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Sunday, 15 April 2012

The Elephant in the Corner - trade regulations

Thanks to the excellent TV comedy “Outnumbered” we are all aware of the “elephant in the corner” – a subject or topic that is in the back of people’s minds but skirted around or avoided as being too delicate, difficult or embarrassing. At a recent BeXA event held at the wonderful Rolls Royce Learning & Development facility in Derby entitled: Innovation in Exporting: the World Awaits – I was asked to do a 10 minute slot on Customs Procedures. I had the worse time slot too, just before lunch, when, if other speakers have over-run (which usually happens) the attendees wish this one would just be cut from the agenda.

What fantastic, inspiring talks – we were entertained and overwhelmed by Simon Topman the CEO of Acme Whistles who explained why they are still producing whistles in Birmingham since 1870 and export 85% of their goods, with an export growth of 27% (6 million whistles exported a year!). Whistles, low technology – you must be joking! His story about the hand-grenadine shaped duck call for US hunters was fantastic. They know that other regions of the world will copy their new whistles in 6 months or so but they stay ahead. Then Paul Titley, Managing Director of a pharmaceutical testing company, Aesica Formulation Development explained how they keep ahead by selling Good Manufacturing Practices (GMP). Graham Tyers, Managing Director of Newson Gale and Mike Norfield, Chief Executive, Team Telecom Group also shared what gives them an edge in the international market place and why they believe exporting keeps their businesses alive. And all the time I’m thinking – customs procedures, rules, regulations, fines, penalties – did they really want to hear from me?

Well, I had prepared the talk in line with the theme of the day “Innovation in Exporting” so I knew I’d surprise a few people when I showed how exploiting your knowledge of customs regulations and being so comfortable with rules, documentation, etc, gives you “an unfair advantage” when trading internationally. But as I listened to the other speakers I realised that the role I, and other trade compliance people, play is the elephant in the corner. Great export deals are done, fantastic innovation, wonderful profits included in contracts but – rules, pre-shipment inspection, certificate of origin, tariff classification – if you squint your eyes in a marketing meeting you can probably just get a quick glimpse of the grey shape in the cornering lifting its trunk to comment before – whoosh – everyone moves on.

Well, it’s time to come out of the corner. Trade compliance is not a nasty afterthought or undesirable necessity it should be part of the planning and marketing strategy. You can’t change a commodity code of a product to get a lower duty rate or reduce licensing regulations (well not legally anyway) but you can change a product or how it is shipped to get a better commodity code (legally). Why just issue a EUR1 Form because your customer asks for one – sell the fact that as we are in the EU and have a trade agreement with our customer’s country our goods will actually be cheaper to import because of this form. Sell the fact! Even increase your price, where you have an option – example a UK exporter sells to Turkey, the standard rate of duty into Turkey for their product is 14%, if the goods can be shipped with a preference form (ATR Form) the 14% becomes NOTHING/ ZERO!!! Isn’t that worth a 1-2% increase in the selling price to make sure the form is produced? Knowledge is power, is an adage often used – well the elephant of trade compliance has quite a bit of untapped knowledge. Invite us to the table.

See other articles by Strong & Herd LLP HERE