Over the last few weeks the rhetoric regarding the global trade environment has increased dramatically. Less than a month after he declared to the World Economic Forum that India was open for business, Prime Minister Narendra Modi has raised import duties to their highest in three decades, setting the stage for a protracted trade war. The U.S. administration announced it would look at reciprocal tax treatment.
The administration has also announced a 25% duty on steel and aluminum products to counteract what are considered unfair trade practices affecting those industries. This has caused allied trading partners to look at various U.S. made products for retaliation.
The renegotiation of the trilateral North American Free Trade Agreement continues and the Administration is taking another look at the Trans-Pacific Partnership agreement and discussing a possible model free trade agreement with an unnamed country in Africa.
The stage was set at the State of the Union address, when President Trump reiterated his position on trade. He stated “we expect trading relationships to be fair and to be reciprocal. We will work to fix bad trade deals and negotiate new ones. And we will protect American workers and American intellectual property, through strong enforcement of our trade rules.”
The pendulum is swinging sharply toward enforcement. Customs is using terms like intelligent enforcement and consequence delivery in order to effect deterrence.
With increased enforcement just around the corner, a good spring cleaning may be needed. Now is a good time to reorganize, clean up, and ensure that all systems are in good working order.
The compliance team should be asking the following questions:
- Are corporate compliance manuals up to date?
- Have all training materials been refreshed and have new employees been trained?
- Have all employees been trained on any compliance changes within the company?
- When was the last time the company did an internal audit to check that compliance procedures are working effectively?
- Are vendors and suppliers knowledgeable about the importers compliance requirements?
- When was the last time corporate internal controls were reviewed and updated?
- When was the last time we talked with our broker about changes in sourcing, use of trade preference programs, and the introduction of new product lines?
Clearing out the compliance cobwebs now will undoubtedly pay off in the long run.
Please contact Vandegrift to learn more about conducting an internal compliance assessment.