First of all, I think it may be worthwhile to say a few words about “trade compliance.” It may mean a lot of different things to different folks so I want to establish at least a baseline working definition. For me, “trade compliance” probably goes well above and beyond strictly compliance matters because, in the real world, in a real job, the more you can do to help your company, the more valuable an employee you may be, so for me, including cross-border and other import-export operations, as well as global end-to-end (E2E) supply chain strategies have been ‘“annexed” into my role of overseeing trade compliance.
But for today’s ”lesson,” we can focus strictly on those activities undertaken in a business that has import-export/re-export and/or deemed export activities that fall within the scope of all applicable laws and regulations to those activities. Don’t forget that the government has a responsibility to protects its citizenry, provide national security, and has the right to assess and collect its revenue, so these laws and regulations are fairly far-reaching, and can be highly complex.
Moreover, to, um, ”encourage” organizations that have transactions that are within the purview of these laws and regulations, there are significant potential fines and penalties. And, in any case, any good corporate citizen really does want to comply with these laws and regulations as part of their commitment to ethical operations.
So, more specifically, each company generally implements an internal control program in many functional areas, including our own trade (import-export) area. In our June post, we wrote about internal control program, generally. See http://cerasis.com/2014/06/11/trade-risks/
Here is one essential element identified there:
Moreover, we explained that this translates, when put into action in your own trade compliance program into (with emphasis added for this month’s post):
While no training is specified in any law of regulation regarding trade matters, both import and export laws and regulations clearly require due diligence and reasonable care. Notably, the U.S. Export Administration Regulations (EAR) have specifically identified a “knowledge” standard as “knew or should have known.” (See 15 Code of Federal Regulations (CFR) part 700, various.) To ensure that all parties that touch any tangent point to any matter where there are import-export law or regulation implications, it’s imperative that you train them [and be able to prove it] to meet your overall legal obligations!
Before you can identify who needs to be trained, you have to understand all your business processes and functions, alongside what the applicable laws and regulations. When I say “all,” I really mean “all.” This is an area where there are frequently gaps because the laws and regulations are not written with ease of implementation for the average business operation in mind. To create and implement an appropriate, and meaningful, trade compliance training program, first, understand your business!
Most companies are organized around similar concepts so there are the “usual suspects” regarding the primary functional areas. If you have trouble identifying all the functional areas in your organization, Human Resources, Accounting and/or Finance can provide significant help, by providing department names, cost centers and/or job titles. Below is a list of standard functional areas and the tangent of the core content of each area to import-export issues.
Topics to be included in trade compliance training cover a lot of ground as import-export issues touch virtually every functional area of a business. These are the usual topics that can be framed specifically for the audience at hand, or provided in generic form depending on the complexities of your individual business landscape:
At New-Hire: Any new employee should be exposed, even if briefly and at a high-level to these concepts and be made aware of the trade compliance organization in case something crosses their path in their daily work that should be elevated for attention. One slide embedded in the deck, and simple tri-fold brochures at orientation are good ways to get this message in.
Annual Code of Conduct (Re)Certification: As part of your company’s Code of Business Ethics and Conduct, a section on abiding by all import-export laws and regulations helps keep the message alive and shows a strong management commitment.
Annual Training: For each identified functional area AND for executive management, an annual training session is important, especially if your company has a dynamic workforce. It is essential that there is proof of attendance at these sessions. If there is no documentary evidence, in case of a government audit, it simply did not happen: you must be able to prove that the training took place, who was trained and the content of the information provided. Can you say “mitigating factors?” Most companies have a training sign-in or log sheet form that should be used and saved as part of your record keeping program for in-person training,
There are basically two types of trade compliance training for your overall business: in-person or automated. There are pros and cons for each of course and one size does not fit all. To my knowledge, there is no good off-the-shelf automated/web-portal trade compliance training that covers all the important training topics. Now that I’ve written this, I guess we’ll get all sorts of folks telling us that we’re wrong and to check out this and that and the other thing. Of course, for a fee, professional corporate training companies will develop and provide training in any way a company may want or need. But will it be good, or at least good enough? In these cases, the training system itself maintains an audit trail of who logged in, how much time they spent on the course material, the responses to any embedded questions, and so and as such provides a solid audit trail as may be needed. But…
…there is no interactive dialogue. There is no, “I have a ‘friend’ who noticed that…” There is no tailoring to any specific business case or scenario that might truly help your company minimize, mitigate and/or avoid its risks. If you only want to check the box that says, “I trained my employees”, then an automated solution is enough, but if you are truly dedicated to preventing, avoiding, minimizing, and mitigating risks of violations and therefore potential ensuing penalties, I am in favor of personal training.
Of course, if you need help creating and/or implementing your trade compliance training program, we are always here to help!
Let Livingston Global Trade Management walk with you today!
© Randi S. Waltuck, 2014 All Rights Reserved. RWaltuck@LivingstonIntl.com
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