I have just returned from Orlando and the ICPA conference held at Disneyworld. As they say in Disney...it was truly a “magical” time. The conference is extremely well run and well attended. In fact, it was completely sold out. The topics presented are always valuable and provide insights and perspectives into the world of trade compliance that I often lose sight of during my daily work routines.One of my highlights of the conference is the opportunity to mix with the trade compliance community and get an incredible view of the trade compliance practitioner's world - which unfortunately is not always magical. The content of the conference has a few themes which are standard fare: Product Classification (HS, ECCN), ACE activity, Sanctions, Reconciliation, Denied Party Screening, License control, etc.). But, the fact that they are standard does not mean they are ordinary. Because of the increasing sophistication of ACE, understanding the changes in CBP and PGA regulations and enforcement from a practitioner’s perspective is invaluable. ICPA is a particularly great venue for the sharing of information and ideas because it is truly practitioner focused. As a service provider, what is very exciting is getting the opportunity of talking with trade compliance practitioners, lawyers, consultants, and other service providers about their specific areas of concern and success. So, here are a few of the takeaways from ICPA Orlando 2019 that I walked away with.
The Continuing Impact of Geopolitical Activity
One of the major topics we heard frequently was the increasing impact of geopolitical activity on daily trade compliance work effort. Since this administration took control in 2017 there has always been turmoil around international trade and this only seems to increase over time.With the increase in geopolitical activity, new trade tensions appear every day and trade compliance is virtually in constant reactive mode. The imposition of 232 and 301 tariffs affects the cost of the related import product, often-times dramatically. New sanctions against individuals, organizations, and countries are rolled out almost every day. Rules on ownership, labor, conflict minerals, and protected resources are regularly being introduced, enhanced, or revised. When added up, all the changes taking place in legislative activity have real potential consequences for an organization. Managing all the changes are causing substantial additional work for trade compliance professionals.
The Increasing Impact of ACE
ACE certainly garners its share of mind-share among trade compliance pros. It is increasingly apparent that ACE is a powerful tool for CBP and PGAs to mine data for both import and export compliance analysis and enforcement. The very high investment the government has made in technology is yielding significant value for the trade enforcement arms of government and this is only increasing with time. What I heard with increasing frequency is that CBP and PGAs have better information as it relates to their specific activity and that of their peers. This ability to capture and share incredible amounts of data inter-departmentally provides CBP and PGAs with insights that they were not previously privy to. This is only going to increase over time and it means that companies must be ever more vigilant as to what they declare. This vigilance no longer applies only at the time of the original filing but must continue until a file is liquidated.
The Importance of Visibility - Reporting and Analysis
It appears that visibility is still a real problem for trade compliance. Many, if not most trade compliance practitioners, have problems with visibility into account and product master data, entry status, and overall oversight of customs and PGA interaction. As a result, they are spending a lot of time struggling to do their daily work routines. This lack of visibility is not surprising because, for the most part, we heard that they are working in environments which don’t allow them to manage or control the information they need into a useable format. Many companies are not able to easily run reports that provide the integrated insights they need to see what is happening with their import entries or their export filings. Most reasonably sophisticated companies are still relying on ACE for their basic operational trade compliance information.Many trade compliance practitioners have too little visibility, input, and control over Master Data. The enterprise systems their organizations are using are either lacking in trade compliance Master Data control or are too cumbersome to support it. In either case, this lack of Master Data management means that spreadsheets and word processing are still the way that Trade Compliance tries to manage this crucial activity. While spreadsheets are great at manipulating data and providing great looking reports they are, unfortunately, poor at ensuring data accuracy and the integrity of the reports. Without data accuracy, reporting and analytics is of poor quality and this is, more or less, the status of trade compliance reporting today.
A Discernible Shift in “C”- Level Interest
A final impression that I take away from this conference is that in more and more companies, senior levels of management are becoming aware of the importance of their Trade Compliance organization. This was by no means a tsunami but it is discernible.The overriding reason mentioned as to why senior management is more sensitive to the need for more trade compliance support is directly related to what is happening geopolitically. As the world is constantly shifting with respect to global trade, senior management is rapidly becoming sensitized of the associated trade risks. This heightened awareness in trade risk exposure is raising senior management’s understanding of the role Trade Compliance professionals play in helping the company maneuver its way through these chaotic times and mitigate the company’s risk. Where senior management is becoming more engaged, the trade compliance practitioners we talked with mentioned that their requests for additional support - be it manpower or technology - are being more seriously addressed. This does not mean immediate investment, but it does mean greater opportunity to make the case for trade compliance.