Crannagh & Co offer specialist advice to the international trade community. Here they tackle issues surrounding customs requirements…

Many companies do not have a clear picture of their obligations with respect to customs compliance and therefore no basis for an accurate assessment of the associated risks. Customs requirements are a moving target and a number of changes are currently occurring which already have (or will) impact the obligations of international trading companies, whether in a buying or selling role. Certainty and predictability of the business process are key success factors for any company and more so where the international nature of the business adds complexity. Here are some examples:

Authorised Economic Operator (AEO)
The AEO programme has been in place for several years but has had little reason to evoke emotion (until recent changes, that is). Under the Community Customs Code, certain AEOs are currently or will be able to benefit from reduced financial security requirements (bonds) or be exempt from them completely.

While this is a significant benefit to some traders, achieving AEO status as a prerequisite to continued access to customs simplifications is another scenario and may be a best case. Deadlines have already passed in some member states, not just for receiving AEO status as a pre-condition to obtain relief under simplified or beneficial trade regimes, but to retain those benefits currently in place.

In a much awaited benefit, mutual recognition between the US C-TPAT (Customs-Trade Partnership Against Terrorism) and AEO programmes becomes operational in June 2012 and will bring tremendous benefits to participants through a reduction in cost and time delays, less red tape, greater ease, and critically, the predictability in the movement of their goods as well as new trade opportunities.

If you have not reviewed the status of AEO certification in the last 6-12 months, there is every reason to do so now.

Export controls, restrictions and sanctions
Commodity-based export controls as well as restrictions on trade in terms of specific disallowed parties and locations and regime sanctions have a long history. However, these areas have seen quite a bit of renewed interest and movement, by the EC and the member states, especially in the area of enforcement.
Although not widely published, fines in the range of several millions of euros have been levied against companies who have chosen to turn an blind eye to their obligations in this area, while others have been at serious risk of losing their ability to export controlled merchandise.

It is key to note that the goods or merchandise controlled under export requirements can be and often are technology transfers, software with encryption capabilities (56k level or above) or in general, any item specifically designed for use by military forces.

Although export controls by their nature deal with the delivery of goods, the requirements for dealing with their provisions and the controls that must be in place start at the time of (or possibly even before) an order is placed for a product.

Conclusion
Customs authorities across the member states are more willing and likely than ever to levy fines and penalties. The use of this type of tool by customs has increased significantly in the past five to seven years. However, the largest potential risk or cost to an international trader will be tied to a disruption in its supply chain, as losing the ability to efficiently move goods to one’s customers can be disastrous, so why take chances?

If there is less than crystal clarity with respect to your relationship with customs or government entities involved in import or export activities, the best that can be assumed is that you haven’t seen the full extent of the problem yet. Taking a proactive approach to trade compliance is a strategy proven to pay out dividends whether through a lower cost of goods sold or risk mitigation, often both.

Contact details
For further information please visit: www.crannaghtrade.eu