What is Trade Compliance?
Companies engaged in international trade need to follow various rules (including laws, technical standards, and regulations) in their industries, in their home countries, and in the countries where the goods are being imported or exported to.
Trade Compliance consists in reviewing the foreign trade procedures adopted by a company to ensure that they are in compliance with the legal rules applicable to a given product or service. Often, it is necessary to ensure that there is also compliance with regulations at earlier stages of the production chain.
Work to be developed in Trade Compliance
The work is carried out by lawyers specialized in international trade and can be divided into a few stages, as follows:
- Identify the risks that importers and/or exporters face, which may vary according to the raw materials used, the type of product, the tax classification adopted, and even the nature of the sales transaction;
- Proposed actions for risk management, which will include the establishment of effective internal controls in the practices and in the procedures adopted by different areas of the company, such as accounting, commercial department and legal department; and
- Conducting periodic reviews of compliance in the proceedings adopted in various areas of the company.
Advantages of Trade Compliance
Having a Trade Compliance program in which a specialized team closely monitors the performance of each intervening party, ensuring the accuracy of the operation, not only reduces risks and costs and avoids losses, but also provides a more efficient, safe, and reliable process, ensuring fluidity in foreign trade operations with risk management.
Importers and exporters who fail to comply can face serious consequences, such as fines, seizure of goods, or a ban on entering a particular market. In addition, there may be delays in customs clearance, which will lead to additional costs and delays in payment for the goods. The same consequences can be suffered by the importer and exporter who do not obtain the licenses and other documents required to export and for to the customs clearance or to commercialization of the goods.
