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http://itracglobal.com Automate global trade compliance and logistics Mon, 29 Apr 2013 13:27:50 +0000 en-US hourly 1 http://wordpress.org/?v=3.5.1 Why Trade Compliance and Logistics Must Work Together http://itracglobal.com/blog/why-trade-compliance-and-logistics-must-work-together/ http://itracglobal.com/blog/why-trade-compliance-and-logistics-must-work-together/#comments Tue, 23 Apr 2013 18:07:16 +0000 Andrei http://itracglobal.com/?p=2571 Why must Trade Compliance and Logistics’ teams work together? Simply put, Trade Compliance primary function is supporting the compliant movement of tangible goods across international borders.  Trade Compliance professionals need to review how the team can move beyond being simply [...]

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Why must Trade Compliance and Logistics’ teams work together? Simply put, Trade Compliance primary function is supporting the compliant movement of tangible goods across international borders.  Trade Compliance professionals need to review how the team can move beyond being simply a back office data maintenance and audit function.

International Trade Compliance is Ultimately About Logistics

At its heart, trade compliance is a function of logistics and shipping. This means that if you exclusively ship domestically, you do not have any compliance issues to deal with.  However, if you ship internationally, it is mandatory that you comply with all  import/export requirements of one or more Countries.

It may be helpful to think about a trade compliance solution like an accountant. Accountants provide data to the company and prepare the company for future audits.  A trade compliance solution should have the same function in support of logistics.

Therefore, every trade compliance problem is a logistics problem, because fundamentally, logistics needs to use trade compliance data to make the international shipments compliant. So working out where and how logistics can access this data is crucial to a successful trade compliance and logistics program.

Trade compliance solutions help logistics by making it easier to ship; your goods do not get stuck in Customs, which keeps your partners and customers happy and revenue flowing. When goods ship on time, you minimize risk of loss of revenue and cash flow gaps.

How International Trade Compliance Can Help Logistics

In order to foster the most effective and efficient import/export process for all of your international shipments, the questions logistics and compliance should be working on together are:

  1. How to simplify audit compliance and get all of your data in one place.
  2. How to easily retrieve documents and avoid bankers’ boxes lost in the warehouse.
  3. How to easily control and revise documents and eliminate excel spreadsheets with outdated and inaccurate information.
  4. How to decrease time spent producing compliant documents and templates to under one minute.
  5. How to track and trace all shipments.

Trade Compliance must become a proactive team that actually helps your business thrive with improved processes and software to streamline the creation of compliant documents and shipments that empower your logistics team.

To learn more about trade logistics and compliance or to speak with a representative about how our trade compliance system integrates Trade Compliance and Logistics, please contact us.

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The Cost of Not Having Proper Documentation http://itracglobal.com/uncategorized/the-cost-of-not-having-proper-documentation/ http://itracglobal.com/uncategorized/the-cost-of-not-having-proper-documentation/#comments Tue, 16 Apr 2013 20:04:28 +0000 gabrielsales http://itracglobal.com/?p=2257 It happens everyday that companies do not use an automated system when shipping goods.  This happens most often when companies ship spare parts both inside and outside the US.  Without an automated system that keeps good track of things like [...]

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It happens everyday that companies do not use an automated system when shipping goods.  This happens most often when companies ship spare parts both inside and outside the US.  Without an automated system that keeps good track of things like the price, where the good was made and even your own taxed ID number, the customs authorities in any country will stop your goods, confiscate your goods or charge you duty.

In a recent case, because a company did not have the proper documentation, they were charged $8,000 of duty in taxes on a $16,000 piece of equipment.  They were unable to recover that money.  If they had put an automated system into place, they would not have had to deal with this problem to begin with. So, you can easily see that too many of those mistakes can cost a company a lot of money very quickly.

The iTRAC Global system is specifically designed to help companies avoid those kinds of mistakes that result in penalties, fines and other bad situations. Avoiding law enforcement and penalties from the various governmental bodies involved is not a simple task, as the rules for import and export are multifaceted and constantly changing.  If you have any questions or need help with import or export compliance, please feel free to contact us.

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Crocs in Trouble http://itracglobal.com/uncategorized/crocs-in-trouble/ http://itracglobal.com/uncategorized/crocs-in-trouble/#comments Mon, 15 Apr 2013 15:20:56 +0000 gabrielsales http://itracglobal.com/?p=2241 At iTRAC Global, we often explain to potential customers the high cost of failing to implement best practices for import and export compliance.  We often explain that not having a clear understanding of all of the laws, procedures and obligations [...]

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At iTRAC Global, we often explain to potential customers the high cost of failing to implement best practices for import and export compliance.  We often explain that not having a clear understanding of all of the laws, procedures and obligations involved in compliance can lead to confiscation of goods, heavy fines or even jail time.  One Colorado-based company is currently finding that out the hard way, facing up to $36.3 million in fines from the United States and Mexican governments.

Crocs, a popular company selling colorful shoes, underwent audits by both the United States Customs and Border Patrol (CBP) and the Mexican Federal Tax authority.  The first estimates from the audit show that the company could owe $14.3 million to the US and $22 to Mexico. These estimates are based on the raw material value of Croc’s imports between January 2006 and July 2011.

Officials for the company have stated they are disputing the results of the CBP audit explaining, “We have responded that these projections are erroneous and provided arguments that demonstrate the amount due in connection with this matter is considerably less than the preliminary projection.” They have also claimed the Mexican audit is “unfounded and without merit” and claim to have “retained legal counsel to handle the matter.”

For more on how iTRAC Global can help with your entire import/export process, please contact us.

Read the full article on Crocs’ legal disputes in the Daily Camera.

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International Trade Compliance Gone Wrong: Gibson Guitars http://itracglobal.com/uncategorized/international-trade-compliance-gone-wrong-gibson-guitars/ http://itracglobal.com/uncategorized/international-trade-compliance-gone-wrong-gibson-guitars/#comments Tue, 26 Mar 2013 18:04:48 +0000 gabrielsales http://itracglobal.com/?p=2249 When it comes to dealing with matters of international trade, there are often many bureaucratic hoops to jump through.  You have to determine country of origin, the most efficient delivery methods, tariff classification numbers, etc. In addition to the customs [...]

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When it comes to dealing with matters of international trade, there are often many bureaucratic hoops to jump through.  You have to determine country of origin, the most efficient delivery methods, tariff classification numbers, etc. In addition to the customs regulations like Harmonized Tariff Codes and such, there is also a whole set of global regulation that companies have to be conscious of. One of the most recent and popular stories, which is very unfortunate for all of the music fans out there, is Gibson Guitars.

Gibson Guitars imported a million dollars worth of very nice and exotic wood from India to use for their guitars. Unfortunately, US Customs believed at the time that the wood had not been properly or legally imported.  They went to the Gibson factory and confiscated all the wood.  This put 16 people out of work overnight and caused a very big problem for the company that they are still trying to recover from.

The iTrac system helps companies to keep track of these types of things both through the audit process and through the document collection. We can collect the documents to ensure the documents and your goods coming from any place anywhere in the world are compliant with all of the relevant government standards. If a government agency does have a question, you have only one place to go to find everything you need.

If you need help with import or export product classification, or have any questions about global trade compliance, please contact us.

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What is a Harmonized System Tariff? http://itracglobal.com/uncategorized/what-is-a-harmonized-system-tariff/ http://itracglobal.com/uncategorized/what-is-a-harmonized-system-tariff/#comments Mon, 04 Mar 2013 18:15:32 +0000 gabrielsales http://itracglobal.com/?p=2263 A harmonized system tariff is a tariff that is categorized by the Harmonized System, also known as the Harmonized Commodity Description and Coding Systems. The Harmonized system (HS) is utilized in around 200 countries in their harmonized tariff schedules and [...]

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A harmonized system tariff is a tariff that is categorized by the Harmonized System, also known as the Harmonized Commodity Description and Coding Systems. The Harmonized system (HS) is utilized in around 200 countries in their harmonized tariff schedules and has categories for more than 5,000 commodities. The HS is upheld and revised by the World’s Customs Organization in Belgium.

Each time a good or other commodity crosses an international border, HS works by classifying it. Every good or commodity that is classified is assigned a unique 6-digit classification number. The number each commodity is assigned is based on its utility or substance.  The leading four digits are known as the ‘heading’, while the subsequent 2 numbers are called the ‘subheading’. For example, all things related to toy dolls are given the heading 9502, so a part or accessory for a doll is assigned the number 9502.91.

This system was set up in part so that all of the countries participating in HS have the ability to share a unified system of naming for global trade.  All of these countries do not have the ability to alter the first six digits, although they may attach anywhere between two and four more digits.  Some countries do this for research objectives or to use in their own tariff rate system.

The HS has been in operation since the 1970s, when worldwide communications and global trade started to increase almost exponentially.  With this sharp rise in the volume of international transactions, there was need for a common and uniform type of classification. Every five years, the HS gets updated with additions, alterations and deletions. There was an update in 2012, so the next scheduled update is in 2017.

For more on the HS or for help with international trade, please contact us.

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International Trade Compliance Gone Wrong: Tablets http://itracglobal.com/uncategorized/international-trade-compliance-gone-wrong-tablets/ http://itracglobal.com/uncategorized/international-trade-compliance-gone-wrong-tablets/#comments Sat, 23 Feb 2013 18:06:10 +0000 gabrielsales http://itracglobal.com/?p=2251 One of the more challenging aspects for any company is trying to understand the import/export requirements from a government.  And that is not just about harmonized tariff codes or expert control numbers; it is also about Federal FCC and FDA [...]

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One of the more challenging aspects for any company is trying to understand the import/export requirements from a government.  And that is not just about harmonized tariff codes or expert control numbers; it is also about Federal FCC and FDA restrictions on goods.

One of the best examples of this is when tablets first came out a few years ago.  When this happened, not every country allowed the tablets to come in.  There is a very popular story about how people bringing in the newest tablets to Israel had them confiscated.

Why? Because the company had failed to register the wireless chip in the tablet with the government. So, for several months until the issue was resolved, anybody who tried to bring a tablet into the country was stopped and had it confiscated at the border.  Needless to say, Israel was not taking shipments into the country either.

The lesson to take away here is that global trade compliance is very challenging and is getting more complex everyday.  It is also difficult to keep track of the constant changes to the rules and variances in protocols from country to country.  The iTRAC Global system helps you by tracking each country that you might be doing business is and storing that data for you.

Avoiding law enforcement and penalties from the various governmental bodies involved is not a simple task, as the rules for import and export are multifaceted and perpetually evolving.  If you have any questions or need help with import or export compliance, please feel free to contact us.

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How to Create a Partner http://itracglobal.com/support/how-to-use/ http://itracglobal.com/support/how-to-use/#comments Fri, 22 Feb 2013 11:27:32 +0000 David http://itracglobal.com/?p=377

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What is Tariff Classification? http://itracglobal.com/uncategorized/what-is-tariff-classification/ http://itracglobal.com/uncategorized/what-is-tariff-classification/#comments Fri, 08 Feb 2013 18:26:47 +0000 gabrielsales http://itracglobal.com/?p=2278 When importing and exporting commodities in international trade, tariff classification involves putting each and every item to be shipped into categories.  In the United States, commodities that are imported receive their classification number utilizing the harmonized tariff schedule (HTS).  Other [...]

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When importing and exporting commodities in international trade, tariff classification involves putting each and every item to be shipped into categories.  In the United States, commodities that are imported receive their classification number utilizing the harmonized tariff schedule (HTS).  Other countries use their own classification system for tariffs. The department in charge of overseeing tariff classification is Customs and Border Patrol (CBP).

When someone is importing something into a country, they are responsible for classifying each item they bring in using the HTS or other countries’ tariff classification system.  Because tariff classification designates the amount of taxes and customs duties to be paid for every shipment, tariff classification is not a trivial thing.  For this reason, the CBP encourages importers and exporters to exercise care and diligence when classifying.

To verify the declaration of these classification numbers, there are customs authority branches in each country that vigorously review the imported and exported commodities.  These branches of customs authority conduct customs audits to validate that the correct classification has been made.

Not classifying a commodity correctly can have severe consequences. For example, there was a man in Ireland who repetitively declared imported garlic using the tariff classification for apples to avoid a higher import tax. The man was caught when a box labeled apples broke and garlic spilled all over the floor. He was put in jail for six years.

While being put in jail is an extreme consequence, improper tariff classification can also cause your goods to be confiscated until the proper classification is made. In some cases, the goods cannot be recovered.  In light of this, a person or company who imports or exports goods should exhaust all resources to ensure classification is correct.

If you have any questions or need help with tariff classification, please contact us.

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CBP Enforcement & Penalties http://itracglobal.com/uncategorized/cbp-enforcement-penalties/ http://itracglobal.com/uncategorized/cbp-enforcement-penalties/#comments Fri, 25 Jan 2013 18:02:46 +0000 gabrielsales http://itracglobal.com/?p=2239 When engaging in global trade, you are almost always going to have to have some sort of interaction with the CBP.  The United States Customs and Border Protection was established in 2003 as a subset of the US Department of [...]

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When engaging in global trade, you are almost always going to have to have some sort of interaction with the CBP.  The United States Customs and Border Protection was established in 2003 as a subset of the US Department of Homeland Security.  It is the largest agency of law enforcement in the country and is responsible for standardizing and regulating policies for international trade, collecting duties for import, and enforcing trade, customs and immigration regulations.

Enforcement

In regards to the enforcement of international trade laws and regulations, the CBP has the power to examine all imports and exports and seize anything they believe is in violation of their policies. These include materials or substances that are found to be stolen, smuggled, controlled or contraband.

CBP can also seize goods if:

  • The commodity is found to be in violation of health and safety or environmental protection standards.
  • The commodity is marked (intentionally or repetitively) with an incorrect country of origin.
  • The commodity does not have the federally issued license necessary for importation.
  • The commodity or its packaging has a copyright or trademark violation.
  • The documents presented for import compliance are found to be counterfeit.

Penalties

There are three types of civil penalties that fall under Section 592 of the Tariff Act of 1930.  Penalties may be applied to a person who uses fraudulent or false documents, statements, practices or omissions when importing, trying to import or aiding in importation.

The three types of penalties are:

  1. Negligence.  One incurs a monetary penalty of negligence when they fail to act with due care when gathering necessary trade documents and following trade protocols.  The maximum penalty may not exceed 20 percent of the dutiable value of the good.
  2. Gross Negligence.  One incurs this penalty when they perform an intentional act of omission or show wanton disregard for the material facts required for import or export.  The penalty for gross negligence may also be applied if there is disregard for any of the policies and procedures obligated by Section 592.  The maximum penalty is generally 40 percent of the dutiable value.
  3. Fraud.  The penalty fraud may be applied to a person who knowingly present falsified information or make an intentional omission to the US Department of Revenue. The domestic value of the commodity in question is the maximum penalty for this act.

Avoiding CBP enforcement and penalties is not a simple task, as the rules for import and export are complex and constantly changing.  If you have any questions or need help with import or export compliance, please feel free to contact us.

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What is Import/Export Compliance? http://itracglobal.com/uncategorized/what-is-importexport-compliance/ http://itracglobal.com/uncategorized/what-is-importexport-compliance/#comments Sun, 06 Jan 2013 18:24:18 +0000 gabrielsales http://itracglobal.com/?p=2274 As a seller or buyer of commodities in 2013, being able to connect with customers in other countries is imperative to being able to continue to expand business.  Exporting and importing goods can bring great growth for your company, however, [...]

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As a seller or buyer of commodities in 2013, being able to connect with customers in other countries is imperative to being able to continue to expand business.  Exporting and importing goods can bring great growth for your company, however, the process of going about this is not simple or straightforward.  You need to look into what you could expect potential returns to be for this investment as well as the legal requirements that you need to adhere to.

If you have decided to import or export goods, you should start by trying to get a list together of all of the governmental protocols pertaining to trade with foreign countries.  When it comes to exporting, a commodity is not allowed to leave a country until it is compliant with all of the nation’s trade laws, so it is important to understand what those laws are.  On the flip side, many countries have different laws regarding what can be brought into a country, which need to be properly comprehended as well.

Understanding and following these rules is called import/export compliance.  Achieving compliance in trade is often difficult because a single item may be bound by different trade laws depending on what country it is being imported or exported to.  In addition, there are also countries that prohibit the import of certain commodities as well as countries that ban all trade from another country. So, the information required and the procedures that must be followed in order to be compliant differ from nation to nation and product to product.

Import and export compliance is not something that you should take lightly.  If your import or export is not compliant with all relevant rules and protocols, the commodity is subject to confiscation or destruction, causing you to lose your investment.  In severe cases, noncompliance could also result in heavy fines and or jail time.

At iTRAC Global, we can help you easily navigate all of your import export compliance needs.  For more information on trade compliance, please feel free to contact us.

 

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