New Articles

HOW TO EXPORT TO THE UNITED STATES: 6 SIMPLE STEPS FOR SMEs

SMEs

HOW TO EXPORT TO THE UNITED STATES: 6 SIMPLE STEPS FOR SMEs

According to the Organization for Economic Cooperation and Development, International Trade Statistics 1, participation in exports remains largely led by large enterprises (250 or more employees) in industrialized countries. In developing countries, the story is the same, and only a small percentage of small and medium sized businesses export at all. The World Trade Organization (WTO) reports that SMEs in developing countries make up roughly 45%, on average, of a country’s Gross Domestic Product (WTO, 2016), but SMEs’ exports represent on average 7.6 per cent of total manufacturing sales, compared to 14.1 per cent in the case of large manufacturing firms (WTO, 2016).

If you want your small or medium-sized business to get a piece of the export pie, according to the OECD Trade Committee, there are a number of challenges to be overcome. These include everything from limited access to credit, insufficient use of technology, and lack of export experience, to border controls. The most significant challenge posed, remains learning the ins and outs of getting your product from your country to foreign markets in a cost effective manner. These tips can help your small business become better equipped to enter the exciting world of exports.

The first stage in export planning is to investigate the market and identify your reasons for exporting to customers.
First, determine demand. You need to know where in the U.S. your product is needed. If you sell bathing suits, better export to Florida and California than to Nebraska or Alaska.

Second, you’ll need access to buyers. Start with researching buyers on the Internet, use your local U.S. Chamber of Commerce as a first resource, followed by the Economic Officer in the U.S. Embassy or Consulate in your country. Then, watch for upcoming trade shows where your goods could be featured.

Next, either start selling directly on your own ecommerce platform (secure payment and delivery systems should be integrated), or build a relationship with an international trade agent, whom you trust to help you navigate state and city markets, regulations, and opportunities for you to sell your goods in the U.S. , either to wholesale distributors, or directly to retailers. Improved logistics channels, eCommerce, and free trade agreements make that possible.

Third, find out what, if any, tariffs or exemptions exist for your goods. If there are no trade agreements between your country and the U.S., exempting your goods from tariffs, you’ll need the help of a U.S. licensed Customs Broker. A U.S. Customs Broker will be familiar with the Harmonized Tariff Schedule of the United States (“HTSUS”), and help you classify your goods and determine the tariffs you’ll have to pay to the U.S. Customs and Border Patrol, before your goods can enter the United States.

The National Customs Brokers and Freight Forwarders Association of America can easily provide brokers in the state or region you’re targeting.

Fourth, once you’ve got a better understanding of your profit margin to determine how you’ll sell your goods in the export market, you may wish to consider how to potentially mitigate any risks that can occur while your goods are being shipped, or once your goods arrive at their destination and are with the buyer(s). There are payment risks, damage or destruction of goods risks, documentary risks with customs, and many others.

You may have access to a good trade and customs attorney in the originating country, but he or she may not be thoroughly familiar with U.S. trade compliance requirements. In that case, you may benefit from consulting with a U.S. international trade lawyer to learn how they can help you mitigate risks in exporting by intervening with customs on your behalf, managing disputes through a properly drafted contract, and putting you in touch with relevant agents for information on U.S. trade insurance and compliance with government regulations.

In the U.S., generally, a phone or email consultation with a reputable lawyer would be free. If they want you to pay to talk with them for a few minutes about your problem and find out if they can help you, then hang up and call another lawyer.

Fifth, you need to build a relationship with a reputable freight forwarder or consolidator, who will help you decide: whether to ship by air or by sea; what documents are required for the country you are exporting to; how to pack your products for shipment; label them, and insure them. Normally, the freight forwarder will take care of it all, for a premium, but beware of INCOTERMS (regulations that define the responsibilities of buyers and sellers involved in commercial trade).

You must have at least a basic understanding of them to comprehend the shipping documents your freight forwarder will have you sign, and to protect your rights and limit liability.

Sixth, yes exporting is exciting, but it’s also risky doing business across oceans and continents with buyers you don’t know and may never see. To that end, there are many export resources in the originating country that companies, small and large, can benefit from. Usually Chambers of Commerce are a good starting point. There are associations of American Chambers of Commerce in every region of the world; just check the American Chamber of Commerce online directory for the specific one in your region or country.

Your own government’s resources can usually also offer invaluable information and global networks, including relevant contacts in the U.S. This is particularly helpful if you have a problem that can be fixed by your government seeking the intervention of commercial or economic officers at the local U.S. embassy in your country (keep in mind though that the Embassy is meant to assist U.S. citizens and residents, not foreigners).

Further, your local manufacturers association(s) may have members who have exported in the past, and can share their expertise. Lastly, commercial banks and local Export-Import Banks can guide you on how to leverage export financing, and minimize your financial exposure, when transacting business with foreign buyers.

Against this backdrop, you can reduce the external challenges SMEs face in trading, and better manage the uncertainty inherent in doing business internationally, all while making a healthy profit and expanding to new markets.

Magda Theodate is an international trade attorney and Director of Global Executive Trade Consulting Ltd. She works as a senior consultant for international development agencies in lower and middle income countries, resolving project execution challenges affecting trade, procurement and governance. To learn more, please visit: www.globalexecutivetrade.com

global pepper

Global Pepper Market Is Expected to Reach 840K Tonnes by 2025

IndexBox has just published a new report: ‘World – Pepper – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The global pepper market revenue in 2018 is estimated at $4.1B, a decrease of -1.7% y-o-y. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). In general, pepper consumption continues to indicate a strong expansion. The most prominent rate of growth was recorded in 2011 when the market value increased by 26% against the previous year. The global pepper consumption peaked at $4.2B in 2017, and then declined slightly in the following year.

Consumption By Country

The countries with the highest volumes of pepper consumption in 2018 were Viet Nam (166K tonnes), India (86K tonnes) and the U.S. (68K tonnes), with a combined 41% share of global consumption. These countries were followed by Bulgaria, Indonesia, China, Singapore, Malaysia, Sri Lanka, Germany, the United Arab Emirates and the UK, which together accounted for a further 33%.

In value terms, Viet Nam ($904M), India ($506M) and the U.S. ($374M) constituted the countries with the highest levels of market value in 2018, with a combined 43% share of the global market. These countries were followed by Indonesia, Singapore, China, Malaysia, Bulgaria, Sri Lanka, the United Arab Emirates, Germany and the UK, which together accounted for a further 33%.

The countries with the highest levels of pepper per capita consumption in 2018 were Bulgaria (7,641 kg per 1000 persons), Singapore (5,288 kg per 1000 persons) and Viet Nam (1,724 kg per 1000 persons).

Market Forecast 2019-2025

Driven by increasing demand for pepper worldwide, the market is expected to continue an upward consumption trend over the next seven-year period. Market performance is forecast to decelerate, expanding with an anticipated CAGR of +1.2% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 840K tonnes by the end of 2025.

Production 2007-2018

In 2018, the amount of pepper produced worldwide stood at 752K tonnes, jumping by 5.1% against the previous year. In general, the total output indicated a conspicuous expansion from 2007 to 2018: its volume increased at an average annual rate of +3.2% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, pepper production increased by +55.4% against 2012 indices. The pace of growth was the most pronounced in 2016 with an increase of 11% against the previous year. Over the period under review, global pepper production reached its maximum volume in 2018 and is likely to continue its growth in the immediate term. The general positive trend in terms of pepper output was largely conditioned by a tangible increase of the harvested area and a resilient expansion in yield figures.

In value terms, pepper production totaled $3.8B in 2018 estimated in export prices. Over the period under review, pepper production continues to indicate a remarkable increase. The pace of growth appeared the most rapid in 2011 when production volume increased by 47% against the previous year. The global pepper production peaked at $4.6B in 2016; however, from 2017 to 2018, production remained at a lower figure.

Production By Country

The country with the largest volume of pepper production was Viet Nam (273K tonnes), comprising approx. 36% of total production. Moreover, pepper production in Viet Nam exceeded the figures recorded by the world’s second-largest producer, Indonesia (88K tonnes), threefold. The third position in this ranking was occupied by Brazil (80K tonnes), with a 11% share.

In Viet Nam, pepper production expanded at an average annual rate of +8.1% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Indonesia (+0.8% per year) and Brazil (+0.2% per year).

Harvested Area 2007-2018

In 2018, approx. 570K ha of pepper were harvested worldwide; stabilizing at the previous year. Overall, the pepper harvested area, however, continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2009 when harvested area increased by 8% against the previous year. The global pepper harvested area peaked at 622K ha in 2007; however, from 2008 to 2018, harvested area failed to regain its momentum.

Yield 2007-2018

Global average pepper yield amounted to 1.3 tonne per ha in 2018, surging by 4.8% against the previous year. In general, the yield indicated prominent growth from 2007 to 2018: its figure increased at an average annual rate of +4.0% over the last eleven-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, pepper yield increased by +53.3% against 2012 indices. The pace of growth appeared the most rapid in 2013 with an increase of 22% y-o-y. Over the period under review, the average pepper yield attained its maximum level in 2018 and is likely to continue its growth in the immediate term.

Exports 2007-2018

Global exports totaled 392K tonnes in 2018, picking up by 6.5% against the previous year. The total export volume increased at an average annual rate of +2.1% from 2007 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being recorded in certain years. The most prominent rate of growth was recorded in 2015 with an increase of 7.9% y-o-y. Over the period under review, global pepper exports attained their maximum at 398K tonnes in 2016; however, from 2017 to 2018, exports stood at a somewhat lower figure.

In value terms, pepper exports stood at $2B (IndexBox estimates) in 2018. Over the period under review, pepper exports continue to indicate strong growth. The growth pace was the most rapid in 2011 with an increase of 43% against the previous year. Over the period under review, global pepper exports reached their peak figure at $3.4B in 2015; however, from 2016 to 2018, exports failed to regain their momentum.

Exports by Country

Viet Nam represented the largest exporter of pepper in the world, with the volume of exports finishing at 142K tonnes, which was approx. 36% of total exports in 2018. It was distantly followed by Brazil (73K tonnes) and Indonesia (36K tonnes), together achieving a 28% share of total exports. India (17K tonnes), Germany (16K tonnes), Sri Lanka (15K tonnes), Malaysia (12K tonnes), Mexico (8.4K tonnes), the Netherlands (7.5K tonnes), France (6.8K tonnes) and the U.S. (6.8K tonnes) took a minor share of total exports.

From 2007 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by France, while the other global leaders experienced more modest paces of growth.

In value terms, Viet Nam ($743M) remains the largest pepper supplier worldwide, comprising 36% of global exports. The second position in the ranking was occupied by Brazil ($243M), with a 12% share of global exports. It was followed by Indonesia, with a 9.9% share.

In Viet Nam, pepper exports increased at an average annual rate of +9.6% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Brazil (+7.3% per year) and Indonesia (+2.9% per year).

Export Prices by Country

In 2018, the average pepper export price amounted to $5,214 per tonne, going down by -14.2% against the previous year. Over the period under review, the pepper export price, however, continues to indicate remarkable growth. The most prominent rate of growth was recorded in 2011 an increase of 51% y-o-y. The global export price peaked at $8,660 per tonne in 2015; however, from 2016 to 2018, export prices remained at a lower figure.

Prices varied noticeably by the country of origin; the country with the highest price was the Netherlands ($8,605 per tonne), while Mexico ($2,602 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by India, while the other global leaders experienced more modest paces of growth.

Imports 2007-2018

Global imports totaled 414K tonnes in 2018, picking up by 8.6% against the previous year. The total import volume increased at an average annual rate of +2.9% over the period from 2007 to 2018; the trend pattern remained relatively stable, with somewhat noticeable fluctuations being observed in certain years. The most prominent rate of growth was recorded in 2013 when imports increased by 9.8% y-o-y. Over the period under review, global pepper imports attained their maximum in 2018 and are likely to see steady growth in the near future.

In value terms, pepper imports amounted to $2.1B (IndexBox estimates) in 2018. Overall, pepper imports continue to indicate a strong expansion. The pace of growth was the most pronounced in 2011 when imports increased by 41% year-to-year. The global imports peaked at $3.3B in 2015; however, from 2016 to 2018, imports stood at a somewhat lower figure.

Imports by Country

In 2018, the U.S. (75K tonnes), distantly followed by Viet Nam (35K tonnes), Germany (32K tonnes) and India (31K tonnes) were the major importers of pepper, together creating 42% of total imports. The following importers – the United Arab Emirates (16K tonnes), the UK (13K tonnes), France (11K tonnes), the Netherlands (11K tonnes), Spain (10K tonnes), Japan (9.5K tonnes), Pakistan (8.2K tonnes) and Russia (8K tonnes) – together made up 21% of total imports.

Imports into the U.S. increased at an average annual rate of +1.5% from 2007 to 2018. At the same time, Viet Nam (+21.5%), India (+8.8%), the UK (+5.4%), the United Arab Emirates (+3.9%), Spain (+2.9%), Russia (+2.6%) and France (+2.0%) displayed positive paces of growth. Moreover, Viet Nam emerged as the fastest-growing importer in the world, with a CAGR of +21.5% from 2007-2018. Pakistan, Japan and Germany experienced a relatively flat trend pattern. By contrast, the Netherlands (-2.7%) illustrated a downward trend over the same period. From 2007 to 2018, the share of Viet Nam, India and the U.S. increased by +7.5%, +4.5% and +2.7% percentage points, while the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, the U.S. ($391M) constitutes the largest market for imported pepper worldwide, comprising 18% of global imports. The second position in the ranking was occupied by Germany ($188M), with a 8.9% share of global imports. It was followed by India, with a 7.8% share.

In the U.S., pepper imports increased at an average annual rate of +5.5% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Germany (+4.8% per year) and India (+14.1% per year).

Import Prices by Country

In 2018, the average pepper import price amounted to $5,122 per tonne, shrinking by -18.3% against the previous year. In general, the pepper import price, however, continues to indicate noticeable growth. The growth pace was the most rapid in 2011 an increase of 45% against the previous year. Over the period under review, the average import prices for pepper attained their peak figure at $8,550 per tonne in 2015; however, from 2016 to 2018, import prices remained at a lower figure.

Prices varied noticeably by the country of destination; the country with the highest price was the United Arab Emirates ($8,027 per tonne), while Viet Nam ($2,485 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by the United Arab Emirates, while the other global leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

Goods

Is Your Supply Chain Prepared for Potential U.S. Tariffs on EU Goods?

Transatlantic tariffs came closer to reality in recent months after the United States Trade Representative (USTR) proposed tariffs on a list of products from the European Union (EU). 

Unfortunately, even if you’ve already gone through something similar with goods imported from China, the same strategy may not be effective for the tariffs on EU goods. This is due in large part to the types of proposed commodities from the EU.

The good news is there are things you can do today to adjust your import strategy to maintain compliance while insulating your company from the proposed tariffs.

Up to $25 billion worth of EU goods at stake

The USTR announcements in April and July proposed tariffs targeting up to $25 billion worth of goods. This includes items such as new aircraft and aircraft parts, foods ranging from seafood and meat to cheese and pasta, wine and whiskey, and even ceramics and cleaning chemicals. 

To date, the USTR has only provided a preliminary commodity list for the proposed U.S. tariffs on EU goods. No percentages have been announced, leaving many to wonder if the tariffs will be manageable—in the 5-10% range—or more substantial, like the 25% tariffs applied to China imports. 

On top of the tariffs, when the French Senate announced a 3% tax on revenue from digital services earned in France, President Trump threatened a counter-tax on French wine. But it’s unclear if this tax will come to fruition or fizzle out—especially since the USTR’s tariff list already includes many types of wine. 

5 key questions to insulate your supply chain

Looking for the best way to prepare your business from the potential tariff increases? Answering these key questions may help you adapt and insulate your company. 

-Do you have a plan to cover the costs? 

You may not be able to avoid paying the tariffs, but there are various strategies you may consider to help cover their costs. 

While not ideal, you could increase prices to end consumers. It may not be feasible to recover the entire cost of an added tariff, but you can at least offset a small portion of the tariff this way.

You can also adjust the cost of the goods with suppliers and manufacturers to cover a portion of the tariff. Just remember: pricing changes still need to meet the valuation regulations with U.S. Customs and Border Protection (CBP). 

-Will you need to increase your customs bond? 

The smallest customs bond an importer can hold is $50,000. That used to be enough for many importers to cover generally 10% of the duties and taxes you expect to pay CBP. 

Unfortunately, as many importers from China are learning, a 25% tariff on products can quickly exceed your bond amount. And bond insufficiency can shut down all your imports while resulting in delays and added expenses. 

To help avoid bond insufficiency, consider any increased duty amounts in advance of your next bond renewal period. And don’t wait to do this until the last minute, because raising your customs bond with your surety company can take up to four weeks. 

-Do you re-export goods brought into the U.S.? 

Duty drawback programs can’t be used by every importer. But if you can take advantage of them, they can result in big savings for your company.

In fact, you can get back 99% of certain import duties, taxes, and fees on imported goods that you re-export out of the U.S. Just be aware that you still need to pay the duties up front. And you might need to wait up to two years to get your refund. 

-Are your product classifications current and accurate?

With potential tariffs looming, consider reviewing your product classifications and make sure they’re accurate. If you find an issue, discuss it with your broker or customs counsel to discuss how you can properly rectify the issue, and avoid penalties from doing it incorrectly.

And while we’re on the topic of product classifications, never change them to evade tariffs. CBP will be on the lookout for this kind of activity, and the penalties for noncompliance can be steep.

-Do you have the support you need?

Changing your customs brokers may not sound appealing, but ensuring they provide all the services you need to stay compliant should be your top priority when working with them.

Your provider should help make sure you pay the appropriate duty rates for your products. And they should have people and services available globally to support your freight wherever it is located throughout the world. 

Also, consider simplifying your support by working with one provider that offers not only customs brokerage and trade compliance services but also global ocean and air freight logistics services. 

If you only employ one strategy…

Discuss your import strategy with your customs attorney or customs compliance expert. Bringing in specialized expertise is the most effective way to analyze how these tariffs could affect your products, your supply chain, and your business. 

If you don’t yet have a customs broker who can meet all your needs in today’s changing environment, consider C.H. Robinson’s customs compliance services. With over 100 licensed customs brokers in North America, and a Trusted Advisor® approach, our experts are ready to help.

____________________________________________________________

Ben Bidwell serves as the Director of U.S. Customs at  C.H. Robinson

USMCA

How a Footnote in the USMCA Undermines Economic Liberty

House Democrats are holding up ratification of the U.S.-Mexico-Canada Agreement (USMCA) until U.S. Trade Representative Robert Lighthizer agrees to make some changes. While a number of the big concerns about the new NAFTA, such as enforcement, biologic drugs, and the implementation of Mexico’s labor laws have received a lot of attention, there is another issue that has flown under the radar, perhaps in part because it’s buried in a footnote.

Chapter 7 of the USMCA, “Customs Administration and Trade Facilitation,” includes a section on “Express Shipments.” These are goods of low or negligible value that are shipped by courier or express mail services in large volume. Think about that pair of shoes you just ordered from France. That’s an express shipment.

Because there are so many of these packages coming through customs facilities, and it’s such a burden to process them, most countries have what is called a de minimis threshold, that is a set value below which imported goods are both sales tax and duty free. The United States has the highest de minimis threshold in the world, allowing individuals and businesses to make purchases from abroad up to $800 with no duty or tax collected by customs.

As Gary Hufbauer, Euijin Jung, and Lucy Lu explain, high de minimis thresholds are not only good for consumers, who do not have to deal with the complexity and time delays in processing customs duties and sales tax on the things they buy, but also for small businesses, because of the importance of intermediate inputs, as well as cross-border sales for their profits.

As part of the USMCA, Canada and Mexico both raised their de minimis thresholds, which not only helps small businesses in the United States but also consumers in both countries as well. Canada raised its de minimis threshold to $150 CAD from its original $20 CAD limit, and sales tax cannot be collected until the value of the product reaches at least $40 CAD. Mexico increased its de minimis from $50 USD to $100 USD, with tax free de minimis on $50 USD.

While the U.S. did not alter its de minimis threshold in USMCA, there is a curious footnote in Chapter 7 that should be cause for concern. It reads:

Notwithstanding the amounts set out under this subparagraph, a Party may impose a reciprocal amount that is lower for shipments from another Party if the amount provided for under that other Party’s law is lower than that of the Party.

Now we are all well aware of this administration’s distorted concept of reciprocity, and they seem to be applying it here as well. What this footnote suggests is that the U.S. could potentially lower its de minimis threshold to match what Canada or Mexico have agreed to. To put this in perspective, in 2016, the United States increased its de minimis level to $800 from $200. This footnote would allow the de minimis to drop even below the 2016 limit. This is not only an attack on economic liberty for American citizens, but it would be an enormous step backward on a policy where the United States has been a leader for liberalization.

Back in June, Robert Lighthizer was directly asked about this footnote by multiple members of the House Ways and Means Committee during a hearing on the 2019 trade policy agenda. While a number of excellent questions were raised, I highlight two below. First, Rep. David Schweikert (R-AZ), noting bipartisan support for the current de minimis threshold, stated:

In 2016, Congress raised the U.S. de minimis threshold to $800 in the bipartisan Trade Facilitation and Trade Enforcement Act. This change enjoys wide bipartisan support in Congress and throughout the e-commerce landscape. The current threshold benefits millions of American small businesses, across all sectors, including manufacturers, who rely on low-value inputs for the production of U.S. exports. As a result, American small businesses now enjoy more rapid border clearance, reduced complexities and red tape, and lower logistics costs, while American consumers benefit through faster, less expensive access to a wider range of goods.

Given the benefits of the current de minimis threshold to American small businesses and the U.S. economy as a whole, and that Congress legislated on the U.S. de minimis level only a few years ago, I remain extremely concerned over the Draft Statement of Administrative Action (SAA) on the U.S.- Mexico-Canada Agreement (USMCA) transmitted to Congress on May 30. This draft SAA includes language suggesting that you may seek changes to the U.S. de minimisthreshold through the USMCA implementing bill. As you know, last December, Rep. Kind and I led a bipartisan letter urging you not to seek to lower the U.S. de minimis threshold. My position has not changed.

I strongly oppose including any language in the USMCA implementing bill that would lower the U.S. de minimis level or that would delegate this authority to the Executive Branch. As you work with Congress to finalize the USMCA implementing legislation, will you commit to not seeking authority to lower the U.S. de minimis threshold?

Rep. Daniel Kildee (D-MI) also emphasized how this change would undermine Congress’s authority to regulate commerce:

In 2016, Congress raised the U.S. de minimis threshold to $800 in the bipartisan Trade Facilitation and Trade Enforcement Act. The current threshold benefits millions of American small businesses, across all sectors, including manufacturers, who rely on low-value inputs for the production of U.S. exports. As a result, American small businesses now enjoy more rapid border clearance, reduced complexities and red tape, and lower logistics costs, while American consumers benefit through faster, less expensive access to a wider range of goods.

Given the benefits of the current de minimis threshold to American small businesses and the U.S. economy as a whole, I was curious to see the Draft Statement of Administrative Action on the U.S. Mexico Canada (USMCA) includes language that you may seek authority for the Executive Branch to set U.S. de minimis thresholds. Congress must maintain its Constitutional authority to set tariffs – including de minimis thresholds.

As you work with Congress to finalize the USMCA implementing legislation, can you commit not to seek the derogation or authority to derogate from the current U.S. de minimis threshold?

Amb. Lighthizer’s comments to all questions on the de minimis threshold remained the same:

As noted in the Administration’s submission to Congress on changes to existing law and the draft Statement of Administrative Action, we identified this as an issue for consultation with the Committee on Ways and Means of the House and the Committee on Finance of the Senate. These consultations are underway. I look forward to continuing those conversations with you and other Members on this important issue.

Congress should continue to press the administration for the removal of this footnote from the USMCA. It may seem like a small part of the broader USMCA debate, but Congress should not be fooled. This is representative of the broader attempts by the executive branch under this administration to expand its power into areas where the Constitution gives Congress express authority. Congress should not give up its authority to regulate foreign commerce, and should actively push to rein in the abuses of the executive in trade policy. By pushing for this on de minimis, we can get one step closer to ensuring that the Trump administration’s trade policy remains as its own small footnote in the history of U.S. trade policy.

__________________________________________________________-

Inu Manak is a visiting scholar at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies.

blockchain

BLOCKCHAIN COULD REPLACE MOUNDS OF PAPER AT THE BORDER

This is the third in a three-part series by Christine McDaniel for TradeVistas on how blockchain technologies will play an increasing role in international trade.

What’s Even Better Than No Tariffs?

Smoother and faster customs procedures could boost global trade volumes and economic output even more than if governments were to eliminate the remaining tariffs throughout the world – up to six times according to an estimate by the World Bank.

Blockchain is a promising technology that, if widely adopted by shippers and customs agencies, could reduce the current mounds of paperwork and costs associated with import and export licenses, cargo and shipping documents, and customs declarations.

Below the Snazzy Surface of Trade Policy

Trade agreements work when the people who want to buy and sell across borders can use them. Engaging in international trade transactions requires diving into the rules and regulations of international customs processes. Businesses either have someone in-house to handle this or they hire companies whose business it is to manage these processes.

Moving goods through the customs process means preparing the relevant paperwork for import or export at each step in the process. The paperwork at each step must be confirmed and verified, sometimes separately by different people. These procedures — in rich and poor countries alike — can be complex, opaque and laden with inefficiencies that raise costs and cause delays at best. At worst, less automated processes can leave the door open to corruption and security breaches.

paperwork in shipping

Trade policymakers have increasingly focused on simplifying and modernizing customs procedures — a policy approach commonly known as “trade facilitation.” Nearly all modern free trade agreements have a trade facilitation chapter and the World Trade Organization has an entire Trade Facilitation Agreement devoted to eliminating red tape at national borders to streamline the global movement of goods.

Too Much Paperwork

The international shipping industry carries 90 percent of the world’s trade in goods but is surprisingly dependent on paper documentation. In a New York Times article, Danish shipping company Maersk commented that tracking containers is straightforward. It’s the “mountains of paperwork that go with each container” that slow down the process.

A shipping container can spend significant time just waiting for someone to cross the t’s and dot the i’s on the paperwork. Delays pose real costs to traders and represent a deadweight loss of resources that could have been spent elsewhere in a more productive manner. The cost of handling documentation is so high that it can be even more expensive than the cost of transporting the actual shipping containers.

Beginning in 2014, Maersk began tracking specific goods such as avocados and cut flowers to determine the true weight of compliance costs and intermediation. The company discovered that a single container moving from Africa to Europe required nearly 200 communications and the verification and approval of more than 30 organizations involved in customs, tax and health-related matters. Maersk’s office in Kenya has storage rooms filled from floor to ceiling with paper records dating back to 2014.

single container paperwork v2

Lost Opportunities

Inefficiencies in customs processes create chain reactions, extending the costs and inefficiencies throughout the transportation industry and all the way to the consumer. In just one example, as many as 1,500 trucks might be lined up on a given day on both sides of the critical border crossing between Bangladesh and India. Many trucks wait up to five days before crossing. Examples like this are not hard to find in developing countries.

Delays for perishable items are painfully costly for traders, but also for consumers. Economist Lan Liu and economist and horticultural scientist Chengyan Yue examinedlettuce and apple imports in 183 countries. They determined that reducing delays from two days to one would increase lettuce imports in those countries by around 35 percent, or an additional 504,714 tons of lettuce, increasing in world consumer welfare by $2.1 billion. The same improvement would increase apple imports by 15 percent, enabling shipment of an additional 731,937 tons and increasing consumer welfare by around $1.1 billion.

Complexity Makes Corruption Easier

Fraud constitutes a major threat to the customs process. Fraudulent behavior can involve the forgery of bills of lading and other export documentation such as certifications of origin. A fraudulent shipper could claim “lost” goods, underreport the cargo, and steal the difference. Or a shipper could misrepresent the amount or quality of shipped goods and pay less than the required amount for their imports.

Fraud can be perpetrated by a shipper, by the receiver of goods, a customs official, or an interloping third party. The greater the complexity of customs procedures and the more discretion granted to customs officials, the more likely corruption will be present at the border, creating both risk and costs for companies working to avoid corruption.

Indeed, corruption acts as a “hidden tariff” for companies and reduces legitimate customs revenue for governments. The World Customs Organization estimates the loss of revenue caused by customs-related corruption to be at least $2 billion.

Blockchain Makes Corruption Harder

Blockchain is a digital distributed ledger that is secure by design. Each transaction in the shipping process is uploaded to the chain if (and only if) it is agreed upon by the other users. It is nearly impossible to make a fraudulent claim or edit past transactions without the approval of the other users in the network.

Blockchain could discourage corruption by simplifying procedures and reducing the number of government offices and officials involved in each transaction. Each transaction can also be audited in real time, allowing users to see exactly when and where disputes arise and exactly what the discrepancies are.

This level of transparency enables participants in the network to hold each other accountable for mistakes or purposeful deception. Though blockchain does not prevent false information from being entered into the system, it does reduce opportunities for the original information to be corrupted by intermediaries involved in the shipping process. Rather than parties relying on the good faith of shippers and customs agents, blockchain greater assurance of the integrity of each transactional record.

Blockchain technology in customs and border-crossing procedures could also be used to prevent circumvention and transshipment—that is, when shippers send goods to a neighboring country before the destination country in an attempt to avoid tariffs on goods from the real country of origin. The importer ends up liable for duties and penalties. (For example, some exporters from China are now sending finished products through Vietnam to avoid new U.S. tariffs on goods from China.)

All In on Blockchain?

The use of blockchain in customs processing is still nascent. An advisory group for U.S. Customs and Border Protection is broadly exploring the role of emerging technologies like blockchain.

IBM and Maersk have partnered to demonstrate how blockchain can simplify shipping. Their plan would allow all parties involved in a container’s shipment to observe and track the container from inception to endpoint. For example, after a customs agent verifies the contents of a container, they can immediately upload information to the blockchain with a unique digital fingerprint that visible to all other users. The ease of access to information throughout the blockchain system reduces time-consuming correspondence among the parties.

For all this to work, customs agencies, shippers and suppliers will have to cooperate to integrate blockchain technology along the supply chain and across borders. By reducing time and cost, blockchain could be a boon to the majority of honest global shippers. By providing greater accuracy and transparency, blockchain would be a bust for dishonest brokers who manipulate the current inefficiencies in customs procedures to commit fraud or gain from corruption.

ChristineMcDaniel

Christine McDaniel a former senior economist with the White House Council of Economic Advisers and deputy assistant Treasury secretary for economic policy, is a senior research fellow with the Mercatus Center at George Mason University.

 

This article originally appeared on TradeVistas.org. Republished with permission.

Global Customs Platform “RIISE” Showcased in Uzbekistan & Romania

Disruptive global customs platform RIISE was announced and released this week by PCFC subsidiary, Customs World. The in-house customs project was presented to Uzbekistani officials and received positive feedback for its automation capabilities and elimination of traditional, time consuming trade bottlenecks.

“This disruptive technical and functional CMS (Customs Management System) and the trade enabling platform takes the lessons and builds on the learnings and 100 years of distinctive experience and practices of Dubai Customs” Nadya Abdullah Al Kamali, CEO of Customs World said. “The system recognizes the threats and challenges of today and provides the levels of border integrity that governments and their communities expect in such a way that sets world benchmarks for cross border trade.”

The plug-and-play solution is equipped to meet specific needs of customers and utilizes technology such as AI and machine learning to simplify and streamline decision-making and operations. Additionally, the open-source system eliminates the need for third party license and is predicted to improve rankings on the global indexes, increase revenues, facilitate trade, secure borders and the supply chain for countries that utilize the platform.

“RIISE is built with a vision to be the number 1 partner of choice for
governments to protect their borders and facilitate trade following the standards and requirements of the World Trade Organization, SAFE and Kyoto. It is a disruptive option to a stale market currently monopolized by companies with a 1990’s mentality dumping old technology and re-branding old processes.”

trade

Realign Your Trade Compliance Program with a Midyear Review

The complexities of importing and exporting goods in the United States means it’s easy to overlook process changes and forget to make updates in a timely manner. However, if not caught quickly, outdated information or imprecise processes can add unnecessary fees and penalties. If left to accrue over the course of a full year, these costs can be staggering.

That’s why I recommend a midyear customs review. If something is off base with your customs compliance program you can rapidly realign as needed. Use C.H. Robinson’s comprehensive checklist to guide your own midyear customs process review.

Midyear customs clearance checklist

1. Review customs broker powers of attorney

Revisit powers of attorney (POAs) and revoke any from U.S. customs brokers with whom you no longer wish to work. Remember, any POA you extend should have an expiration period, providing a natural time to review. If you aren’t sure of existing POAs, you can see all U.S. customs brokers transacting business on your behalf by requesting your Importer Trade Activity (ITRAC) data (see #11)

2. Update names and addresses on file with U.S. Customs

U.S. Customs and Border Protection (CBP) uses contact information from CBP Form 5106 to communicate with Importers of Record. If you have recently moved, or have not reviewed the information listed on CBP Form 5106 in a while, re-validate the information you have on file so you will receive all pertinent and time-sensitive correspondences the CBP sends.

3. Ensure bond amount is sufficient

If your import activity has changed, or you anticipate a large increase in activity during the remaining half of the year, your bond may need updating. CBP can determine your bond is insufficient and may require you to increase your bond amount. A midyear review and update is a proactive move.

4. Consider changing listing multiple principals on the same bond

Having multiple entities on one bond can bring cost savings. But be sure to decide if the risks are worth the reward. When sharing a bond, each entity shares liability if CBP issues a demand against the bond. In addition, if any entities terminate the bond, this can disrupt the other entities within the bond.

5. Check customs broker instructions

Review and document any customs broker instructions you send to U.S. customs brokers regularly—from Harmonized Tariff Schedule (HTS) classification rules and related party verification instructions to anti-dumping/countervailing duty instructions—to ensure your customs broker declares entities to the CBP according to your wishes.

6. Request updated certificates of origin

Be proactive with foreign suppliers and obtain updated annual blanket certificates of origin (COO) for any program in which you’d like to claim preference. And provide any updated COOs to your U.S. customs broker. Not obtaining COOs in a timely fashion may lead to unnecessary annual duty costs.

7. Update free trade agreement instructions

Revise any instructions pertaining to free trade agreements (FTAs) so your U.S. customs broker has proper direction about how you would like to file entries that may be eligible for FTAs.

8. Obtain your manufacturer’s affidavits

If you utilize a U.S. goods return program, found under Heading 9801, be sure you have obtained your manufacturer’s affidavits for the rest of the year. Share these affidavits with your U.S. customs broker and record them within any customs broker instructions.

9. Review anti-dumping/countervailing duties products

The CBP can investigate any potential anti-dumping/countervailing duties (AD/CVD) evasion allegations. Accurate case numbers, rates, etc. are critical for reporting upon entry. Even if you are disclaiming AD/CVD, document your product details internally, explaining why your product does not fall within the scope of the order.

10. Provide reconciliation flagging instructions to U.S. customs broker

If you are a reconciliation participant, approved by CBP, flagging of entries is the responsibility of the importer. Now is the time to send your U.S. customs broker written direction with any flagging instructions you would like established or changed.

11. Request import activity records from CBP

ITRAC provides a wealth of information you can use to create or improve your import compliance program. Likely, you’ll need tools, like C.H. Robinson’s Global Trade Reports®, to transform the raw ITRAC data into user-friendly dashboards and reports.

12. Sign up for the ACE Portal

The ACE Secure Data Portal is a powerful way to manage trade compliance programs. This powerful tool enables you to receive paperless notifications from CBP, monitor your brokers, audit entries in real time, and much more.

13. Request export activity data

Similar to ITRAC data for import activity, request your Electronic Export Information (EEI) from the Census Bureau, Foreign Trade Division. If you are the filer in the Automated Export System (AES) using the ACE Export Portal, you can review your EEI on a regular basis.

14. Check U.S. Import HTS Classification and Export Classification

Review and communicate any updates to your HTS Classification Database and your Export Schedule B Number to proper stakeholders—both internally and externally.

15. Reduce liability with marine cargo insurance

Steamship lines and air cargo providers have limited legal and financial responsibility for international cargo. Marine cargo insurance plans can reduce your company’s financial exposure and bring new efficiencies.

16. Protect trademark and trade names

Make sure the CBP has any and all of your trademarks and trade names protected and recorded. This allows CBP to help you combat potential counterfeit products or infringement.

17. Request manifest confidential treatment

You can request confidential treatment of inward and outward manifest information. However, note that there are mandatory biannual renewal requirements. In addition, account for all possible variations of names within your request.

18. Review your denied party screening program

Look at which parties you are screening, and how often. This can ensure your program is appropriate for your current business model and bring potential risks to your attention.

19. Perform internal and external training

Regularly schedule time to ensure adequate training is happening with appropriate stakeholders. This keeps all parties, especially new employees, up to date with changes.

20. Address priority trade issues

Be sure that your compliance program addresses each one of the CBP’s initiatives to mitigate the risks of priority trade issues.

Smooth customs clearance doesn’t just happen

Careful planning and regular reviews of your customs processes are critical components to a strong trade compliance program.

If a midyear review seems unfeasible or this list seems daunting to conduct all at once, consider bringing in an outside expert like C.H. Robinson to guide you through the process. The most important part is to ensure you review, update, and communicate any changes to these areas of your compliance program on a consistent basis.

In an Unclear International Trade Environment, Tariff Forecasting Provides Answers

If there’s one thing we can say with a fair amount of certainty amid the rapidly shifting priorities of the U.S. government’s current administration, it’s that tariffs appear to be their preferred international trade tactic. Though customs duties have always been a part of any worldwide shipping equation, their renewed prominence has the potential to create serious (and expensive) headaches for companies that are not proactively assessing their supply chains and goods classifications.

To combat this, cut through the confusion, and stay ahead of changing customs regulations, perceptive businesses are turning to a new data-driven analysis method offered by some logistics providers: tariff forecasting.

How tariff forecasting works

As the U.S. government announces lists of new tariffs or changes to existing tariffs, the delay between announcement and implementation offers a window of opportunity for immediate action. Beyond merely issuing client advisories detailing the impending impacts, savvy providers use historical shipment data to predict what their customers’ actual cost ramifications will be once the new or altered tariffs come into force.

Essentially, providers will analyze what shippers imported in the past six, twelve, or eighteen months to calculate what the total duty would have been on that historical cargo, had the approaching tariffs been in place during those times. Then, using information about upcoming shipments and business intelligence about a company’s importing patterns and cadences, providers can automatically project the additional costs that newly announced tariff changes will impose on importers.

Understanding future customs impacts today

When customs brokerage and trade compliance services originate from the same company that also offers global air and ocean freight logistics services—like with C.H. Robinson—customers benefit from their provider’s ability to synthesize that information and provide innovative insights.

As a result, importers gain true visibility to their incremental costs, eliminating the manual guesswork and uncertainty that changing tariffs can create. With concrete data on how changed tariffs would affect their bottom line, shippers are in a better position to reallocate resources or shift strategies before they experience impacts. Rather than merely react, businesses that use tariff forecasting open new possibilities and solutions for taking charge of the international trade situation, mitigating consequences, and preserving their margins.

But more than just easily highlighting anticipated duties on a shipper’s impending imports, forecasting offers new opportunities for businesses to rethink their broad importing strategy.

A chance to reconsider customs importing strategies

Because tariffs apply to particular countries, classes, and commodities, seeing duties’ specific impacts can spur new conversations about the best ways to declare imports. This often involves revisiting the basics of customs enforcement and asking holistic questions that may have previously slipped under the radar: Do our goods have the right tariff number/classification, or are they misclassified? Are our imports’ countries of origin correct? Are we properly declaring value?

With the rise in tariffs bringing renewed scrutiny to these compliance considerations, revisiting the customs process may suggest fresh ways for companies to keep their costs down. Here, providers’ modeling can also offer perspective on what would be the current or future impacts of changing strategies, helping importers project and evaluate the consequences of different courses of action to adapt to tariff volatility.

Additional opportunities around exclusions

Providers’ access to importers’ shipment information also allows them to provide valuable services surrounding tariff exclusions.

When the U.S. government announces that currently active tariffs will be reduced or suspended, providers can “invert” their tariff forecasting, using their customers’ historical information to quickly locate past shipments that were charged duties but—under upcoming cancellations—would not have been had they shipped later. With this data, providers’ local experts can approach U.S. Customs on their customers’ behalf to request refunds, saving importers time and money.

That means whether tariffs are coming or going, good logistics providers, like C.H. Robinson, proactively combine their experience and scale with the vast amounts of customs data they submit for their customers to create an information advantage that helps deliver better outcomes.

Staying prepared in a volatile trade environment

With all the politics and personality that surrounds U.S. tariffs and economic policy, seeing through the rhetoric and determining concrete impacts can be a real challenge. But doing so is essential for companies to remain in compliance and avoid unexpected, unpleasant increases in costs. Tariff forecasting is a proactive and automatic way some providers leverage their routine business with customers to provide additional insights and value-added services that keep companies ahead of changes, putting importers in better positions to make crucial decisions.

In an unclear global trade environment, it’s a powerful tool that can provide shippers some much-needed, tangible reliability.

GTKonnect Sets the Bar Higher with Global Trade Management Platform

“Sometime last week, I was chatting with a long-term customer about our recent rebranding. She asked me why we had the tagline, “Our goal is to drive your Global Trade success?” And this was my explanation, “We have all been observing the constant changes that have been happening with global trade in recent times. Brexit, US-China tariffs on each other, the US pulling out of the Trans-Pacific Partnership (TPP) trade deal, NAFTA renegotiations and more. More and more businesses now have a global footprint and such economic and political decisions have a major impact on global trade. Compliance rules and trade regulations are changing rapidly, and businesses cannot afford to adapt a reactive stance to Global Trade Management (GTM) any longer. They need to be armed with information and keep pace with the changing trade environment to stay ahead of the pack. Protection and polarization are becoming more relevant in the existing political and economic conditions and trade partnerships are being altered more often.”

“Businesses constantly need to keep watching baseline outcomes and be prepared with content relevant to changing compliance rules. For instance, vehicle manufacturing companies might require some percentage of the components to be made locally and due to a broken partnership, businesses might not fall under the same compliance rules as before. While adherence might appear to be a stumbling block, free trade zones could be an option to address the concern and optimize costs at the same time. Irrespective of the compliance regulation, and the possible solutions, businesses can stay ahead and reach out for success only if they lead with content. In the current changing GTM environment, additionally, businesses need to be proactive and collaborative. GTKonnect offers solutions to bridge these gaps and empowers businesses to achieve GTM success. And that explains the reason for our new tagline.”

“Let me now give you a wider perspective that places the current GTM trends in context. Global trade professionals have stayed in the background for very many years, only making sure the business met compliance regulations, and not influencing business decisions for the most part. The tide is turning now and due to the changing political and economic global climate, company CEOs are now consulting global trade professionals on new regulations and trade policies. On the one hand, countries are approaching trade with a very protective and conservative outlook and drawing up new regulations based on this approach. These are reflecting in terms of control rates, tariff rates, retaliation and other stringent limitations. On the other hand, they are also aiming at expanding their global trading presence, looking to formulate agreements and seeking new marketing opportunities.”

“Businesses are now compelled to keep an eye on the wider global trade scenario along with the impact on their costs and efficiency. However, many companies have not yet adapted this two-pronged approach and are lacking the information and tools to be successful in GTM. Data has to be proactive and global trade professionals need to be aware of the changes and stay in step with the top management’s needs. In order to do this, they must be equipped with the latest information, stay connected with industry experts who can offer advice on the latest developments and take advantage of the cost savings and opportunities that are available. A mix of the right tools, content to power the tools and the ability to collaborate can help the business remain competitive and lead to the right decisions in GTM. Let’s also not forget that any information on global trade, and access to expert advice tend to be expensive.”

“Businesses vary in their capabilities vastly, some being technologically well-equipped and others not so much, but all of them require the right content and information that is readily available on demand, at a reasonable cost. GTKonnect has been listening to customers and having observed these needs in the context of global trends in GTM, came up with the iKonnect+ feature to connect the dots. Harmonized Tariff Schedule (HTS), dumping case details, import/export procedures and customs office locations are a few factors for which content is difficult to find. iKonnect+ is a single content platform that helps source all the information in one place, without added costs. The first social platform of its kind in the GTM space, the tool helps global trade professionals connect with a community that can offer expert advice and help develop contacts in the global trade arena.”

“No matter what rules and trade partnerships change, a business’ preparedness to adapt to global trade changes and trends makes it efficient and successful. And GTKonnect is here to help businesses achieve success in GTM.”

Find out how we can help you achieve GTM success.

Anand Raghavendran is GTKonnect’s President & CEO.

What to Consider when Planning for the Post-Brexit Period

The past weeks have seen a flurry of parliamentary activity in London, none of which has yielded any more clarity regarding the status of the UK’s membership in or relationship with the European Union. At time of writing, British lawmakers have twice voted down a proposed Brexit deal that EU officials have said is non-negotiable, and subsequently voted against leaving the EU without a deal.

Even in the likely event the EU agrees to delay the Brexit deadline, the future of Brexit remains very much in question, as Britain’s divided Parliament won’t be any more likely in the coming months to reach consensus than European officials are likely to re-open negotiations.

The innocent bystanders, of course, are the countless businesses on both sides of the English Channel, which have hitherto relied on seamless trade between the two entities, and which are increasingly reconsidering their relationships with suppliers and vendors across what has the potential to become a hard border.

Unprepared for Brexit

While the impending Brexit deadline has generated expected urgency in Britain’s parliament, the inevitability of Brexit has been known for nearly three years. Yet, as it stands today, many businesses are unprepared for the very real possibility of a hard Brexit. In fact, a recent report in the Wall Street Journal, citing a study by the Chartered Institute of Procurement & Supply (CIPS), notes only 40 percent of British businesses would be prepared to comply with a new customs compliance regime.

That’s a daunting number and serves as a call to action for those who have yet to prepare for Brexit’s rapid approach. Should a hard Brexit occur, it will serve as much more than a milestone; it will turn Britain’s customs regime on its head, sowing confusion and uncertainty that will inevitably result in disruption to supply chains, administrative headaches and unexpected costs. Industries heavily integrated with European supply chains, such as aerospace, pharma, food manufacturing and autos will face acute disruption.

Increasing Landed Costs

Perhaps the most urgent consideration for those who engage in trade will be the spike in associated landed costs. In the event of a hard Brexit, the current European customs regime will cease to apply to imports. The immediate effect will be the application of tariffs and Value-Added Taxes (VATs). Those tariffs will be based on Most Favored Nation (MFN) rates, which will vary by product and could be quite substantial. While the British government has already stated that, in the event of a hard Brexit, it plans to waive seven percent more tariffs than which  currently exist, VATs will still apply as will tariffs on virtually all imports from non-EU origins. That includes countries with which the EU currently maintains free trade deals, such as the Comprehensive and Economic Trade Agreement (CETA) recently signed between the EU and Canada.

Compliance (New customs regime)

While tariffs for EU imports may be reduced for the most part, customs declarations will still be required. This is a critical development. Given that approximately half of the UK’s imports come from the EU, and the EU has several trade agreements with key trading partners, there’s been little need for customs declarations in the UK to this point. However, after Brexit, the number of customs declarations is estimated to increase almost 400 percent (from 55 million to 205 million) at a cost of approximately £6.5billion or USD $9.1 billion to businesses. In addition, there will be 180,000 British business who will be filing a customs declaration for the first time, while those who have already been filing declarations will need to adjust to a new regime of customs classification.

The importance of correctly classifying these cross border movements cannot be overstated. In a best-case scenario, such as declarations with missing information, importers will face delays at UK border crossings, which are already anticipated to be backlogged. In a worst-case scenario in which goods are misclassified, importers may face retroactive payments on top of financial penalties and – in extreme cases – lose their authorizations to import.

Border Delays

According to CIPS, 10 percent of UK businesses could lose EU business if there are delays at the border, and about 20 percent will see their EU buyers demand discounts for delays of more than a day.

The organization notes 38 percent of EU businesses have already changed suppliers because of Brexit and up to 60 percent of EU businesses would look to switch suppliers if border delays were to extend to two weeks or more.

Delays are almost inevitable given the more robust customs administration requirements. Today, tractor trailers pass through the UK-EU border without stopping. At the Port of Dover, the UK’s busiest and closest port to mainland Europe, some 17,000 tractor trailers pass through on a daily basis with only about two percent being stopped. After Brexit, almost all of them are likely to be stopped. Even if that stop is only for a few minutes, it’s going to result in a significant backlog of transports.

In short, importers into the UK and exporters out of the UK will need to factor in additional time in transit and set expectations with their trade partners on the other side of the English Channel.

Preparation is Key

Given the shrinking time window for preparation, businesses that haven’t done so already should be working with their trade services partners – carriers, freight forwarders, trade lawyers and consultants and customs brokers – to ensure they’re able to minimize the negative impact of Brexit on their trade activity.

The UK’s official leave from the EU may very well be imminent, or potentially months or even more than a year away, but given the consequences of inaction, getting prepared late is still better than not being prepared at all.

Mike Wilder is vice president of Managed Services at trade services firm Livingston International. He has 30 years of experience in trade compliance. He can be reached at mwilder@livingstonintl.com.

David Merritt is a director in the Global Trade Consulting division of trade services firm Livingston International. He can be reached at dmerritt@livingstonintl.com.