Global cross border trade and compliance continues to grow in complexity, introducing new challenges for market players. Businesses are addressing cross border compliance challenges in many ways, usually with innovation and technology forming a critical part of their strategy. Partnerships with external companies like logistics service providers are common in international trade, with third parties providing cross border services ranging from trade facilitation software to consultancy.
Cross Border Compliance & the State of Global Trade
According to the World Trade Organization’s (WTO) World Trade Statistical Review 2019, the volume of world merchandise trade as measured by the average of exports grew by 3 percent in 2018, just above the 2.9 percent increase in world gross domestic product (GDP). The value of global merchandise trade increased by 10 per cent last year driven mostly by high energy prices.
Merchandise exports of manufactured goods, agricultural products, and fuel and mining products grew by 8 percent, 5 percent and 23 percent respectively. Developing countries exported US$8.779 billion in 2018, with US$193 billion coming from the least developed economies. Asia was the main contributor to the increase of global imports.
The total value of world merchandise trade was US$19.67 trillion in 2018, with China leading the world as the top merchandise trader. Clothing was the most dynamic product among manufactured goods, growing 3.3 per cent in 2018.
Meanwhile, global trade in commercial services increased by 8 percent to US$5.63 trillion, a record strong growth for the second year in a row. The United States led the world in terms of commercial services trade, while China was the top leading exporter of commercial services by value among developing countries, with exports growing by 17 percent.
The Commonwealth of Independent States posted the highest (12 percent) growth in commercial services exports driven by the FIFA World Cup in Russia. Information and communications technology (ICT) led by computer services posted the highest export growth (15 percent) in the services sector.
Cross Border Compliance: Who is Responsible?
Cross border trade compliance impacts all professionals involved in cross border trade, from executives to temporary workers in the supply chain. Whether you are a procurement officer, ground handling agent or truck driver, your work is planned around compliance with existing trade rules and regulations. Failure to comply with these requirements can lead to serious consequences (financial and otherwise) for any business, and even bankruptcy in some smaller organizations.
Noncompliance can also mean extra operating and warehousing costs, wasted time, product delays, emergency shipments and logistics disruptions, on top of penalties issued by customs agencies. Noncompliance can easily put a small firm out of business when vehicles don’t have the required electronic logging device or when an entire shipment is held by customs due to incomplete or inaccurate paperwork.
Compliance optimization and cost reduction are two reasons many businesses work with third parties like logistics service providers. LSPs Help businesses access cross border services and improve compliance. LSPs offer customs processing services, software and technology, and expertise in cross border trade. Even with the help of third parties, the responsibility for compliance remains ultimately with the owner of the goods.
Customs requirements also apply to commercial carriers, freight forwarders, handling agents and other members of the supply chain. An understanding of cross border rules helps trade participants make more informed decisions and take a more proactive role in managing cross border trade risk and challenges.
Cross Border Trade and Compliance Challenges
Consumers are at the center of cross border trade. With always on devices and instant connectivity to e-retailers, consumers have grown accustomed to convenience, fast/same-day delivery and multiple payment options. Consumers are also more tech savvy today. Many are less loyal to a brand than previous generations and use price comparison sites before making purchase decisions. This new breed of customers won’t hesitate to switch to a competitor if they feel that their needs are not being met.
One of the biggest challenges to smooth cross border trade is uncertainty in the economic and political landscape across the world. While governments and private entities work hard to ensure that cross border trade continues to flourish and everyone can proper, trade wars and protectionism have negative effects on e-commerce and international expansion.
Different Payment Systems
Different payment systems around the world introduce an additional layer of complexity to cross border trade. Credit and debit cards that are the used as the main payment methods in developed countries are often not available to consumers in developing economies. Merchants in these areas understand the need to provide as many alternative payment options as possible to reach more customers and provide the best experience. Those who partner with a payment/service provider with the right technology and local expertise are more likely to capture a larger share of the market than those who do not.
Localization is critical when selling to a different country or region. Merchants must think like a local or work with someone who understands the culture, market and customer needs. Most people won’t buy from a website that’s in a language they can’t understand, so merchants need to ensure that listings are localized and provide prices in local currencies.
Changing Customs Regulations
Politics and policy changes greatly impact a country’s customs regulations. With protectionism on the rise in some regions, trade participants can expect more rules and stricter customs regulations for imports and exports. Businesses engaged in cross border trade are at risk for noncompliance due to their reliance on third parties for critical information. Data is often siloed or spread out and is available only at a later date. For governments, policy changes usually mean developing or updating existing technology and implementing changes to electronic customs processes.
Benefits of Cross Border Services
Cross border services offered by third parties like Global eTrade Services (GeTS) benefit businesses engaged in international trade and other supply chain participants, including manufacturers and suppliers. Cross border services help businesses:
- Simplify international trade
- Identify, measure and address risks related to noncompliance
- Meet regulatory requirements of customs agencies across the world
- Prepare for and handle customs audits appropriately
- Design and implement global trade compliance programs
- Improve collaboration with stakeholders and access to financial institutions
- Collect, analyze and use trade data for strategic planning and decision making
- Address cross border challenges
- Optimize competitiveness
- Reduce costs and uncover savings
Global eTrade Services (GeTS) Cross Border Compliance Services
GeTS helps businesses and governments make cross-border trade predictable, accessible and easier to fulfill. GeTS’ Cross border compliance services for business include cloud-based trade compliance applications for traders in the U.S., Canada, Mexico, Panama, Japan and Singapore.
GeTS Cross Border Data Exchange instantly connects businesses, government agencies and trade participants to the global window to access support, services and valuable information. Cross Border Data Exchange links isolated digital islands to facilitate trade and optimize compliance. Collaboration at the business level along with efficient use of data improves operation efficiency.
Cross Border Data Exchange serves as a global Single Window or unified platform that powers data management and trade declaration processing for government agencies worldwide. It is also a system of record for trade related data and documents required for compliance.
Cross Border Data Exchange features and benefits:
- End-to-end trade data flow visibility
- Improved efficiency by making it easy to use data at source
- Improved supply chain and trade finance with access to compliance-related data. Accessible data means better decision making and risk management for businesses and financial institutions.
The GeTS team include customs, export and IT professionals with extensive experience in cross border trade. We help the private and public sectors around the world make cross-border more accessible, predictable and easier to fulfil.
To learn more, visit our cross border compliance page or contact us us today!
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Contact GeTS today for more information on cross border compliance services!
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