Given the new opportunities the new free trade agreements with Colombia, Panama, and South Korea provide small and midsize companies, you might want to consider this question: Does your current IT software have the right stuff to help you trade on a global scale?
Last October, the House and Senate and President approved three trade pacts with Colombia, Panama, and South Korea. In general these agreements will lower or eliminate tariffs that American exporters face in the three countries. They also take steps to better protect intellectual property and improve access for American investors in those countries. According to a recent assessment by the staff of the U.S. International Trade Commission, the agreements are expected to boost exports by more than $13 billion.
For small and medium enterprises, this represents a tremendous opportunity to enter new markets. For example, the Korean agreement, known as KORUS FTA, would immediately eliminate or phase out tariffs and quotas on a broad range of agricultural products, with almost two-thirds (by value) of Korea’s agriculture imports from the United States becoming duty free upon entry into force. It would also open Korea’s services market to American companies, supporting jobs for American workers in sectors ranging from delivery and telecommunications services to education and health care services. The other industry-specific opportunities of these agreements can be found at http://trade.gov/fta/.
Most ERPs provide functionality for basics like inbound and outbound logistics, inventory and warehouse management, but this may not be enough for global trade. IT software system(s) should provide the right mechanisms to ensure that all parties involved in cross-border trade meet their contractual obligations and help mitigate financial risks while trading on a global scale. You would do well to assess your current ERP and IT systems for the following:
To manage cross-border, cross-currency, cross-language trading, your IT system should tie together all critical steps of a transaction with all the right the people in your company – like sales administrator, export manager, import manager, warehouse clerk, billing administrator, purchasing manager, service agent, and quality manager. It should also facilitate electronic communication with government IT systems to streamline transactions so your business gains a sustainable competitive advantage. It should do this on one integrated technology platform so nothing is “lost in translation.”
Trade preference management
Trade Preference Management determines the eligibility of products for reduced import duty rates. Eligibility is determined using content-based rules-of-origin detailed in preferential trade agreements between trading partners’ countries. Involving time-consuming vendor-declaration gathering, complex product-content origin analyses, and sophisticated numerical data processing algorithms, preference determination is costly, error-prone, and risky when done manually or without the aid of a purpose-built solution. Check to see if your solution automates this process, enabling you to claim duty reductions and comply with your customer’s need for vital product origin certification.
Your IT systems should help you manage the complete logistical outbound supply chain from a trade compliance and customs perspective. The services from your ERP and any trade services add-ons should be used along the outbound supply chain to accelerate, automate, and secure your trading processes. Trade compliance can be ensured through specific services like sanctioned party list screening, export control and embargo check, which need to be flexibly assigned to every part of the supply chain. Your systems should automate and expedite the export-related customs processes by collecting required data from various areas of the company and exchanging the information with customs authorities in the right format and at the right point of time.
Special customs procedures
Your IT system should support the complex customs procedures so you can get substantial savings on duties, taxes, and customs fees for importers and exporters. To support these procedures, a good trade services add-on will provide comprehensive integration into the core ERP production and logistics processes by automating the tracking of the inventory of materials and their components for customs purposes. Examples of these special customs procedures include Bonded Warehouses, Outward Processing Relief and Inward Processing Relief.
Small and midsize enterprises can achieve higher profits from bottom-line cost savings delivered by software. The right solution can help you eliminate costly fines and penalties of non-compliance. It can help you expedite customs clearance, reduce buffer stock and improve customer service levels by managing end-to-end trade processes. Additionally, the right IT solution helps improve competitiveness in a global marketplace through reduced duty rates by helping companies use the benefits of regional trade preference agreements.