A couple of years into this economic malaise and there are no unequivocal signs of recovery.
There is a temptation during economic downturns for companies to slack off in the legal compliance area. Not only is it dangerous to surrender to that urge, but it also misses the great economic advantages that inevitably come from maintaining a real trade compliance program during economic slowdowns.
Let’s take audits or investigations, for example. They are like having federal regulators perform a company-wide root canal. But a fascinating realization happens in the months and years following an audit or investigation. Defending and preparing for the intrusion impose a discipline that helps the target company become more profitable in the long run.
Back to the root canal. You get dental rot because you aren’t as attentive as you should have been to your dental health or, if you were attentive, something snuck through undetected in spite of your best efforts. But a bad tooth is a bad tooth. You wouldn’t stop brushing and flossing during lean times, would you? Indeed, it is during lean times that you take extra care to make sure those things you currently have and the processes in place are not compromised out of fear that you won’t have the resources later to tend to emergency repairs. Taking pain drugs to mask the problem and in the hope that the infection won’t spread is bound to land you in the emergency room and wipes out any “savings” from not going to the dentist and setting you up for an early introduction to the lovely lifestyle of dentures. But if you dare visit the dentist, you certainly are prepared to save your winning smile.
If you have a sound international trade compliance program, you can better take advantage of government initiatives to your advantage. For example, you and your industry peers may be able to bring a successful challenge on foreign competitors under our antidumping laws. You will be better able to take advantage of the protections that US Customs and Border Protection offers to protect your intellectual property.
Is there proof that trade compliance is a money saver? It’s difficult to marshal empirical evidence for or against the proposition, but it’s clear that enhanced penalties for both export and import violations are designed to dissuade companies from viewing fines and penalties as the cost of doing business, merely a nuisance that one suffers through rather than invest in compliance programs. It’s hard to hold on to that kind of thinking, especially during lean times, when you’re whacked with penalties in the tens of millions of dollars.
Let’s also give the Government some credit for trying to provide empirical proof that compliance saves you money. Cargo examinations and delays are bottom line killers, but does enrolling in voluntary compliance programs like the Customs-Trade Partnership Against Terrorism (C-TPAT) help? Yes, according to CBP.
Neglecting trade compliance during lean times allows obvious and hidden problems to fester. Now is the time to take a full measure of your compliance weaknesses and strengths, to find the economies of scale (you wouldn’t believe how much waste and fraud a good compliance program can eliminate), and to avoid problems with federal regulators. Trade compliance, even in big companies that have compliance programs with all the bells and whistles, is seldom a big-ticket item compared to other company expenditures. It becomes a big-ticket item only when the feds knock at your door and you’re not ready. Federal enforcement authorities have an uncanny ability to detect when companies are cutting legal corners. So, don’t cut any. Corners, that is. Keep your compliance efforts robust and honest. Your bottom-line will be healthier for it. Maybe even your smile will improve.
Principal and a founding member of GRVR Attorneys.