A Harmonized (Tariff) Christmas – Credit: Tyler Brown, Sr. Export Technical Representative, Office of Export Compliance, Jet Propulsion Laboratory (reprinted with permission).
(SEDA-Council of Governments) – For this analysis, we assumed that the Lords, Ladies, maids, and entertainers are not performing defense services. Articles and material would appear to all be EAR99. Dealing only with the associated hardware, I propose the following…
A Harmonized (Tariff) Christmas
(SEDA-Council of Governments)
For this analysis, we assumed that the Lords, Ladies, maids, and entertainers are not performing defense services. Articles and material would appear to all be EAR99. Dealing only with the associated hardware, I propose the following HTS designations:
• Twelve drummers drumming: 9206.00.20 00 – Percussion musical instruments (for example, drums, xylophones, cymbals, castanets, maracas): Drums
• Eleven pipers piping: 9205.90.20.60 – Woodwind instruments: Flutes and piccolos (except bamboo)
Based upon reports done by IBM, the supply chain for consumer products and retail sector Supply Chain has about $40 Billion of inefficiencies in it annually, interesting way to tell that story below in a narrated and non-narrated versions.
Based upon reports done by IBM, the supply chain for consumer products and retail sector Supply Chain has about $40 Billion of inefficiencies in it annually, interesting way to tell that story below in a narrated and non-narrated versions.
A survey conducted by a large North American foreign exchange provider found that 80% of the corporations surveyed acknowledged that their businesses were exposed to significant foreign exchange risk. However, only 42% of these corporations indicated that they currently employ currency hedging techniques to manage their risk.
Managing Risk Should be Strategic
Our friends at Western Union Business Services have published a paper titled, Foreign Exchange Risk Management: Protect Your Profits and Prosper in an Uncertain Economy. While this is an area that I have no direct experience handling, I found it interesting and relevant for this site because it address’ how the act of managing foreign exchange risk can be strategic for an organization.
It is worthy to note that according to their paper:
A 2006 survey conducted by a large North American foreign exchange provider found that 80% of the corporations surveyed acknowledged that their businesses were exposed to significant foreign exchange risk. However, only 42% of these corporations indicated that they currently employ currency hedging techniques to manage their risk.
Financial Risk Management is part of the ‘F’ in FACTS based approach
This suggests that there is a lot of risk left on the table with regards to Foreign Exchange, that would be one of the areas of focus under a FACTS based approach of an Integrated Trade Compliance Strategy. The FACTS based approach is a way to view the tactical detail of reviewing aspects that relate to your trade compliance program. The letters represent that broad categories that we have found you should consider in your review Financial, Advisory, Compliance, Technology, Service. Rick Riess, President of GHY International shares his vision of this “unpacking the facts” approach in the following excerpt from the GHY International website:
Key to our approach is a comprehensive “360 degrees” trade assessment that examines your entire supply chain as an integral cycle encompassing various Financial, Advisory, Compliance, Technology and Service aspects of your business (that we collectively refer to by the acronym “FACTS”).
After having explored the FACTS to discover potential opportunities to increase your cash flow, compliance, supply chain visibility, etc., and/or decrease your exposure to the risk of non-compliance, the cost of excessive duty payouts, etc., we then develop a heuristic plan customized to your specific situation that allows you to “test drive” proposed solutions and evaluate them before proceeding further.
This road map is more clearly articulated on the GHY International web site where we share this vision as part of our approach with importers and exporters in order to define a GAP. You can read more about this offering here.
Foreign Exchange Management Expertise
In the white paper from Western Union Business Services they address the top 3 myths about currency hedging, which includes;
- Currency hedging is speculative and risky.
- Currency hedging is only for the short-term; in the long run exchange rates always average out.
- I don’t need to hedge currency risk if I operate in US dollars and conduct foreign business in US dollars—I’m not exposed to other currencies.
They also cover the 3 key components of managing risk with a hedging program. This and other great tips can be found in the white paper, you can check it out here.
Case in Point, Engineering a Product to meet a Beneficial Tariff Classification. The fact is that by understanding the how on both sides of the trade compliance equation can you maximize the ultimate value of a integrated Trade Compliance Strategy for your organization and make international trade a strategic benefit for your organization.
Recently an article by Lauren Meling of the software firm, Management Dynamics, was brought to my attention. The article is titled, Understanding the Science of Importing for Small to Mid-sized Companies, Lauren was writing a summary of an article that appeared in the CFO Magazine website titled, Import Duties: Bend Me, Shape Me, Any Way You Want Me.
Portions of Lauren’s article is reprinted here with permission.
Lauren did an excellent job summarizing 5 key tips from the CFO article.
From this article, I have composed 5 simple tips on how to reduce costs in your company as an importer:
1. View your import tax policy.
2. Understand the subtle differences with the tariff schedule.
3. Audit your Supply chain.
4. Discuss tactics with your vendor.
5. Practice “tariff engineering.”
For this case in Point article I want to focus on her #5 item, Practice “Tariff Engineering”, in which she defined in her article as;
5. Practice “tariff engineering.”
According to CFO, “tariff engineering is the practice of designing and marketing a product with a tariff schedule in mind.” Understand how you will market the product. The terms and use of the product derives back to tip #2, how you classify your product can help you save money.
“How you import products is actually a science. If you know the [importing] categories and how to work with the categories, you’ll save your company money.” states Billy Pymm, CFO of Maverik Lacrosse
Understand the ‘How’
The fact is that by understanding the how on both sides of the trade compliance equation can you maximize the ultimate value of a integrated Trade Compliance Strategy for your organization and make international trade a strategic benefit for your organization. The how questions being how is it manufactured (sourcing) and how it is sold (sales) in reference to end use and markets.
Here is a case in point to demonstrate what I mean;
A ‘L’ shaped metal bracket when imported is classified as a metal bracket. But that bracket is welded onto a machine and therefore the bracket is no longer a bracket but a part of a larger machine. So when that bracket breaks and requires repair, the bracket is removed and needs to be exported for repair, is it a metal bracket again? NO it is a part of a machine and therefore can benefit from tariff classification as part of that machine, and not a metal bracket.
Disassemble of items from source can create tariff shift and thereby qualify for tariff benefits such as NAFTA or duty free status, because work to remove items must be considered as further rework, disassembly of an item is really manufacturing in reverse.
What about goods that require Quota?
Products subject to quota have conditions that make them quota applicable, question is what conditions make it quota applicable and what can be changed to no longer make that product quota applicable.
By adding or removing something that changes the definition of the end product while not changing it’s use, may in fact allow the product to be engineered to have a tariff shift that is in fact not quota applicable.
In Closing
While each case is unique and must be reviewed by your professional trade services provider, you can see that you can in fact engineer products to meet with tariff changes that benefit your organization once you understand the ‘how’ questions.
Tell us about your experience with this? Did it work out for you?
Opportunities to use supply chain management to bolster overall company efficiencies are being missed in Canada because the discipline remains silo based and tactical as opposed to company wide and strategic
Since I am constantly looking for articles that talk about International Trade Compliance Strategies, I was pleased when I opened the October 2010 issue of Canadian Transportation and Logistics magazine. I read with delight the story by Lou Smyrlis in which he reports on events from the 24th Annual Transportation Innovation and Cost Savings Conference. Of interest to me was his opening report of a session lead by Mike Croza, managing partner, Supply Chain Alliance Partners, who said:
Opportunities to use supply chain management to bolster overall company efficiencies are being missed in Canada because the discipline remains silo based and tactical as opposed to company wide and strategic
How true that is, when compliance intersections are encountered because of actions that occurred between sourcing to selling, it is critical to consider an integrated trade compliance strategy in order to minimize risk and increase visibility to all stakeholders in an organization.
Lou Smyrlis goes on to share some thoughts of why this may be according to Mike Croza;
“In 2010 we still have a long way to go for supply chain management in Canada. I’m not sure why it hasn’t stuck,” Croza told
the well-attended annual gathering, held at the CNE grounds in September.Croza believes the continuing lack of focus on improved supply chain practices is symptomatic of a corporate culture that has “rested on the laurels of having a low dollar for too long” and not yet made the adjustments necessary to be competitive in the new reality of a Canadian dollar that is at par with the US greenback. Croza criticized corporate Canada for not making the necessary investments in capital equipment, information technology and management practices to remain competitive.
we cant create a dialogue if we don’t know each other, in this post we introduce the key players behind tradecompliance.ghy.com
We can’t establish a relationship if we don’t know each other:
I am Nigel Fortlage, Vice President Information Technology at GHY International. I have been in this industry since 1988 and before that I worked for an importer/distributor/Manufacture as their in-house customs specialist. For the last 16 months I have had a second hat I have been wearing in partnership with our Executive VP, Reynold Martens working on understanding the social media space and how we can connect with you in a two-way conversation. We will be specifically sharing details around the concept we have been introducing you to, an Integrated Trade Compliance Strategy. We believe by providing you good information, education and awareness that we hope to engage in a conversation that results in helping you solve problems, creating that Ah Ha moment for you, or addressing moments of truth in your international trade operations that adds value
Martin Rayner is an independent consultant with more than 27 years of diverse experience working in various operational facets of the customs brokerage and international trade logistics field. Martin has also held executive-level positions in the industry with a number of the leading trade service providers across Canada and during his career has acted in both professional advisory and advocacy capacities for companies seeking to leverage opportunities in the regulatory environment to their benefit.
Reynold Martens is Executive Vice President and Corporate Secretary of GHY International, and he is the President and co-founder of the firm’s subsidiary, GHY USA, Inc. He is the Author of the white paper titled, a Case for an Integrated Trade Compliance Strategy. Reynold is also actively involved outside of GHY, he is active in various industry and community leadership roles, including directorships with the Canadian Manufactures and Exporters Association, current chair for IE Canada Manitoba Chapter and member of the National Board
Rick Riess, President & CEO, GHY International. We can not talk about our current president and 4th Generation owner of the firm without, acknowledging the background from which he comes,
GHY–over a century old and still “Young.”
Yes it’s true. Geo. H. Young & Co. Ltd. turns 110 in 2011, making the company one of the oldest and most established privately held enterprises in Canada that continues to grow and evolve as both a pioneer and innovator in the Customs brokerage industry.
In the late 1800’s, Canada was a work in progress, with only seven provinces (Alberta and Saskatchewan joined in 1905). The young nation was struggling to protect its development by means of high tariffs on goods that were manufactured—or could be—in Canada. Duty rates of 20 – 40 percent accounted for most of the government’s revenue of about $50 million, as income taxes weren’t initiated until 1917.
At the time, George Henry Young was the Chief Inspector of Customs Ports stationed in Winnipeg. In 1901, recognizing the opportunity when he saw it, he opened one of the first brokerage houses in Western Canada. This pre-dated the automobile era, and the majority of goods moved by rail. However, the winds of change were blowing, and in 1903, Wilbur and Orville Wright took their first flight, and by 1929 the first international commercial flight into Winnipeg arrived from Minneapolis. That was likely Northwest Airlines, one of the company’s longest standing international relationships. George led the company for its first 43 years until 1944, when the reins were turned over to his son George Donald Young, known as Don.
In 1950, under Don Young’s leadership, Geo. H. Young & Co. Ltd. formally incorporated, and so began an exciting era of growth in revenue and clients. News of those years is well documented in the formal corporate minute books, which include colourful details about the business of the day, the people and events, as well as the challenges and opportunities. There is reference to some of our long-term clients who have become pillars of the Manitoba business community, and indeed some of these relationships span more than eight decades and have contributed significantly to our success.
In 1968, GHY’s leadership transitioned to Charles Riess, son-in-law to Don Young. As the Prairie economy continued to expand and with it cross-border trade, so did the company, which opened an office at Emerson, Manitoba to accommodate the growing volume of truck traffic originating in the US bound for the Prairies. Charles’ son, Richard Riess, became President in 1992, and so began an unprecedented period of growth and expansion in products, services, locations, and strategic partnerships.
Today, GHY International as it is known, is recognized as a leader in the industry for its strategic focus on trade facilitation and regulatory risk management, use of innovative technologies, solid core values, and principled approach to working with clients, associates, Customs regimes of Canada and the US, supply chain partners in all modes of transportation, and yes, even competitors.
The scope of the enterprise has expanded to include locations in British Columbia (1994), Ontario (2005), a strategic partnership in Alberta (2005), a nationally licensed US subsidiary based in North Dakota (1995), and numerous strategic partnerships. It has grown to include over 100 employees serving a client base from a broad cross-section of industries, including many top 500 companies in Canada and the US.
Canada Border Services Agency (CBSA) ranks GHY Canada 13th out of 504 reporting entities; United States Customs Border Patrol (CBP) ranks GHY USA 39th out of 2523 reporting entities; GHY Canada is the largest prairie-based member of the Canadian Society of Customs Brokers (CSCB), which includes the vast majority of Brokers in Canada.
GHY has survived the calamities of two world wars, the Great Depression, dozens of economic cycles, fast-paced growth in trade and the regulatory environment, and a technology revolution, and through all those waves of change, has been an innovator, while staying true to its core values, and maintaining a relentless pursuit of creating value for our clients.
While the author shares their thoughts why it is not time to get out of China it did raise an issue that is part of an Integrated Trade Compliance Strategy, that is managing international exchange and purchasing in local currencies.
I was reading an Article in Supply Chain Brain about an opinion piece on whether or not it was time to bail out of China due to it’s increasing cost of doing business there. Read the whole article here.
While the author shares their thoughts why it is not time to get out of China it did raise an issue that is part of an Integrated Trade Compliance Strategy, that is managing international exchange and purchasing in local currencies.
While GHY International is not an expert in these areas, we do have someone who is. These are exactly the topics that Custom House Currency Exchange, now a Western Union company handles.
Here is a link to their white papers on these exact topics
For those not familiar with IBM’s push to share the message about creating a smarter planet, this post shares that insight and links to their study
IBM’s Smarter Planet Message
For those not familiar with IBM’s push to share the message about creating a smarter planet, it is simply defined as using all sources of information that are created around a process such as supply chain, and bringing it together in a way that makes the process and those involved smarter. Creating ability to make smarter decisions, faster, better, and to ensure that the rest of the process knows those decisions have been made.
This is more of a vision than it is a program or process you can buy. To learn more from IBM’s, watch their own video explaining their smarter planet message.
Where does the Integrated Trade Compliance Strategy fit?
The answer is simple, it is the obvious next step after articulating a vision and then turning it into a strategy that can be executed. As you will find from the materials below, the talking points we shared already are all validated once again in IBM’s own efforts. The intersections of compliance need transparency, viability, accountability, and they need to go beyond your internal organization to involve all external supply chain partners.
That is the model we shared in support of an Integrated Trade Compliance Strategy.
IBM’s Smarter Supply Chain Message
IBM defines these times as volatile in the world of supply chain, mentioning such things as;
Cost and currency fluctuations, supply disruptions, transportation capacity constraints and production recalls. As a Supply Chain Executive, you must handle all of this volatility, and more, in a transparent manner. If you don’t – if there is even one misstep – your whole Supply Chain and its extended network can be brought to an abrupt halt.
To find out more about IBM’s vision for the supply chain, check out their;
Website: IBM’s Supply Chain Study
Study: Direct link to Study
Benchmark: Benchmark yourself against the global study participants
Also checkout their website for specific industry studies in the Life Sciences, Automotive, and Metals and Mining sectors.
Click below to see IBM’s Video on the Smarter Supply Chain and their Global study that was conducted.
Even Canada is getting strategic about the supply chain.
Check out the video introducing Canada’s Supply Chain Sector Council.
Even Canada is getting strategic about the supply chain.
Check out the video introducing Canada’s Supply Chain Sector Council.
As they become global in scope, supply chains take on additional levels of complexity, says Karin Bursa, vice president of marketing with Logility. She enumerates the major trends with which suppliers and retailers are dealing today, as they strive to meet changing customer needs.
(Courtesy of Supply Chain Brain)
Karin Bursa, Vice President Marketing, Logility |October 26, 2010
As they become global in scope, supply chains take on additional levels of complexity, says Karin Bursa, vice president of marketing with Logility. She enumerates the major trends with which suppliers and retailers are dealing today, as they strive to meet changing customer needs. [Run Time (Min:)…>more
Registration is free on supply chain brain: check out the video here
