{"id":10792,"date":"2022-11-16T15:50:13","date_gmt":"2022-11-16T23:50:13","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=10792"},"modified":"2023-01-17T15:51:17","modified_gmt":"2023-01-17T23:51:17","slug":"3-minute-explainer-why-you-should-automate-trade-compliance","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2022\/11\/3-minute-explainer-why-you-should-automate-trade-compliance","title":{"rendered":"3 Minute Explainer: Why You Should Automate Trade Compliance"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10793″ img_size=”full”][vc_column_text]Global trade comes with a host of rules. Import and export compliance cannot be ignored. Violating trade laws and regulations puts a company at the risk of fines.<\/span><\/p>\n

Recently, governments around the world have responded to the Russian-Ukrainian conflict by imposing sanctions on Russian individuals and businesses.<\/span><\/p>\n

More recently, <\/span>companies are facing fresh supply chain challenges in responding to a new US law that requires proof that imported goods are not sourced with forced labor in China, particularly in the Xinjiang region.<\/span><\/p>\n

And coming soon, companies will have to address future global trade legislation like the German Supply Chain Act and the EU Supply Chain Law.<\/span><\/p>\n

Unexpected disruptions occur \u2014 consider that the <\/span>2021 Suez Canal blockage held up $9.6B in global trade per day, according to KPM<\/span>G. Furthermore, certain goods can face enhanced restrictions like oil and semiconductor chips.<\/span><\/p>\n

Companies engaged in international trade are obliged to abide by new restrictions as they come into force. However, this can be a significant challenge for companies that need to manually check groups, entities and individuals against sanctioned party lists.<\/span><\/p>\n

The Cost of Non-Compliance<\/span><\/h2>\n

Depending on the origin or destination of shipments, companies have a huge number of rules and regulations that they must follow.<\/span><\/p>\n

In 2021, the US Treasury Department\u2019s Office of Foreign Assets Control (OFAC) issued over $20 million in fines for sanctions violations. Last year was a slow one for OFAC. In 2019, the organization issues <\/span>$1.3 billion in monetary penalties<\/span><\/a>.<\/span><\/p>\n

Many companies outside the US are also subject to OFAC regulations. Any company that issues or receives payments in US dollars must abide by OFAC rules.<\/span><\/p>\n

The European Union has similar laws restricting or prohibiting goods. Under Article 267 of the Union Customs Code (UCC), the EU can restrict goods to protect human health, the environment, public security and so forth.<\/span><\/p>\n

Shippers need to be aware of, and abide by, all the national and international trade compliance regulations that apply across the supply chain. Furthermore, shippers must correctly classify their goods. Customs authorities around the world issue fines if companies fail to use the correct commodity codes.<\/span><\/p>\n

In addition to fines, incomplete compliance procedures can result in missed delivery deadlines, lost shipments and other supply disruptions. Repeat offenders may have their export privileges revoked. All of this can impact a company\u2019s customer relationships, reputation and ultimately, its bottom line.<\/span><\/p>\n

Global shippers that <\/span>automate trade compliance<\/span><\/a> mitigate these risks, and remove costly time- and labor-intensive processes.<\/span><\/p>\n

Trade Compliance Automation Explained<\/span><\/h2>\n

Automation removes the guesswork out of trade compliance processes. Automated trade compliance solutions offer:<\/span><\/p>\n