A survey of 1,700 trade professionals from multinational companies in 30 countries by KPMG and Thomson Reuters found 62% expect more regulatory complexity related to trade in the next three to five years. Among those located in North America, this figure actually jumps to 75%.
The second edition of the annual Thomson Reuters and KPMG Global Trade Management Survey found that growing complexity was a factor in meeting the compliance challenges associated with free trade agreements (even to the extent of contributing to their widespread underutilization) and in the valuation of goods, especially with regards to transfer pricing between related-parties.
Most significantly, however, tariff classification – arguably the most foundational component for moving product across borders – was where roughly 90% of trade professionals reported having a challenge. Usually, this was owing to problems with ambiguity in product description, differing classifications among importing countries, and frequent changes in guidance.
“Classification needs are ongoing, and the sheer volume and constant regulatory changes make this a time-consuming and challenging activity for trade compliance departments,” says Keith Haurie, VP Business Development for Thomson Reuters ONESOURCE Global Trade, adding that “Investing in the right tools to ensure the accuracy of classifications from the start should be a key priority for trade professionals.”
Other key takeaways revealed in the survey were that: trade departments are riddled with burdensome manual processes that drain time and resources globally; despite awareness for their need, most companies are yet to realize the full value of Global Trade Management (GTM) automated solutions; utilization of free trade agreements continues to be low, with only about a quarter of respondents saying their companies fully utilize all FTAs available and applicable to their products; and there is no one decisive factor when determining the right structure for organizations, although centralization of trade processes enjoyed a slight edge among survey respondents.
The report concludes on an optimistic note: “The global trade function is becoming more of a priority for executive management. Getting the funding necessary for GTM enhancements, including technology, is a barrier for trade teams, but with executive-level visibility to even modest successes and the long-term strategy, they should have an easier time getting support.”
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