Never before in history have the challenges in international trade been so great. The World Trade Organisation (WTO) expects trade tensions to rise further this year, with trade restrictions only increasing. Software can help solve companies' biggest problems with international supply chains.
The WTO expects global trade to continue growing, but at a slower pace than before."The slowdown in growth reflects increased tensions between key trading partners," said RobertoAzevêdo, director general of the WTO. "More than ever, it is crucial that governments iron out their differences and keep themselves in check."
For now, companies cannot rely on governments to actually resolve their differences. They will have to hedge against potential problems. But what are those problems and what are possible solutions?
1.Expect the unexpected
In 2016, President Trump promised to pursue an unpredictable foreign policy should he win the election. An unpredictable foreign policy means export control regimes change faster and more frequently. It makes the job of export control workers a lot harder.
Good IT support makes the job of export control officers easier. Software is available on the market that allows companies to cover all key elements of export controls. Think screening on trading partners, national embargo’s, critical goods and critical end uses. The software can be fully geïntegrated into existing business processes and IT systems.
2. Global sanctions
On 8 May 2018, the United States officially withdrew from the Joint Comprehensive Plan of Action (JCPOA), better known as the Iran nuclear deal. This led to a separation of powers, with the EU imposing additional measures on 7 August 2018 to protect European companies with trade interests in Iran from US sanctions.
These conflicting regulations createërun an extremely complex business environment for trading companies. But this does not only concern Iran. The US administration has imposed additional sanctions against Russia and North Korea. Not to mention sanctions against other countries including Venezuela, Burma and South Sudan. Software allows companies to check whether or not the countries, goods and intended end use by their trading partners violate the sanctions in place.
3. OFAC 50% rule
In 2014, the US Office of Foreign Assets Control (OFAC) published its 50% rule. This rule means that an entity will be blacklisted if it is more than 50% owned - directly or indirectly - by one or more persons already on that blacklist. Many companies currently only check whether the entity itself is blacklisted. So that is not enough.
One outcome is software with content that is constantly and fully automatically updated. This involves content on new blacklists, watch lists and penalty lists that are valid worldwide. Sometimes such a solution also allows companies to create their own blacklist and automate, for example, compliance with OFAC's 50% rule.
4. Intangible technology
Immateriële technology poses an increasing challenge when it comes to export controls. After all, sanctions also apply to software and technology. System descriptions, technical specifications and blueprints may contain information indicating that exports require a licence.
The solution is a secure web-based application that allows employees to check with export control officers whether a licence is needed. If that licence is already in place, the officer can inform and advise the employee on the procedure via the same application. If not, the officer can initiate the application for a new export licence.
5. Multi-jurisdictional compliance
Internationally operating companies have the challenge of complying with the laws and trade restrictions of different countries. These all have their own foreign policies and national interests and their own export control regimes, which are sometimes contradictory. Consider US sanctions on Iran and EU countermeasures.
Software can help classify goods, think intuïtive wizards, reliable process management and automatic suggestions based on an intelligent algorithm. Each product can be classified based on relevant regulations to be determined, providing the foundation for effective export control.
