Trade Compliance

GHY discusses changes to international trade regulations and explores cutting-edge compliance strategies.

Responsibilities of the Trade Champion: Tactical Perspective

Posted April 06, 2016


At a macro level the trade champion’s focus is on the strategic and architectural elements of the organization’s global scope.

But at a more tactical or “micro” level, this shifts to working across the company’s functional units and locations to map and track compliance variables.  In this respect, specific areas of practical oversight across the span of the company’s operations include:

  • Finance
  • Legal/Regulatory Affairs
  • Sales and Marketing
  • Procurement
  • Supply Chain
  • Manufacturing
  • Information Technology
  • Supply Chain Partners/Third Parties

In reviewing the list of trade compliance-related variables in each of these functional areas it can be noted that:

  • There are far more potential “touchpoints” than may be visible without a closer look;
  • It is significant undertaking to monitor all of these variables without a well-thought-out plan;
  • Successful implementation depends on a cooperative and collaborative approach;
  • The trade champion must be empowered and equipped by senior leadership for the task; and
  • A full understanding of the company’s global trade profile is necessary to map the touchpoints.

If we take the Finance area as an example, following is a summary of several major trade compliance-related touchpoints that the Trade Champion and Vice President or Controller would need to have visibility to, and the discipline of an international framework to operate within:

  • Financial terms and instruments on imports and exports;
  • Regulatory audits, fines, penalties, interventions by global customs agencies;
  • Valuation (related and non-related party transactions);
  • Free trade eligibility verification;
  • International currency fluctuation implications on economic forecasts;
  • Currency hedging and forward contracts;
  • Duty paid and saved/avoided assessments;
  • Duty drawback opportunities; and
  • Insurance on supply chain imports and export sales.

Each of the areas listed has a direct link to a compliance trigger, which if effectively managed, can help ensure cost certainty and risk containment.

Conversely, a reactive or passive approach can create significant consequential impact downstream that will likely involve considerable time, energy, and intellectual capacity to sort through after the fact.

Regulatory audits, fines, penalties, and interventions by global customs agencies are obvious areas of impact where it is non-negotiable that the leaders of Finance and Trade Compliance work collaboratively together.

But what about a more innocuous area such a duty drawback, which essentially is an opportunity to recover the duties paid on goods that are imported, and then subsequently exported internationally?

Without an understanding of the concept, and intentional track of duties through the supply and sales chain, the opportunity for cost-savings in this regard will be lost, and unnecessary costs assumed that could compromise the price competitiveness of the product at final sale.

Or take the more oblique connection that international currency fluctuation presents as an area having a potential commercial consequence.

Most, if not all, contracts with foreign suppliers or customers are priced on the basis of a foreign currency exchange rate versus the Canadian or U.S. dollar. International contract pricing and costing formulae must take foreign currency volatility into consideration, with some allowance for fluctuations reflective of recent trend lines.

In this case, the Trade and Finance leaders can play a key role in working with Procurement and Sales functions to ensure that anticipated margins are realized.

These examples based on intersections in the Finance area underscore the diversity and scope of the challenge across the various functional silos of the company, where a commercial or compliance-related consequence can be triggered requiring intentional oversight and ongoing vigilance to manage consistently. 

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