(Sept. 15, 4:05 p.m. EDT) — Much of the coverage marking the anniversary of 9-11 looked back at how the terrible events of that day have changed our lives. But we also need to look at how 9-11 will impact the future — particularly as many companies strug¼gle to compete in a rapidly changing global marketplace.
As director of Asian operations and global product management at D-M-E Co., I frequently deal with one of the thorniest issues in the post-9-11 economy: the heightened border scrutiny of imported and exported goods.
As Customs duties continue to decline worldwide, new security initiatives, such as the Customs-Trade Partnership Against Terrorism, are presenting new hurdles to international trade.
At the same time, customer demands for increased transaction speed and part-cost reductions have led to greater reliance on overseas suppliers. Throw in our climate of accelerated globalization, and it's easy to conclude that the amount of materials and products crossing national borders will only increase.
To improve speed and ensure proper documentation as packages move through their ports, many governments have installed automated systems. Rather than making things easier, though, these systems have added complexity. With automation, there's no gray area: An item is either suspicious or not. As such, the number of items flagged and checked has risen exponentially. This makes it imperative for companies to master international trade regulations.
Because D-M-E ships products to and from more than 70 countries, we manage a considerable volume of international trade on a daily basis. Our success hinges on our ability to support customers wherever they're located. To deliver on this promise post-9-11, we've had to retool our international trade processes. The following are general guidelines we've found to be indispensable in the current climate of heightened security:
* Know the codes. Every item shipped requires a Harmonized Tariff System code determined by the World Customs Organization. The HTS code documentation for the U.S. consists of two 4-inch-thick binders, and the code selection isn't always intuitive. The Web site www.customs.gov offers a searchable database called CROSS (Customs Rulings Online Search System) showing how similar products have been classified in the past. Requirements that may apply to your product include country-of-origin identification, other commercial terms and, possibly, Export Administration regulations. The Export Administration regulates exports of military and “dual-use” products. Your product may require an Export Control Classification Number and possibly a license. Some seemingly innocent products, such as thick stainless-steel plates, have “dual-use” status.
* Invest in documentation software. Knowing the code is only half the battle. Proper documentation is just as important. Export documentation software is available to expedite this task. Be sure to choose a package that can handle your shipping volume. Inexpensive, stand-alone software is also available, but be sure to consider one that can be readily integrated with your company's existing IT systems.
* Get expert help. If your product gets held in port, you incur expenses for storage and handling. You can also incur additional penalties based on how Customs interprets a mistake. While an “honest mistake” typically costs you the value of the item in port, Customs will charge you up to four times that value if officials believe your documentation is fraudulent. Given these costs and the potential for valuable time lost, it's best to get expert help and do it right the first time. Consultants who specialize in export documentation software can train your people and help you get started.
* Work with a broker. Good Customs brokers know the ports well and can help with moving product in and out of port quickly. They can also advise you if something is incorrect on your documentation. If your international trade business is relatively small, you can get away with one broker. Larger operations may need one broker for every port that's a frequent conduit.
To compete and win in the post-9-11 economy, companies will need to walk the line between meeting customer demands and complying with increasing security regulations. That's no small challenge. It can, however, be a source of tremendous competitive advantage for those willing to invest in creating a well-grounded, comprehensive set of practices.
Navarre is director of Asian operations and global product management at D-M-E Co., based in Madison Heights, Mich.