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70% of Companies are NOT Leveraging Free Trade Agreements

Competitive Advantage - Willson International Limited

I was surprised, but not surprised.

A recent KPMG study* reported that “70% of companies do not fully utilize Free Trade Agreements.” One of the main reasons is that companies find it difficult to manage complex and changing trade regulations.

I was surprised that the number was as high as 70%, but I was not surprised to hear companies report that they struggle with customs compliance. The implications are manifold. Trade is complex. And it’s going to get worse. TPP is in the news, but what is not in the news is that we are also currently facing 4 major changes in regulations (in Canada and the US) that require significant changes in technology. On top of that, the global supply chain is changing rapidly and constantly.

The implications of not fully leveraging Free Trade Agreements are financial, strategic and regulatory. There is a cost associated with the time and resources dedicated to managing customs issues, as well as a cost of not properly leveraging an FTA. But there is also an often-overlooked cost of management activity that takes staff away from being proactive and strategic, from focusing on their core competencies, and the bottom line. If that’s not enough, there is also a risk of penalties associated when classification, documentation or licensing are incorrect.   All of these activities affect your company’s competitive advantage.


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What are the most problematic areas? The report lists top challenges as documentation for importing, licensing and rules of origin, product export classification, and managing a customs broker. Trade specialists report “difficulties interpreting rules across borders, ever-changing requirements from local governments and agencies, and antiquated processes.”  The study noted that the “U.S. is more focused on efficiency than other countries, and is a uniquely complex country.”

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Documentation - Willson International Customs Brokerage







Here are just a few areas other than customs management that demand your staff’s attention. Supply chains are becoming more complex and changing constantly. Product life cycles are shorter. There is pressure to streamline. Customers are more demanding. They want what they want, when they want it, the way they want it. And everyone needs to improve margins.


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Technology plays an increasingly important role in customs compliance. Yet the report noted that companies are still using inefficient manual processes, “that expose them to risk, consume time and resources, and take them away from activities that affect the bottom line.” Right now, custom brokerages are implementing significant changes for Single Window, ACE, ARL, and E-manifest. TPP is on the horizon. This is one of the most demanding and complex periods in trade history. But brokers are ready. It is our core competency.


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Let this research be a call to action for you to partner with experts so you can focus on your core competencies. Try to view leveraging this process as an investment, not a cost. “Managing your customs broker” should never be a challenge. The job of a broker is to make customs compliance easy for you. Oh yes, and if you don’t know what ARL, ACE, E-manifest and Single Window are, call the service people at your brokerage. You need to know.


* Thompson Reuters and KPMG International, 2015 Global Trade Management Survey

70% of Companies are NOT Leveraging Free Trade Agreements