{"id":11508,"date":"2023-11-07T11:06:44","date_gmt":"2023-11-07T19:06:44","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=11508"},"modified":"2023-11-07T11:10:44","modified_gmt":"2023-11-07T19:10:44","slug":"navigating-new-regulations-supply-chain-and-global-trade-compliance-challenges-in-2023","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2023\/11\/navigating-new-regulations-supply-chain-and-global-trade-compliance-challenges-in-2023","title":{"rendered":"Navigating New Regulations: Supply Chain and Global Trade Compliance Challenges in 2023"},"content":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;11509&#8243; img_size=&#8221;full&#8221;][vc_column_text]<span style=\"font-weight: 400;\">Countries across the globe have held human rights and environmental protection legislation for decades. However, the standards of compliance are evolving to ensure greater accountability for corporations and their supply chains. In fact, corporate accountability plays a major role in meeting human rights and environmental protection standards. While new mandatory regulations have taken effect in 2023, companies need to significantly ramp up their due diligence efforts and ensure compliance with these new regulations along with impending supply chain legislation \u2014or face major penalties.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Understanding the Changing Landscape<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Nearly all due diligence legislation seeks to implement the standards set by the UN Guiding Principles on Business and Human Rights. One example of such legislation is the <\/span><a target=\"_blank\" href=\"https:\/\/www.business-humanrights.org\/en\/latest-news\/german-due-diligence-law\/\" rel=\"noopener\"><span style=\"font-weight: 400;\">German Supply Chain Act (GSCA)<\/span><\/a><span style=\"font-weight: 400;\">, formally the Act on Corporate Due Diligence in Supply Chains.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">The Role of Corporate Accountability<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">This act seeks to eliminate forced and child labor as well as provide additional <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/blog\/2023\/05\/how-to-navigate-esg-risk-with-supplier-management-software\" rel=\"noopener\"><span style=\"font-weight: 400;\">environmental, social and governance (ESG) protections<\/span><\/a><span style=\"font-weight: 400;\">. The legislation intends to improve working conditions for all. In addition, it also seeks to completely eradicate human rights abuses from all commerce and production activities. After only 22 percent of companies were found to be compliant with the German National Action Plan in 2020, the German parliament enacted GSCA and voted to make participation mandatory in June 2021.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">The German Supply Chain Act (GSCA)<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The GSCA went into effect January 1, 2023 for companies with 3,000 or more employees in Germany. As of January 1, 2024 the law will extend to companies with 1,000 or more employees. The legislation also applies to foreign-based companies with registered German branches. From 2023 onward, applicable businesses in the German market must:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Establish preventative measures within their supply chains<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Provide annual reports of due diligence activities<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Establish <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/solutions\/qad-digital-supply-chain-planning\" rel=\"noopener\"><span style=\"font-weight: 400;\">risk mitigation<\/span><\/a><span style=\"font-weight: 400;\"> and <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/blog\/2022\/12\/a-guide-to-supply-chain-software-risk-management\" rel=\"noopener\"><span style=\"font-weight: 400;\">risk management systems<\/span><\/a><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Any company that does not comply with the GSCA could face repercussions through the Federal Office for Economic Affairs and Export Control (BAFA), including fines up to \u20ac800,000 and up to a three-year exclusion in public contracts.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">A Global Movement for Compliance<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Regulations like GSCA are a growing global movement. In December 2021, US President Joe Biden signed the <\/span><a target=\"_blank\" href=\"https:\/\/www.congress.gov\/bill\/117th-congress\/senate-bill\/65?s=1&amp;r=88#:~:text=Passed%20Senate%20(07%2F14%2F2021),-Uyghur%20Forced%20Labor&amp;text=This%20bill%20imposes%20importation%20limits,related%20to%20such%20forced%20labor.\" rel=\"noopener\"><span style=\"font-weight: 400;\">Uyghur Forced Labor Prevention Act (UFLPA)<\/span><\/a><span style=\"font-weight: 400;\"> that states all goods fully or partially manufactured in China&#8217;s Xinjiang <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/blog\/2023\/08\/your-uflpa-risks-may-be-wearing-a-disguise\" rel=\"noopener\"><span style=\"font-weight: 400;\">Uyghur Autonomous Region<\/span><\/a><span style=\"font-weight: 400;\"> are products of forced labor and are not eligible for US entry. Even smaller scale legislation like the Fashion Sustainability and Social Accountability Act (FSSAA) introduced in New York has real global regulatory and compliance implications.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Worldwide Due Diligence Directives<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Other due diligence directives include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">EU Mandatory Human Rights Due Diligence Directive<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Norwegian Transparency Act<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Swiss Human Rights Due Diligence Law<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Dutch Due Diligence Act<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Challenges and Costs of Compliance<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">In order to ensure due diligence up and down their respective supply chains, companies are going to face much greater accountability standards and consequences\u2014adding another layer to an already complex international trade compliance ecosystem. The protection of human rights and sustainability standards comes at a very real monetary cost. However, corporations will have to put due diligence at the forefront of their business practices to remain viable in the global market.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">A Compliance Solution<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Partnering with an expert in <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/solutions\/global-trade\" rel=\"noopener\"><span style=\"font-weight: 400;\">global trade compliance<\/span><\/a><span style=\"font-weight: 400;\"> can be a first step in ensuring these regulations are met. This includes supplier risk assessment and needs to be addressed sooner rather than later.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Addressing Non-Compliance Swiftly<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Should you uncover non-compliance with <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/blog\/2023\/06\/is-esg-really-worth-the-trouble\" rel=\"noopener\"><span style=\"font-weight: 400;\">ESG standards<\/span><\/a><span style=\"font-weight: 400;\">, you will need to act swiftly. Finding and qualifying new suppliers is time-consuming. These kinds of supply chain risks could significantly impact business operations as well as your reputation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Essential capabilities and software solutions include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a target=\"_blank\" href=\"https:\/\/www.qad.com\/solutions\/restricted-party-screening\" rel=\"noopener\"><span style=\"font-weight: 400;\">Restricted party screening<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a target=\"_blank\" href=\"https:\/\/www.qad.com\/solutions\/sourcing\" rel=\"noopener\"><span style=\"font-weight: 400;\">Sourcing<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a target=\"_blank\" href=\"https:\/\/www.qad.com\/solutions\/supplier-management\" rel=\"noopener\"><span style=\"font-weight: 400;\">Supplier management<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a target=\"_blank\" href=\"https:\/\/www.qad.com\/solutions\/import-management\" rel=\"noopener\"><span style=\"font-weight: 400;\">Import management software<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a target=\"_blank\" href=\"https:\/\/www.qad.com\/solutions\/export-management\" rel=\"noopener\"><span style=\"font-weight: 400;\">Export management software<\/span><\/a><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">The Proactive Approach: Digitizing the Supply Chain<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Embracing digital transformation in the supply chain is the proactive strategy to meeting these new and evolving compliance regulations efficiently. This approach not only ensures adherence to regulatory requirements but also enhances cost-effectiveness and ensures customer loyalty. A global trade expert like QAD is not only a great step toward compliance and risk mitigation, but a leap towards a better world.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To find out more about QAD, please visit our <\/span><a target=\"_blank\" href=\"https:\/\/www.qad.com\/\" rel=\"noopener\"><span style=\"font-weight: 400;\">website<\/span><\/a><span style=\"font-weight: 400;\">.<\/span>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;11509&#8243; img_size=&#8221;full&#8221;][vc_column_text]Countries across the globe have held human rights and environmental protection legislation for decades. However, the standards of compliance are evolving to ensure greater accountability for corporations and their supply chains. In fact, corporate accountability plays a major role in meeting human rights and environmental protection standards. While new mandatory regulations have taken [&hellip;]<\/p>\n","protected":false},"author":64,"featured_media":11509,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[182,2045],"tags":[2570,1430,2577,2558,1332,92,2826,396,2827],"class_list":["post-11508","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-supply-chain-trends","tag-export-management","tag-global-trade-compliance","tag-import-management","tag-restricted-party-screening","tag-supplier-management","tag-supply-chain","tag-supply-chain-due-diligence","tag-sustainability","tag-uflpa"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Navigating New Regulations: Supply Chain and Global Trade Compliance Challenges in 2023 | QAD Blog<\/title>\n<meta name=\"description\" content=\"Discover how 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