirements of the origin and destination countries. Some countries have specific requirements pertaining to commercial invoices for assessment of correct customs duty. Often the product descriptions are too generic or inaccurate. This makes the determination of the end use of the goods very difficult, making the job of a Broker even tougher.
Uncertainties in Trade Environment
There are many regulatory bodies in the U.S. that lack proper communication and cooperation among themselves. This leads to uncertainties and inefficiencies in the international trade compliance.
The rules and regulations of international trade remain standardized for majority of products but there are certain products that fall in the category of special products and have different import and export requirements. These special categories require more research and more time for complying with regulations.