Geopolitical Sustentation 28: Customs Acts

As per our damnation post, customs is the agency, authority, or regulatory body in a country that is responsible for collecting tariffs on, and controlling the flow of goods in, and out, of the country. Customs is necessary, not just for keeping borders safe (which is often the rationale for their existence these days), but for keeping economies running. Customs levies are not only one of the oldest types of tax, but the foundation for the revenue engines necessary to keep most governments running.

Nor is there anything wrong with, or damning about, creating regulations and acts that clearly define the purpose of a customs agency, the authority it has, the documentation it requires, the taxes that can be levied, and the penalties it can apply for non-compliance. The damnation comes into play when the number of sheets of paper required to capture the rules, regulations, and constant updates to the regulations exceed the quantity of goods flowing into, and out of, a country. For example, in the US, an average importer/exporter has to be fully knowledgeable of half-a-dozen multiple-binder-thick acts as well as a dozen or so global acts. It really is damnation to the power of 100.

So what is Procurement to do?

1. Global Trade Document Management Solutions

That can not only help you with the (e-)paperwork and the e-filing, but also help you identify the acts you have to adhere to, the forms that need to be filed, and the times by which they need to be filed. Some have to be filed before you hit the port, and others before you even leave the port of origin.

2. Customs and Trade Act Monitoring

As per our post on Environmental Sustentation 15, Waste, RoHS, and WEEE, the last thing you want to do is become aware of a new act the day it comes into effect. By the time it is signed into law, even if there is a six month grace period before its enacted, that’s too late. You want to know about a piece of proposed legislation the moment it gets released for public presentation or, if it was drafted in private, the first time it gets red in a regulatory body. A good monitoring solution will not only let you know when acts are updated, but when news is made, you need to know.

3. FTZ Mastery

A FTZ, short for Free Trade Zone, is a zone that allows you to ship goods through country X on their way for sale in country Y without having to pay import taxes or that allows you to delay imports until the goods or materials are actually needed. This can be a blessing to an organization with a tight cash-flow. But more importantly, if country X all of a sudden bans your product or a material in your product, it gives you a way to get your product out of the country and into another where it is not banned, which is much better than having it seized and destroyed on import.

4. State-of-the-Art Logistics Management Platform

If, all of a sudden, due to strikes, trade embargoes, or new legislation that makes your product, or a component, illegal, you have to re-route a shipment in real time, you need a state-of-the-art logistics management platform that will let you identify an alternate route and accomplish the re-routing.

5. Multiple Manufacturing Locations

If something happens and you can’t export or import, and you still need to get a good to market, if you have a local manufacturing location that you can rev up, there’s no better way to meet a need that cannot be otherwise met.

6. Standardize its Design and Cost Structures to the highest common denominator

While it might be cheaper to manufacture different versions of a product for different markets, using the cheapest formulation possible that will get a product through customs, if a company manufacturers to the highest common denominator, and the good meets the regulatory requirements of a number of countries, and one market becomes unavailable, the good is easily redirected to a different market. This is a good lesson for automotive, where each state and province can have different requirements, as inventory can be quickly shifted as consumer preferences change.