The Definition of Trade Compliance

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Moving goods from one country to another is a complicated affair. Every country has its own laws and regulations to govern what can be moved across the border and under what circumstances as well as what duties, taxes and tariffs must be paid. Failure to abide by these laws can result in substantial penalties and imprisonment.

For any company planning on moving goods in or out of the United States, trade compliance means being on the right side of federal laws governing trade and keeping your company's reputation clean.

TL;DR (Too Long; Didn't Read)

The trade compliance definition involves the process by which goods move from one country to another in compliance with the laws and regulations of both countries.

Why Trade Compliance Is Important

There are many reasons trade between countries is regulated. The U.S., for example, restricts the sale of firearms to some countries when there is a threat that they could be used to harm Americans or U.S. allies. Many countries restrict the importing of specific types of goods to protect their own producers of those goods. In several instances, trade to and from a specific country may be banned in order to put pressure on that country when it is violating international laws or is posing a threat.

In general terms, trade compliance helps to ensure stable and ethical practices are observed in all trade across the world. Trade agreements between countries set strict standards on exports and imports. Failing to abide by the laws set in these agreements can result in serious fines and, in some cases, prison sentences. It can also mean bad press and a hit to a company's public relations both in the U.S. and worldwide.

Trade Compliance Training

The U.S Bureau of Industry and Security has a wealth of information on its website and has print publications that detail laws and requirements for exporting goods to other countries. In addition to this, the BIS also offers training, including introductory courses on export administration regulations and topics related to specific issues.

The BIS recommends that companies establish an export compliance program to reduce the possibility of export violations. Information is available on the BIS website. Training includes online instruction as well as in-person training from BIS instructors. The BIS holds seminars throughout the year across the country.

U.S. Customs and Border Protection also has a wealth of material on its website for importing and exporting goods across the border. This ranges from tips and video instruction for new importers to detailed information on specific topics like importing biological materials or selling digital licensing to customers in other countries.

Examples of Trade Violations and Penalties

The BIS may require export licenses for sending goods to some countries. These depend on the type of goods being shipped and where they are going. For example, software and other critical or emerging technologies may require export licenses if they can be used for nefarious purposes.

The BIS restricts most exports to Cuba, Iran, Syria, North Korea and the Crimea region of the Ukraine. Additional restrictions can be imposed at any time, so it's best to keep abreast of any news on trade from the federal government, including the BIS, treasury department and state department. Attempted bribery or offering kickbacks to other countries is also illegal under U.S. law.

Penalties for violating trade laws can include fines, imprisonment and seizure of property. Individuals and companies can also be banned from exporting or importing goods. In 2018, 30 people and companies were convicted of export violations, resulting in $618,500 in fines, $9,642,496 in forfeitures and more than 506 months of prison time.