Chapter 10

Benefits of Trade Compliance Systems

Increased level of compliance Decreased number of physcial inspections Faster release of shipments Avoidance of fines and penalties. Opportunity to interface with other systems.

The Weighted-Factor Rating Model

Compares the attractiveness of several locations along a number of quantitative and qualitative dimensions.

Right-to-Work Laws

25 states have laws protecting the right of employees to decide whether or not to join or support a union.

Businesses violating trade regulations face fines of up to ...............................

40% of the value of the merchandise for "negligence,"

Offshore Factory

A factory set up for manufacturing or assembly in a country where labor and/or raw materials are less expensive, for eventual import back into the manufacturer's home country.

Server Factory

A factory set up to take advantage of government incentives, and/or reduced tax/tariff barriers, to meet regional or local market needs

Land Availability and Costs

As land and construction costs in big cities continue to escalate, the trend is to locate in the suburbs and rural areas.

Global Location Decisions

Companies can locate anywhere in the world due to increased globalization, technology, transportation, and open markets.

Penalties For Violations Can Be Substantial

Criminal Penalties Civil Penalties Statutory Sanctions

Global Logistics Intermediaries

Customs Brokers International Freight Forwarders Trading Companies Non-Vessel-Operating Common Carriers (NVOCC)_

Shipments must conform to.................. Complete and submit................ Submit a .................. for the product

Export Administration Registration a Shippers Export Declaration (SED) Commercial Invoice

Outpost Factory

Factory set up in an area with an abundance of advance supplier, competitors, research facilities, etc.

Contributor Factory

Focused on product development and engineering for products that they manufacturer

Business Clusters

Geographic concentrations of interconnected companies and institutions.

Taxes and Incentives

Global Location Factors Countries with high tariffs discourage importing goods into the country and encourage multinational corporations to produce locally.

Environmental Issues

Global warming, air pollution, and acid rain are debated as being the price of industrialization.

Currency Stability

Impacts business costs and consequently location decisions.

International Trade Compliance

Is a major concern and dozens of laws, regulations and rules have to be checked and complied with for every import and/or export transaction.

U.S. Customs and Border Protection (CBP)

It is the gateway agency for more than 20 other government agencies each of which has some control over various aspects of international trade. Its' mission is to safeguard America's borders enhancing the Nation's global economic competitiveness by enabling legitimate trade and travel.

Labor Issues

Labor availability, productivity, and skill.

Source Factory

Manufactures products at low cost but with skilled workers and significant managerial resources

Foreign Trade Zones (FTZ's)

Physical areas inside the US supervised by U.S. Customs and Border Protection that are considered to be outside of the U.S. territory

Lead Factory

Source of product and process innovation and competitive advantage across the entire organization (world-class)

Access to Suppliers and Cost

Supplier proximity influences the delivery of materials and the effectiveness of the supply chain.

Utility Availability and Cost

Supply of electricity has not always kept pace with the high speed of development.

Access and Proximity to Markets

The trend in manufacturing is to be within delivery proximity of your customers.

Break-Even Model

Useful location analysis technique when fixed and variable costs can be determined

Export Process

When a shipment is ready to be exported, the shipper will file export documents for the goods' at the port of departure

Quality-of-Life Issues

You will need people to work at these locations - so consider the following Quality-of-Life issues in terms of maturity, sophistication, robustness, etc., in each location, and do a comparison/evaluation

CBP protects U.S. through ................. at ports of entry.

active inspections

Trade Compliance Systems

can automate the process of checking every transaction

International Trade Compliance

complex process. completing and filing about 35 documents. over 600 laws and 500 trade agreements which are constantly changing. Interfacing with about 25 parties

World Trade Organization (WTO>

deals with the global rules of trade between nations. Its main goal is to ensure that trade flows as smoothly, predictably and as freely as possible.

Department of homeland security first priority is to prevent the entry of terrorists and the instruments of terrorism, while simultaneously .............

ensuring the efficient flow of lawful traffic and commerce.

An intentional or unintentional export of controlled technology can easily occur within the walls ...................

even if located within the borders of the United States.

Regional Trade Agreements

impact location decisions

CBP has a strong base of .............................. to safeguard the American public and promote legitimate international commerce.

industry partnerships and technology

While in the FTZ, merchandise.....

is not subject to U.S. duty or excise tax.

CBP is also concerned with....

revenue collection (i.e. tariffs and duties).

On March 1st 2003, DHS assumed responsibility for ................... which straddle 350+ official ports of entry and connects our homeland to the rest of the world.

securing our nation's borders and transportation systems

Trade regulations and related content are at the heart of ITC, but ..........................

staying up-to-date is a major challenge

Import Process

the Importer of Record (i.e., the owner, or purchaser) must file entry documents at the port of entry.

Deemed Exports

the release of technology or source code that is subject to the Export Administration Regulations, to a foreign national (i.e., non-US citizen) located in the United States.

Increased revenue

through global business (i.e., more customers) and economic opportunities

Increased sourcing options

with more potential sources of supply to choose from including potential economic opportunities