Manufacturers of high tech products often face restrictions and
controls if and when they ship goods across regions and countries.
In this QAD Precision Report, we look at the three most pressing
compliance issues for high tech enterprises.
Innovation, at its core, is spreading new ideas to new people. For
high tech manufacturers, this means spreading product across
audiences, regions and even countries. Unfortunately, the global trade
landscape isn’t especially open to the constant movement of goods and
ideas. There are many rules and regulations that govern how
manufacturers transfer goods across borders.
Adhering to customs and international trade compliance regulations is
crucial for high tech manufacturers. There are some very real
consequences attached to these seemingly innocuous laws. Monetary
fines, penalties and shipping issues (read: delays) are a very real
possibility. Furthermore, all of these outcomes put the customer
experience at severe risk.
High tech manufacturers can address many of these issues with better
record keeping and documentation. This is one of the biggest pitfalls
of the current global trade compliance landscape. Maintaining an
effective trade compliance program is a great way to take proactive
steps towards optimizing customer satisfaction.
Below, we’ll explore three of the top trade compliance issues for
high tech manufacturers and tips on how to overcome them.
Export compliance for high tech goods often requires restricted
party screening (also called denied party screening or
sanctioned party list screening). This ensures that manufacturers are
not trading with people involved in crime, terrorism or other illegal activities.
Screening customer names against all important government and
international lists is an arduous task if done manually. However, it
is possible to automate this process at the beginning of every transaction.
Screening can also be automatically done before shipment. This is a
best practice. Denied party lists are subject to daily changes.
Furthermore, sometimes only specific entities or individuals are able
to receive certain high-security shipments. If this person isn’t
available, it’s common to get sign-off from a warehouse employee who
happens to be present. Unfortunately, this practice violates trade
compliance laws and can lead to serious fines. Particularly with
certain types of technology, licensing restrictions may limit who can
handle specific shipments and who cannot.
For high tech manufactures looking to spread their innovations
overseas, it’s important to be aware of certain licensing
controls and regulations.
It’s common that manufacturers that create technology in one country
cannot simply ship goods without restriction to another country. For
example, if an item is shipped from a non-US country but contains a
substantial amount of US technology or IP.
Even though this item is not shipped directly from the US, it is
still subject to US export controls. That is because the US government
may declare that restricting these goods is vital to national security.
Manufacturers must manage these licensing agreements extremely
carefully. They must also monitor and record every interaction and
checkpoint in case of an audit. This is important because it shows
authorities that you have undertaken all necessary due diligence.
A cloud-based global trade compliance solution can help take the
guesswork out of licensing. Licensing requirements and regulations can
be stored by critical metrics such as country, item, date or value.
This ensures no licensing issues slip through the cracks with the
potential of fines, penalties or loss of export privileges.
It’s important for high tech manufacturers to keep a steady pulse on
changing government export controls and sanctions. These sanctions can
include shipping bans on countries like Iraq and Cuba.
These blanket bans sit alongside detailed caveats on transferring
high-security technology across borders. The consequences of doing so
are monumental. For a preview of civil penalties, take a look at Don’t
Let This Happen To You. This is a publication of actual
investigations of violations by the US Bureau of Industry and Security (BIS).
To stay up-to-date on sanctions, it’s important to have trade content
that is constantly updated and refreshed. Daily updates to all new
regulatory agency data — including the lists of sanctioned countries —
ensures ongoing compliance with international trade regulations.
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MINUTE EXPLAINER: WHY YOU SHOULD AUTOMATE TRADE COMPLIANCE
YOUR TRADING PARTNERS ARE CRIMINALS, SO ARE YOU
REASONS HIGH TECH AND MANUFACTURING FIRMS NEED DENIED PARTY SCREENING